Back to News
The Chinese technology conglomerate Xiaomi, renowned for its smartphones and consumer electronics, is quietly emerging as a significant player in the EV sector. Having launched its first EV as recently as December 2023, the company began deliveries in April 2024. Despite this short timeline, Xiaomi has faced challenges keeping pace with demand. To date, it has sold over 112,000 units across China, a record-breaking achievement for a first-year EV entrant. But what explains this rapid success?
An entrance in the planning
Xiaomi announced its intention to enter the EV market in 2021, committing to a USD10 billion investment over the coming decade. This move mirrored trends among other technology firms like Huawei and Sony, both of which have also sought to capitalise on the growing EV market. However, Xiaomi adopted a different strategy. While competitors collaborated with established automakers, sharing software and technology, Xiaomi pursued end-to-end vehicle production.
A new chapter in EVs
Xiaomi unveiled its debut model, the SU7, in December 2023. Available in three models, the car offers a range of features, including 800V and 400V platforms, LFP and NCM batteries, and up to Level 3 autonomy. Starting at approximately RMB215,900 (just under USD30,000), the SU7 has positioned itself competitively in the market.
Demand for the SU7 has been robust. Most recently, Xiaomi reported delivering approximately 23,000 units in November alone. All its vehicles are made in its own Beijing facility, which it completed in 2023. Currently it is expanding this facility to increase production capacity.
A tough market for new entrants
Xiaomi’s rapid growth is an outlier in a sector increasingly dominated by established players. Smaller entrants face significant hurdles. For instance, Aiways recently exited the Chinese market after failing to secure meaningful sales, while Weltmeister declared bankruptcy at the end of 2023, again after failing to garner strong growth in sales.
Xiaomi’s rise differs in comparison. Between April and October 2024, the company sold over 90,000 vehicles. For context, Xpeng, a veteran EV maker in China, sold just over 95,000 vehicles in the same period, despite offering nine different models. Xiaomi achieved similar sales volumes with just a single model, underscoring its ability to quickly gain traction in a competitive landscape.
Read: Stellantis bets big on EVs
An entrance in the planning
Xiaomi announced its intention to enter the EV market in 2021, committing to a USD10 billion investment over the coming decade. This move mirrored trends among other technology firms like Huawei and Sony, both of which have also sought to capitalise on the growing EV market. However, Xiaomi adopted a different strategy. While competitors collaborated with established automakers, sharing software and technology, Xiaomi pursued end-to-end vehicle production.
A new chapter in EVs
Xiaomi unveiled its debut model, the SU7, in December 2023. Available in three models, the car offers a range of features, including 800V and 400V platforms, LFP and NCM batteries, and up to Level 3 autonomy. Starting at approximately RMB215,900 (just under USD30,000), the SU7 has positioned itself competitively in the market.
Demand for the SU7 has been robust. Most recently, Xiaomi reported delivering approximately 23,000 units in November alone. All its vehicles are made in its own Beijing facility, which it completed in 2023. Currently it is expanding this facility to increase production capacity.
Read: The evolution of the US Battery Belt, what does the future hold?
A tough market for new entrants
Xiaomi’s rapid growth is an outlier in a sector increasingly dominated by established players. Smaller entrants face significant hurdles. For instance, Aiways recently exited the Chinese market after failing to secure meaningful sales, while Weltmeister declared bankruptcy at the end of 2023, again after failing to garner strong growth in sales.
Xiaomi’s rise differs in comparison. Between April and October 2024, the company sold over 90,000 vehicles. For context, Xpeng, a veteran EV maker in China, sold just over 95,000 vehicles in the same period, despite offering nine different models. Xiaomi achieved similar sales volumes with just a single model, underscoring its ability to quickly gain traction in a competitive landscape.
Decoding Xiaomi’s success
Xiaomi’s strong brand identity has undoubtedly played a pivotal role. As the world’s third-largest smartphone maker, the company is also known for producing a broad range of consumer electronics, from smartwatches to vacuum cleaners. This reputation for affordable and innovative products likely eased its entry into the EV market.
Yet, brand recognition alone does not tell the full story. The SU7 has drawn praise for its quality and design. Notably, Ford CEO Jim Farley reportedly imported an SU7 to the US for analysis, later remarking, “I’ve been driving it for six months now, and I don’t want to give it up.” Such endorsements underline the car’s competitive balance of functionality and affordability.
Profitability remains elusive
Despite its strong sales performance, the Xiaomi Auto arm is not yet profitable. In its two most recent financial quarters, Xiaomi’s auto subsidiary reported losses of USD0.25 billion and USD0.2 billion, respectively. However, its gross profit margin rose from 15.4% to 17.1% during this period. While this improvement is encouraging, Xiaomi remains in a phase of heavy investment in research, development, and production scaling, common challenges for nascent EV ventures. Profitability will likely require a substantial increase in production volumes to offset fixed costs.
Decoding Xiaomi’s success
Xiaomi’s strong brand identity has undoubtedly played a pivotal role. As the world’s third-largest smartphone maker, the company is also known for producing a broad range of consumer electronics, from smartwatches to vacuum cleaners. This reputation for affordable and innovative products likely eased its entry into the EV market.
Yet, brand recognition alone does not tell the full story. The SU7 has drawn praise for its quality and design. Notably, Ford CEO Jim Farley reportedly imported an SU7 to the US for analysis, later remarking, “I’ve been driving it for six months now, and I don’t want to give it up.” Such endorsements underline the car’s competitive balance of functionality and affordability.
Profitability remains elusive
Despite its strong sales performance, the Xiaomi Auto arm is not yet profitable. In its two most recent financial quarters, Xiaomi’s auto subsidiary reported losses of USD0.25 billion and USD0.2 billion, respectively. However, its gross profit margin rose from 15.4% to 17.1% during this period. While this improvement is encouraging, Xiaomi remains in a phase of heavy investment in research, development, and production scaling, common challenges for nascent EV ventures. Profitability will likely require a substantial increase in production volumes to offset fixed costs.
Looking Ahead
Xiaomi has strong plans for 2025, with the release of an all-electric SUV, the YU7, debuting as early as Q1. As production capacity grows, the company will likely solidify its position in the Chinese EV market further.
For now, Xiaomi’s success illustrates the growing influence of consumer electronics firms in the automotive space, even as the broader EV market grows increasingly competitive.
More Information
For more information about the EV & battery market see our research or get in touch.