Electric vehicles are providing Xiaomi with a significant advantage
Xiaomi Corp. Experiences Significant Revenue Growth, Attempts to Compete with Tesla in Electric Vehicle Market
Xiaomi Corp., a Chinese multinational technology company known for its smartphone production, has reported an impressive 47% revenue surge in the first quarter, reaching approximately 111 billion yuan (13.3 billion euros). This growth is partly attributed to the strong performance of the conglomerate's new electric vehicle (EV) segment. The adjusted net profit increased by 65% to 10.7 billion yuan, surpassing the analyst's expectations of around 9 billion yuan.
In the core business of smartphones and electronics, sales showed a robust recovery in the Chinese market, with revenue growing by nearly 23% to 95 billion yuan. Government-led consumption stimulus measures, including subsidies for smartphones and household appliances, have boosted domestic sales. Globally, Xiaomi holds a 14% market share, ranking third behind Samsung and Apple. The company introduced its first EV, the sporty SUV7, last year and has swiftly gained ground among leading Chinese EV startups like Xpeng, Nio, and Li Auto.
As of the first quarter, around 76,000 SU7 vehicles were delivered, with a total of 258,000 sold since its launch in spring 2024. Although no specific break-even targets for this new segment have been announced, the adjusted losses are estimated at 500 million yuan for the first quarter.
In July, Xiaomi plans to launch its second EV model, the electric SUV YU7, which is set to compete directly with the Tesla Model Y produced in China. In a surprising statement during the earnings presentation, Xiaomi President Lu Weibing revealed that they are confident in pricing the new YU7 model around 60,000 to 70,000 yuan higher than the Tesla Model Y, attributing the higher value to its technological features.
The planned market launch of the new SUV was delayed by several months following a high-profile accident involving a Xiaomi vehicle in autopilot mode. This incident, which made headlines for weeks in April, also led to a drop in SU7 sales. In response, the Chinese government has introduced new regulatory guidelines that prohibit manufacturers from explicitly advertising autopilot functions. Despite the temporary setback, Xiaomi's stock has almost fully recovered since the incident.
In terms of competition, Xiaomi's YU7 aims to challenge Tesla's dominance in China's EV market, especially in the mid-to-high-end segment. By offering advanced technology at a competitive price point, the YU7 could potentially disrupt Tesla's market dominance and contribute to Xiaomi's growth in the EV sector.
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According to available data, the Xiaomi YU7 is strategically priced to undercut Tesla's Model Y in China's mid-to-high-end EV segment. The starting price is estimated to be around ¥245,900 (approximately $34,100 USD). The Model Y, on the other hand, starts at ¥263,500 (approximately $36,600 USD) for its Rear-Wheel Drive (RWD) variant. The YU7 offers a longer driving range (up to 835 km compared to 593 km for the Tesla RWD Model Y) and faster charging capabilities due to its 800V architecture. Additionally, the YU7 is equipped with advanced autonomous driving technology, courtesy of Nvidia's Thor chip, outpacing Tesla's current hardware. However, it should be noted that Tesla benefits from a well-established brand reputation and a wide charging network.
Xiaomi Corp., in addition to its growth in finance and technology sectors, is expanding its business into the electric-vehicles market, notably with the launch of the YU7 electric SUV. The YU7, priced at approximately $34,100 USD, aims to compete with Tesla's Model Y in China's mid-to-high-end electric-vehicle market. The YU7 offers advanced technological features, such as Nvidia's Thor chip for autonomous driving, and faster charging capabilities compared to the Model Y.However, Tesla's strong brand reputation and established charging network may pose a challenge for Xiaomi's new electric-vehicle lifestyle offering.
