Xiaomi’s Electric Car SU7 Faces Financial Strain: Losing Thousands Per Unit Sold

Xiaomi electric vehicle, SU7
The more sales, the more loss.
Looking at local news in China

The global electric vehicle boom was enough to make famous global automobile brands nervous. One of the reasons is the challenge of the third companies toward the electric vehicle market. A representative company is Xiaomi, a Chinese home appliance company. Recently, they took their first step into the electric car market by officially launching the brand’s first electric vehicle, the SU7.

From design to performance, Xiaomi SU7 is comparable to most car brands. The most striking part is the price: 29,900 USD for the SU7. Based on these factors, SU7 is becoming a hot topic every day. However, a shocking truth about the vehicle was recently revealed. What kind of truth is it?

Xiaomi’s Electric Vehicle SU7
Loses About 6,800 yuan ($940) per Unit Sold

On April 15, China’s Citigroup released an unexpected research report. The report stated that Xiaomi would lose 6,800 yuan (approx. $940) for each SU7 sold. When it makes no sense to suffer a loss, the scale is beyond imagination.

Citigroup estimated that Xiaomi will need to deliver about 5,000 to 6,000 SU7 units in April 2024 and that annual delivery volume will reach up to 70,000 units. If there is no improvement in production capacity, Xiaomi is expected to suffer a yearly loss of 4.1 billion yuan (about $570 million)

No worries for the next 5 years
Xiaomi shows confidence

How did Xiaomi react to Citigroup’s report? They refuted this through their Weibo account, saying it was information that may have large deviations. They then pointed out that the analyst report is as of April 2; the reports released during the relevant period are insufficient to predict strong sales of SU7.

“Orders for the SU7 have been steadily increasing over the past few weeks, and we are working hard to improve our delivery capabilities,” they added. Additionally, Xiaomi CEO Lei Jun explained that the company has sufficient cash to cope with fierce competition over the next five years, citing the company’s financial report as the basis. However, there was no direct response to Citigroup’s estimate that it would sell at a loss or the amount of the loss.

The order cancellation rate is higher than expected
The actual amount of damage will be lower

Some have pointed out that these figures are grossly exaggerated. The cumulative number of SU7 contracts exceeded 60,000, but the order cancellation rate also reached 55%. In this regard, industry officials in China have expressed the opinion that the actual loss amount may be significantly lower than the estimated amount.

The officials also cited Xiaomi’s daily production capacity as a variable factor. They explained that although Xiaomi does not have sufficient capabilities to produce vehicles right now, it can increase production, starting with the car owner. In the future, producing up to 400 units daily will be possible. If this happens, the figure will inevitably be lower than the estimated total loss.