Is Lei Jun really able to afford losses? Xiaomi’s electric vehicle venture becomes the most anticipated focus outside of the financial report.

By admin Mar 20, 2024

After the release of Xiaomi’s financial report, Xiaomi’s electric vehicle venture is about to be unveiled, with Xiaomi management once again emphasizing that the pricing is “a bit high”.

Xiaomi announced its fourth-quarter and full-year financial results for 2023 this week, revealing that the company’s total revenue declined by 3.2% year-on-year to 271 billion Chinese Yuan last year, while adjusted net profit surged by 126.3% year-on-year to 19.3 billion Yuan, marking the second-highest profit level since Xiaomi went public.

One of the highlights of Xiaomi’s financial report was the significant growth in net profit last year. Xiaomi explained that this was driven by the execution of a strategy that focuses on both scale and profitability.

In addition to the financial report, attention has been drawn to the latest developments regarding Xiaomi’s electric vehicle. Xiaomi Chairman Lei Jun has been teasing the launch of Xiaomi’s car for a while. Earlier on the same day, Lei Jun announced that Xiaomi’s super factory for cars has officially opened. The board meeting was also held inside the car factory, where directors toured the facility and test drove the Xiaomi SU7.

Regarding the focus on the car manufacturing business, the financial report disclosed that the expenses for innovative businesses like Xiaomi Smart Cars rose to 6.7 billion Yuan last year, with 2.4 billion Yuan in the fourth quarter (excluding stock compensation expenses of 200 million Yuan related to innovative businesses like smart electric vehicles).

During the post-earnings conference call, Xiaomi Group President Lu Weibing responded to pricing concerns about Xiaomi cars, stating, “The pricing of Xiaomi cars may be a bit high, but we believe everyone will recognize that it will definitely be worth it.”

He also revealed that internally, Xiaomi aims to be among the top three in the industry in the luxury electric sedan segment.

After facing stagnation in global smartphone development, Lei Jun announced his entry into the car manufacturing arena in 2021. He declared that he had staked his entire reputation on this endeavor, making it his final major entrepreneurial project – Xiaomi cars.

Acknowledging the complexity of car manufacturing, Lei Jun even boldly stated, “We have money, a research and development team, a global intelligent ecosystem, we can afford losses.”

However, even the wealthier Apple abandoned its car-making project in mid-February this year, a nearly decade-long electric vehicle project coming to an abrupt halt. In response, Lei Jun expressed his shock in a post.

He continued to assert that following Apple’s exit from car manufacturing, if Apple users choose to purchase a smart electric car, the Xiaomi SU7 would undoubtedly be the best choice.

In the fiercely competitive automotive industry, what gives Lei Jun some peace of mind is Xiaomi Group’s strong cash reserves. According to the financial report, as of December 31, 2023, its cash reserves amounted to 136.3 billion Yuan, reaching a historic high.

By admin

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