On August 21, Xiaomi revealed its automotive business’s financial performance for the first time. In the second quarter of 2024, Xiaomi reported automotive sales revenue of RMB 6.2 billion (USD 870.5 million) and a gross profit margin of 15.4%, while narrowing its net losses to RMB 1.8 billion (USD 252.7 million). By comparison, Tesla’s automotive gross margin for the same period was 13.9%. For a newcomer to the automotive industry, Xiaomi’s results have certainly turned heads.
Xiaomi’s robust gross margin can be largely credited to its expertise in supply chain management and factory operations—capabilities honed through years in the smartphone and internet-of-things sectors. Lu Weibing, president of Xiaomi, highlighted that some suppliers for the SU7 electric vehicle model offered larger-scale quotes and material supplies, driven by their confidence in Xiaomi. This support has been pivotal in achieving the high gross margins Xiaomi has reported.
In Q2 2024, Xiaomi delivered approximately 27,000 new vehicles, positioning itself to meet its annual delivery target of at least 100,000 units, with a stretch goal of 120,000 units. Five months after the SU7’s launch, public data indicates that weekly new orders for the EV continue to range between 3,000–5,000 units. Lu expressed strong confidence in hitting this year’s delivery target, suggesting that delivering 120,000 vehicles in nine months could set a global record for the fastest single-car delivery.
To support these ambitions, Xiaomi is rapidly expanding its automotive retail network. Currently, the company operates over 100 sales stores, with plans to open 219 stores across 46 cities and establish 139 service centers in 82 cities by the end of the year. Lu added that the company will accelerate the construction of stores in northern Chinese cities.
On the international front, Lu mentioned that Xiaomi’s ongoing global promotion of its smart home products would bolster its future automotive exports. He also hinted in a previous live stream about Xiaomi’s plans to enter the European market.
According to Xiaomi’s Q2 financial report, automotive operating expenses surged to RMB 2.9 billion (USD 407.2 million), a 26% increase from the previous quarter, driven by rising R&D and sales promotion costs.
Lu also disclosed that Xiaomi is working on new vehicle models, though optimizing the SU7 remains the primary focus. The development of new car projects is expected to push R&D expenses higher. Public information indicates that Xiaomi has already started road testing a second model with a camouflaged test vehicle, further stoking consumer anticipation.
In Q3 2024, Huawei launched the third iteration of its autonomous driving system, ADS 3.0, while Xpeng Motors rolled out significant upgrades to its intelligent driving systems. In this competitive landscape, features such as roundabout navigation, U-turn scenarios, and vehicle-to-vehicle urban navigation assisted driving are becoming standard. Despite Xiaomi’s promise to roll out its urban navigate-on-autopilot (NOA) system nationwide by August, the company has yet to announce any significant technical developments. The Q2 financial report only briefly touched on support for automated parking in narrow spaces.
As Xiaomi contends with a 20-week lead time for deliveries, new, lower-priced models like Xpeng’s Mona M03 and Onvo’s L60 could pose a competitive threat in the second half of the year. To sustain customer confidence, Xiaomi will need to sharpen its technological edge.
Beyond new vehicles and technology, Xiaomi is also ramping up its production capacity.
In late July, Xiaomi acquired industrial land use rights in Yizhuang, Beijing, for RMB 842 million (USD 118.2 million). This site will house Xiaomi’s phase-two factory, where construction began within 24 hours of the acquisition. According to available information, the fixed asset investment for the site will exceed RMB 2.6 billion (USD 365 million). Xiaomi’s phase-one factory took 14 months to complete.
The new factory will become the primary production hub for Xiaomi’s upcoming vehicles. Construction of the phase-two factory is progressing under a night shift system, which could accelerate the project’s timeline.
During the earnings call, Lu noted that Xiaomi’s monthly deliveries steadily increased from April to June, and this trend is expected to continue in the second half of the year. However, with SU7 orders still growing and the retail network expanding, the phase-one factory’s capacity, capped at 150,000 vehicles, may soon be stretched to its limits.
The critical challenge for Xiaomi in the coming months will be scaling up production, securing orders, and sustaining growth in both revenue and gross margins.
This article was written by Xu Caiyu in Chinese and was originally published by 36Kr.
