Huge Loss Announced in Xiaomi Electric Vehicle Sales
Although Xiaomi increases its electric vehicle sales, its loss per vehicle increases to $ 5,600, raising a financial alarm.
Technology giant Xiaomi has achieved great popularity by transferring its success in the smartphone market to the electric vehicle (EV) segment. However, the company’s latest financial reports reveal the other side of the coin. Xiaomi loses significant money on every electric vehicle it sells, and this loss deepens as production volume increases.
Damage per Vehicle Increases Exponentially
The published first quarter reports revealed the financial cost of Xiaomi’s aggressive pricing policy in the HOUSING market. During this period, the company achieved great operational success by selling 80,856 electric vehicles across China. Thanks to these sales, the HOUSING department managed to earn a huge income of 2.9 billion dollars (19.9 billion yuan).
However, on the dark side of the coin, an operational loss of $457 million (3.1 billion yuan) was announced for the same quarter. This means that Xiaomi wastes approximately $5,600 for each electric vehicle it leaves the factory. Considering that the loss per vehicle was only $900 in the same period last year, it is clearly understood how rapidly the financial loss is growing.
Low Price Politics Undermine Profitability
Experts state that the main reason behind this huge loss is the low average sales price. The average price of Xiaomi models is around $34,600 (235,000 yuan). Unable to raise prices due to heavy electric vehicle competition in China, the company is having difficulty covering high production and R&D costs.
Xiaomi’s Recipe for Salvation: High Profit Margin Models
Xiaomi is changing its strategy to stop this financial bleeding. The company will focus on more luxurious and performance-oriented models in order to increase the average sales price and profit margin.
- YU7 GT: Priced from around $57,300, this powerful 990-horsepower SUV model is expected to increase profitability.
- SU7 Ultra: This hypercar, which is the flagship of the brand with a price tag of over $ 78,000, directly targets the high income group.
Like many manufacturers in the Chinese HOUSING market, Xiaomi currently prioritizes the race for market share rather than profitability. However, it remains a big question mark for investors when this unsustainable loss will end.
