Xiaomi plans to launch its debut electric car in Europe by 2027 to challenge Tesla and BYD worldwide, following its successful one-year presence in the Chinese electric vehicle market.
Xiaomi’s CEO Lu Weibing unveiled the company’s growth strategy following a 31% rise in quarterly earnings, attributed to the successful release of its second electric car. This move aided in curbing the decline in demand for the brand’s smartphones.
Xiaomi had previously expressed aspirations to expand internationally without defining a specific target market.
Chinese automakers such as BYD are increasingly looking to Europe as a lucrative market, while European governments are reducing their reliance on Chinese electric vehicle and battery firms, in part to lessen the effects of American tariffs.
The high interest in the YU7 sports utility vehicle, introduced by co-founder Lei Jun in late June, is driving Xiaomi’s $10 billion investment in the rapidly expanding electric vehicle market.
The company strives to be among the top five global manufacturers, even though production challenges are hindering its growth. The waiting period for the SUV is currently more than a year.
Xiaomi focuses on producing more automobiles and fewer mobile phones.
The revenue increased to 116 billion yuan (US$16.2 billion) in the June quarter, exceeding analysts’ average prediction.
The company shipped 81,302 vehicles, increasing the total to over 157,000 in the first half and on track to surpass the production of 2024.
Smartphones, their primary and biggest business, experienced a 2.1% decrease and were around 5% lower than the expected average.
Xiaomi aims to boost its market share in China by 1% annually, despite projecting limited growth for smartphones this year, as stated by the CEO during a teleconference with reporters.
The electric vehicle division’s losses reduced to around 300 million yuan recently. In a meeting with investors in June, it was mentioned that the assembler is expected to start making a profit in the latter part of this year.
Xiaomi’s market value has increased by approximately $120 billion over the past year, boosted by its successful venture into the electric vehicle industry, where it is competing effectively against bigger and more established competitors.
The company seems to have bounced back from a serious incident in March involving one of its SU7 sedans with the autopilot engaged. This incident prompted regulators to limit the use of advanced driver assistance systems.
The Chinese government stepped in during June to halt a lengthy price competition that decreased profits throughout the car industry’s supply chain. Xiaomi refrained from participating in discounting due to sustained high demand for its vehicles. Xiaomi’s total net earnings nearly doubled to 11.9 billion yuan, partly due to gains in financial instruments’ fair value.
The actions are currently being exchanged for higher-priced reviews compared to BYD and Samsung Electronics smartphones.
