Even if the boss of Xiaomi himself announced that the brand would not make money on its first electric car during the presentation conference, the brand is benefiting from positive spin-offs.
Xiaomi’s first electric car has been a real phenomenon in China since its official release on March 28. The Chinese are lining up in front of Xiaomi stores to be able to approach and test it. For the brand’s first model, Xiaomi drove the counters wild: 88,898 reservations, with deposit, in 24 hours. Which suggests a strong commercial start in the field of electric cars, even if all these reservations will not result in a firm order.
To ensure this record launch, Xiaomi on the other hand took a financial risk. The Xiaomi SU7 has particularly low prices from €27,650 to €38,400, which remains very competitive, even for the Chinese market. The brand makes no secret of losing money on each vehicle, but how much are we talking about?
Less than $10,000 loss per car, only?
It is too early to have real figures on the loss caused by Xiaomi on this first model. According to Reuters, analysts have made projections based on a production of 60,000 models this year, which would bring the company’s loss to 530,000 million euros, or around €8,900 per car manufactured.
This seems almost low for such a model and such investments. Especially since the rumors spoke of initially higher prices for the Xiaomi SU7. The calculation seems quite optimistic. When we compare the losses incurred by an American brand like Lucid, which drops several hundred thousand euros on each vehicle produced, the truth for Xiaomi is certainly a little higher than the first estimates. Even though China is not the United States, and Xiaomi is not Lucid.
A hell of a rebound on the stock market
Xiaomi’s electric car has in any case had a more than positive effect on the stock. The course gained 7 billion euros in a few days. This is a new record for the brand over the last two years, even if Xiaomi experienced much better in 2021. If this valuation is maintained and is not just an ephemeral bubble like Vinfast, it is a great asset for Xiaomi.
However, it is difficult to compare the results of a tech company like Xiaomi with automotive groups. The valuation of the Chinese giant has already surpassed many players in the automotive sector.
A big boost in notoriety
While Apple has thrown in the towel on its electric and autonomous car project, the release of Xiaomi’s SU7 is finding international resonance. Especially since the car seems particularly accomplished for a first foray into this field.
It will remain to be seen whether the first owners will really share this opinion, or whether the brand will quickly find itself confronted with customer complaints. Which could quickly reduce enthusiasm for this model.
In any case, Xiaomi will start delivering to the first buyers in the coming days. The March 28 presentation was not just an announcement for a vehicle marketed several years later, like Tesla or Renault. The car is already produced and present in showrooms.
On the other hand, given the success of reservations for the model, the delay for the first buyers will extend to 4 to 7 months. Xiaomi may have already reached its production capacities for the year according to some sources. This is always shorter than for certain traditional manufacturers on current models in their catalog.
We will have to see if Xiaomi can keep its promises, because the brand is now closely scrutinized by the entire automotive industry, in addition to its direct competitors who must digest the insolent success of this new player.
Xiaomi is hitting hard for its entry into the world of electric cars. A new player who will inevitably be followed in our weekly newsletter dedicated to electric mobility.
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