Xiaomi CFO Lin Shiwei: The company is currently willing to sacrifice profits in exchange for electric vehicle scale

Xiaomi Group Chief Financial Officer (CFO) Lin Shiwei said in an interview that Xiaomi is currently willing to sacrifice profits to develop its emerging electric vehicle business because Xiaomi aims to become the world's largest car company in the next decade or two. manufacturers, alongside the likes of Tesla and BYD.

Xiaomi prioritizes the growth of its electric vehicle business and it will take time to curb losses

Xiaomi President Lin Shiwei said that Xiaomi puts the growth of its electric vehicle business before profits. The company's electric vehicle business is only five months old, so it will take time to curb losses. He said: "Currently, we are more focused on growth than profitability."

Xiaomi draws on the concept of "cost-effectiveness" to deploy electric vehicles

Lin Shiwei added that Xiaomi has become the forefront of the global mobile phone industry with the concept of "cost-effectiveness". The concept also applies to the electric vehicle business. He said: "We do believe that scale will make us profitable in the future. At the moment, I only have one SKU, which is far from what we call profitability. We also need to continue to invest in this business."

Xiaomi's stock price rises, financial report boosts investor confidence

On Thursday, Xiaomi's stock price rose as much as 8.5%, bringing the cumulative stock price increase since the launch of electric vehicles in March to about 25%. Yesterday, Xiaomi released its second quarter financial report for 2024, with total revenue reaching 88.9 billion yuan, a year-on-year increase of 32.0%, which is also the largest increase since 2021.

Lei Jun bets on Xiaomi Motors, aiming to become one of the world's top five automakers

Xiaomi founder Lei Jun has pledged to invest $10 billion in auto manufacturing and made a bold bet to replicate Xiaomi's success in smartphones . In a crowded car market, Xiaomi has launched its first electric car. Lei Jun said the company aims to become one of the world's top five automakers within 15 to 20 years.

Xiaomi electric cars are losing money, Lei Jun said that building cars is very difficult

But it requires a lot of capital. In the second quarter alone, Xiaomi's adjusted net loss related to smart electric vehicles and other new initiatives reached 1.8 billion yuan (about $252 million). In the second quarter, Xiaomi delivered 27,307 cars, which means Xiaomi lost about 60,000 yuan on every car sold.

Lei Jun once said on his Weibo that building a car is hard, but success must be cool. Xiaomi Auto is still in the investment period. I hope everyone understands.

Lin Shiwei did not want to reveal Xiaomi’s plans beyond 2024. This year, Xiaomi aims to deliver 120,000 electric vehicles. In May this year, Xiaomi raised its delivery target from about 100,000 units to 120,000 units. The company also said it expects to complete its target of cumulative delivery of 100,000 new vehicles in November this year ahead of schedule.
On Wednesday, Xiaomi President Lu Weibing told analysts that he expected shipments of Xiaomi cars to continue to accelerate in the coming months and losses to gradually decrease.
Xiaomi is reportedly currently developing more electric vehicle models to better compete with industry leaders and plans to sell an SUV model similar to the Tesla Model Y as early as 2025. At the same time, Xiaomi is also expanding its production capacity and recently purchased a site in Beijing.
Its surprisingly strong EV gross margin in the last quarter may have more room to run as deliveries continue to rise, analysts Steven Tseng and Sean Chen said. In the third quarter, Xiaomi's electric vehicle sales are likely to grow 40% quarter-on-quarter to about 9 billion yuan.
While Xiaomi only sells its SU7 electric car in China, it showcased the sedan during the Paris Olympics and set up a pit stop at Germany's famed Nürburgring track. Lei Jun said in Paris that Xiaomi would launch the car globally, but did not provide a timetable.
Also, in a live broadcast on August 17, Xiaomi President Lu Weibing said that Xiaomi is studying how to bring its cars to Europe.
Lin Shiwei said: "We do consider global expansion, although now we are trying to meet all the needs of Chinese customers."

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