On April 23rd, Xiaomi Group held an investor conference where the founder, Lei Jun, shared the latest updates on the Xiaomi SU7 with investors: as of April 20th, the pre-order volume for the Xiaomi SU7 has exceeded 70,000 units, and the company is fully committed to expanding production capacity with a delivery target of 100,000 units for this year.
The issue of losses on the Xiaomi SU7 remains a key focus for external observers. Lei Jun stated that the vast majority of the SU7's suppliers are also suppliers for BBA (Mercedes-Benz, BMW, Audi), and the gross margin will not be very high, with an estimated gross margin for the SU7 to be around 5%-10%. The sales volume of the SU7 is significantly higher than expected, so the exact figures still need to be carefully calculated.
Previously, Lei Jun mentioned in a live broadcast on Douyin that in the pure electric car market, he has never heard of any company making a profit, and it is basically absurd for a car to lose hundreds of thousands. Therefore, in an industry with huge losses, everyone really should not talk about cost-effectiveness.
While incurring losses, the new energy vehicle industry is also engaged in a price war. On the 22nd, there was news that Huawei's Smart Selection S7 "intercepted" orders for the Xiaomi SU7, offering a direct deduction of the non-refundable 5,000 yuan deposit for the Xiaomi SU7 on the car price after paying the final payment for any Smart Selection S7 model. On the 21st, Tesla's China official website showed that the Tesla Model 3/Y/S/X series has reduced prices by 14,000 yuan across the mainland China region.
Regarding the competitive dynamics of the SU7, Lei Jun expressed his admiration for Tesla's sensitive response to the competitive environment at the investor conference, which is not at all like a multinational corporate giant with a market value of five to six hundred billion dollars. However, he believes that the best way to respond to competition is not just through price wars, but more importantly, through product strength.
The Beijing Auto Show is about to open this week, where various automobile manufacturers and core component suppliers will showcase their latest smart driving products and technological achievements, making smart driving technology a focal point. At the investor conference, Lei Jun revealed that Xiaomi's smart driving is led by Dr. Ye Hangjun, who previously served as the chairman of Xiaomi's Technical Committee. Currently, the Xiaomi Smart Driving team has an annual budget of about 1.5 billion yuan, with over 1,000 engineers, and the team will expand to 1,500 people this year and 2,000 people next year, further increasing investment in smart driving.
Lei Jun believes that smart driving is the dividing line between new force car manufacturing and traditional car manufacturing, and that smart driving can only become a truly differentiated competitive point if it is done 100% in-house. Smart driving algorithms and underlying architectures are still evolving, and the industry is currently working on end-to-end large models. In an era of rapid technological evolution, relying on supplier technology is difficult to keep up with the pace of the times.
IDC China Senior Analyst Hong Wanting believes that competition in China's smart driving market will further intensify, and whether companies can establish a competitive advantage in this field will depend on their sustained investment in smart driving technology research and development, effective management and efficient use of smart driving data assets, and continuous improvement in the safety performance and reliability of their products.
Lei Jun stated that the group will invest an additional 11 to 12 billion in new businesses, including automobiles, and will further increase investment in several key areas such as the underlying operating system. Lei Jun said his goal is not low-level profitability, but to become one of the top five car manufacturers globally within 15 to 20 years, becoming a new generation of global hardcore technology leaders. Currently, he is most focused on three businesses: automobiles, surging OS, and AI.
Summarizing the achievements of the Xiaomi SU7, Lei Jun stated that in the automotive field, Xiaomi has already taken its place at the table, but it is too early to talk about success. It still needs to go through the three hurdles of quality, delivery, and service to truly succeed.As for the consideration of Xiaomi's car business in overseas markets, Lei Jun stated that in terms of business deployment, Xiaomi's car business will be 100% focused on the domestic market for the next three years, and doing well in the Chinese market is the first step. At the same time, since half of Xiaomi's business revenue comes from the global market, with business operations in over 100 countries and offices or subsidiaries in more than 30 countries, it will be a natural progression to enter the global market once the team is ready.