Citi Bank Analyst: Xiaomi loses $10,000 for every SU7 it sells?!
LienApr 11, 2024, 05:04 PM
On March 28, Lei Jun, the founder and CEO of Xiaomi, held a Xiaomi automobile launch event in Beijing, announcing the pricing of the Xiaomi SU7 electric vehicle: ranging from 215,900 to 299,900 RMB. Voice of America pointed out that the appearance of Xiaomi SU7 is considered by the industry to resemble the luxury car Porsche, but due to the affordable price, the order volume reached 88,898 units within 24 hours.
Xiaomi SU7 is the first attempt of the smartphone manufacturer in the auto industry. Currently, the Xiaomi SU7 is produced by BAIC outsourced production. Once local regulatory approval is obtained, subsequent models will be manufactured in Xiaomi's factory in Beijing.
It is quite normal for losses to occur in the early stages of a new model. Like all commodities, auto manufacturers need some time to recoup their investment in stamping machines, jigs, and molds.
However, as Reuters pointed out, Xiaomi once stated that they expect their SU7 electric vehicle to operate at a loss. Some analysts even predict significant losses. Citibank analysts said in a report, "We maintain a cautious view that every manufacturer pricing cars between 200,000 and 300,000 RMB will end up losing money". If based on this year's projected sales of 60,000 units, it is estimated that Xiaomi's SU7 car could lose a net of 4.1 billion RMB, averaging a loss of 68,000 RMB (about $10,000) per vehicle. The estimated loss per vehicle is about 30% of the Xiaomi SU7's selling price (215,900 to 299,900 RMB).
There are 240 electric vehicle models in the Chinese market at this price range. The low price of the new Xiaomi car has attracted consumers, causing many Chinese electric vehicle manufacturers to follow suit, including Geely's Zeekr series, Changan Automobile, Avatr, and other brands. For reference, the price of BYD Seal ranges from 179,800 RMB to 249,800 RMB.
Xiaomi stated that 100,000 orders were received within the first week of the SU7 launch. It was reported that 40% of the orders were later canceled, but this statement has not been confirmed.
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