Xiaomi’s SU7: A Revolutionary EV or a Financial Disaster?

Xiaomi’s continuous controversy unveiled by CEO Lei Jun
Surprising facts shock China

Chinese electronics company Xiaomi has been embroiled in endless controversy since the launch of its electric sedan, the SU7. The vehicle has been under scrutiny for its performance and safety after videos of accidents immediately after its release circulated online, including instances of the suspension breaking down, the vehicle losing control, and the car crashing into walls.

Despite these controversies, Xiaomi appears to be cruising with the SU7. The number of confirmed orders surpassed 70,000 within less than a month of its release on April 20, making it a sensation in China. The standard version, priced at a breakthrough 215,900 yuan (about $33,000), has fueled this phenomenon.

Rumors of Underpricing Stir Controversy

Opinions that the 40 million won (about $29,010) price tag is unreasonable considering the vehicle’s performance and design have been rampant. There were rumors that Xiaomi was selling at a loss due to the low price. According to a report by Citi Group in China, Xiaomi is estimated to be losing 6,800 yuan (about $1,050) for each SU7 sold.

So far, the loss already amounts to 91 billion won (about $820 million) just from the confirmed orders. Citi Group projected a potential annual loss of 41 billion yuan (about $6.3 billion)
considering future shipments. As the rumors spread, Lei Jun, the CEO of Xiaomi, finally spoke up.

Xiaomi is Making a Profit
Profit Margin of 5~10% Revealed

At an investor event held in China on the 23rd (local time), CEO Lei Jun announced that Xiaomi’s total profit margin from the SU7 is 5~10%. He added that they need to confirm the exact profit due to higher sales than expected. Xiaomi had initially targeted an annual sales volume of 100,000 units, which has already achieved 70% of that in just one month.

Of course, since you can confirm your order with just a 5,000 yuan (about $770) deposit, the actual delivery volume will need to be reviewed later. However, the situation seems favorable for Xiaomi at the moment. CEO Lei Jun added that profits were possible thanks to good supplier contracts.

Xiaomi Expands Production
Accelerating Entry into the Electric Vehicle Market

According to Chinese media, Xiaomi has increased the daily production of the SU7 to 400 units as it expands its production facilities. The monthly production volume is expected to reach 12,000 units. From April 8 to 14th, 2,394 SU7s were delivered, revealing that insurance was completed for 415 units.

According to the Xiaomi app, the current delivery of the SU7 takes about 6 to 7 months for the shortest and up to 9 months for the longest. If Xiaomi makes a profit, the company will continue aggressively investing in the electric vehicle market. All eyes are on Xiaomi, which is emerging as a new powerhouse in electric vehicles, chasing after BYD and Tesla.