China’s Xiaomi electric car sells so many cars it’s close to breaking even

Xiaomi SU7 was showcased at the World Action Conference 2024.

Arjun Kapoor | CNBC

BEIJING – Chinese smartphone company MilletSales of new electric cars beat expectations, staying close to breakeven despite falling prices TeslaModel 3 price.

Xiaomi CEO Lei Jun told investors on Tuesday that as of April 20, orders for Xiaomi’s electric SU7 sedan had exceeded 70,000 units, close to the company’s original delivery target for this year.

He said the company’s current goal is to deliver 100,000 new electric vehicles this year.

Xiaomi released the SU7 in late March, priced about $4,000 less than the Tesla Model 3, and has begun deliveries. As the Beijing Auto Show kicks off, the Chinese smartphone company is scheduled to livestream a car update at 9:20 a.m. on Thursday.

Citi analysts were quoted in a report at the Investor Day as saying: “If annual sales reach 300(k)-400k, breakeven can be achieved.” They raised their gross margin forecast for the automotive division to 6% this year, while Previous expectations were for a 10% loss.

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Citi analysts have raised their earnings per share forecast for this year by 25% and currently expect Xiaomi’s car shipments to reach 100,000 vehicles this year, 200,000 vehicles next year, and 280,000 vehicles in 2026.

For context, Tesla According to statistics from the China Passenger Car Association, China’s car sales exceeded 600,000 units last year. ideal carThe company, which technically sells mostly hybrid cars, sold 376,000 vehicles last year while Nioh Data show that car sales last year were slightly more than 160,000 units.

Li Auto gross profit margin Growth of 23.5% in the fourth quarter of last year NIO’s gross profit margin was 7.5%, both increased from the same period last year.

Tesla’s gross profit margin has declined continuously in the past five quarters, reaching 17.4% in the first three months of this year. Gross profit margin Figures do not include operating expenses.

When Xiaomi launched the SU7 last month, Lei Jun said the company would sell each car at a loss.

But on Tuesday, he projected gross profit margins for Xiaomi’s automotive business to be about 5% to 10%, noting that sales were larger than expected while expressing gratitude to suppliers for lowering costs.

“We are currently discussing with our supply chain partners how to increase production capacity and further support costs,” he said, according to a transcript of CNBC’s Chinese Investor Day provided by the company.

Let’s stay in China for now

Xiaomi has invested heavily in its electric vehicle business as Lei Jun’s long-term goal is to become one of the world’s top five automakers.

But he told investors on Tuesday that the company plans to focus entirely on the domestic market over the next three years.

Lei Jun pointed out that Xiaomi already operates in more than 100 countries.

“We have global influence and a base of Xiaomi fans,” Lei Jun said. “When we are ready to enter the global market, this should be a natural progression.”