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As Xiaomi Group disclosed its quarterly performance report for its automotive business for the first time, related topics such as "Xiaomi loses more than 60,000 yuan on each car sold" quickly became a hot search topic.

"Making cars is hard, but success must be cool! Xiaomi Auto is still in the investment stage, I hope everyone understands." On the evening of August 21, Lei Jun, chairman of Xiaomi Group, responded.

Image source: Sina Weibo (@雷军)

On the evening of August 21, Xiaomi Group released its second quarter 2024 financial report, showing that Xiaomi Group's total revenue in the second quarter was about 88.888 billion yuan, a year-on-year increase of 32%; adjusted net profit was 6.2 billion yuan, a year-on-year increase of 20.1%, including an adjusted net loss of 1.8 billion yuan for innovative businesses such as smart electric vehicles. Based on this calculation, the loss of Xiaomi SU7 per vehicle exceeded 60,000 yuan.

It is worth noting that not only Xiaomi Motors, but many new energy companies are still facing losses. Li Bin, chairman of NIO, has publicly stated many times that "making cars is a very expensive thing. If you don't have 20 billion yuan in funds, it's best not to come in."

Regarding the losses of innovative businesses such as smart electric vehicles, Xiaomi Group President Lu Weibing analyzed at the Xiaomi Auto 2024 mid-term performance conference call that there are two main reasons: First, Xiaomi Auto is still relatively small and is still in the stage of continuous investment; second, Xiaomi Auto invested a lot in its first car, and it will take some time to digest these investments. "As Xiaomi Auto continues to increase its scale in the future, its production capacity continues to be tapped, and its delivery capacity increases, I believe the losses will be further narrowed," Lu Weibing said.

"Our current orders are very stable and new orders are also very good, so we are more confident about full-year delivery, cost control, and continuous improvement in gross profit margin," said Lu Weibing.

Gross margin in the first full delivery quarter reached 15.4%

The financial report shows that in the second quarter of 2024, the total revenue of Xiaomi Group's innovative businesses such as smart electric vehicles was 6.4 billion yuan, of which smart electric vehicles had revenue of 6.2 billion yuan and other related businesses had revenue of 200 million yuan.

"This fully demonstrates Xiaomi Auto's product competitiveness, cost control and delivery capabilities, allowing us to continue to invest intensively in the future and enhance the competitiveness of subsequent products." Lu Weibing said that the company is full of confidence in the locking in of Xiaomi Auto's future new orders, delivery and increase in gross profit margin.

Image source: Xiaomi Group announcement

It is worth mentioning that Xiaomi Auto has achieved a positive gross profit margin in its first full quarter of delivery. The financial report shows that in the second quarter of 2024, the gross profit margin of innovative businesses such as smart electric vehicles was 15.4%.

"The strong gross margin is due to our higher-than-expected delivery volumes, the support from our supply chain, and the contribution of our peripheral distribution products," explained Lu Weibing.

Official data shows that in the second quarter of 2024, Xiaomi SU7 has delivered a total of about 27,300 units. "The Xiaomi Auto Factory has started double-shift production in June 2024, and has carried out production line optimization and maintenance in July 2024. The delivery volume of Xiaomi SU7 will continue to increase every month in the future." Lu Weibing said that the annual delivery target of 100,000 units of Xiaomi SU7 will be completed ahead of schedule in November, and the annual delivery target of 120,000 units will be sprinted in 2024. At present, the company is still exploring the potential of the Xiaomi Auto Factory.

According to the plan, Xiaomi Motors has planned to build a vehicle manufacturing plant in two phases in Beijing Economic and Technological Development Zone. The first phase covers an area of ​​about 720,000 square meters, with an annual production capacity of 150,000 vehicles, and will be completed in June 2023; the second phase is scheduled to start construction in 2024 and be completed in 2025. "The factory (Xiaomi Motors Phase I Factory) has built six core workshops - stamping workshop, body workshop, painting workshop, assembly workshop, die-casting workshop, and battery workshop. Under full production conditions, one Xiaomi SU7 rolls off the production line every 76 seconds at the Xiaomi Motors factory." Lei Jun, chairman of Xiaomi Group, once said.

Plans to open 220 sales outlets by the end of the year

It is reported that when Xiaomi Group decided to build cars, it set aside US$10 billion as a cash reserve for building cars in the next ten years, with an initial investment of 10 billion yuan.

In the second quarter of this year, the research and development expenses of Xiaomi Group's innovative business divisions such as smart electric vehicles showed a significant increase, from 4.6 billion yuan in the second quarter of 2023 to 5.5 billion yuan, a year-on-year increase of 20.7%. "Adequate cash is an important foundation for the sustainable development of our core business and new business." Xiaomi Group said.

According to Lu Weibing, as of June 30, 2024, Xiaomi Group's cash reserves will be 141 billion yuan, a year-on-year increase of 24.5%. At the same time, the company is also actively buying back shares in the open market. "Since the beginning of this year, Xiaomi Group's stock repurchase amount has reached approximately HK$3.68 billion." Lu Weibing said that the company plans to continue buying back Xiaomi Group shares in the open market.

Image source: Photo by Li Xing, reporter of China Business Network

At the same time, Xiaomi Group is also continuing to expand the new retail network of Xiaomi Auto. Official data shows that by the end of June, Xiaomi Auto stores have been stationed in 30 cities across the country, with a total of 87 stores opened. "So far, Xiaomi Auto has more than 100 sales stores, and plans to open 220 stores by the end of this year, covering 59 cities across the country." Lu Weibing revealed.

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