Asia Tech Wire (Aug 22) -- Chinese tech company Xiaomi on Wednesday reported its automotive business achieved a gross profit margin of 15.4% in 2024, surpassing Tesla.
This is the first time that Xiaomi has disclosed detailed financials for its automotive business since the launch of its first electric car, the Xiaomi SU7 Series, in late March this year.
For the second quarter of 2024, Xiaomi recorded an adjusted net profit of 6.2 billion yuan, up 20.1% year-on-year. This included an adjusted net loss of 1.8 billion yuan from smart electric vehicles and other related business, with a gross margin of 15.4%.
In the second quarter of 2024, Tesla recorded a gross margin on electric vehicle sales of 13.9%, the lowest ever.
Xiaomi delivered 27,307 SU7 vehicles in the quarter, generating revenue of 6.4 billion yuan, including 6.2 billion yuan directly from electric vehicles.
According to a rough estimate of the financial data, Xiaomi lost more than 60,000 yuan for every electric car sold in the second quarter.
Industry insiders believe that the automotive business needs to pay for expenses in the early stage, including factory construction, technology research and development, personnel costs, store construction and other fees, so losses are normal.
Xiaomi President Lu Weibing said at an earnings conference that there are two reasons for the loss of Xiaomi's automobile business.
First, he believes that the current scale of Xiaomi's automotive business is relatively small, while the automotive industry typically benefits from economies of scale, and the company is confident that it will be able to increase the scale of the business in the future.
Secondly, Lu pointed out that Xiaomi's first car is a purely electric sedan, and its input cost itself is relatively high, and it still takes some time to digest this part of the cost.
In response, Xiaomi founder and CEO Lei Jun said that the 1.8 billion yuan loss amounted to an equal investment, and "when our [business] reaches a certain scale, I believe it will be easy to break even."
Xiaomi expects the company to meet its full-year delivery target of 100,000 EVs ahead of schedule in November, while it will sprint to a new goal of 120,000 units for the year.
