Chinese smartphone maker Xiaomi will start making money from its electric-vehicle (EV) venture by the end of this year, according to its founder and CEO Lei Jun, less than two years after rolling its first units off the assembly line, as demand surpassed expectations.
Losses have narrowed, and the unit could become profitable by the third or fourth quarter, local media The Paper reported on Tuesday, quoting Lei during a presentation in Beijing. Xiaomi was confident about its sales following the introduction of its second EV model last month, it reported.
A Xiaomi spokesperson confirmed the CEO’s comments and declined to elaborate.
Sales of EVs amounted to 18.1 billion yuan (US$2.5 billion) in the first quarter versus 18.4 million in the same quarter in 2024, Xiaomi said in a stock exchange filing on May 27. Its gross profit of 4.3 billion yuan was less than its operating expenses of 4.8 billion yuan, resulting in a loss of about 500 million yuan, it added.
Xiaomi first announced its EV plan in 2021 and rolled out its first unit, the SU7 sedan, in March 2024 to a strong reception. Its deliveries jumped 8.8 per cent to 75,869 units in the first quarter from the preceding three months, bringing the total sales to 258,000 units since inception.
The company unveiled its YU7 SUV in Beijing last month, and showcased it to the public at the Guangdong-Hong Kong-Macau Greater Bay Area Auto Show in Shenzhen on Saturday. The SUV would be positioned as a luxury high-performance SUV, Lei said.
Xiaomi benchmarks itself against Tesla and Porsche, he said in a post on his official WeChat account on Tuesday.
“Both of them are world leaders in their fields,” he said. “At first, the gap may seem significant when we compare ourselves to them, but as long as we dare to compete, we are on the path to winning.”
Xiaomi had invested a total of 3.5 billion yuan in the development of intelligent driving technology for the YU7, giving it a leading edge in the industry, The Paper reported. The company, which started investing in robotic systems five years ago, was testing them in its EV factory, it added.
Xiaomi’s upbeat prediction is in contrast to recent troubles facing the EV industry in China, the world’s biggest auto market, amid a fierce price war.
Chinese authorities have warned industry players of the unwanted effects of competition, days after market leader BYD escalated the rivalry by reducing prices on 22 of its EV models to garner sales. One executive remarked that the industry could face a liquidity crunch like the one that drove China Evergrande into insolvency.
