Xiaomi posts fastest revenue growth since 2021 after launch of its first EV in March

Xiaomi reported its fastest pace of revenue growth since 2021, buoyed by the initial success of its first electric vehicles and a global smartphone market bounce-back.

Sales rose a better-than-projected 32 per cent to 88.9 billion yuan (S$16.3 billion) in the June quarter, boosted by roughly 6.2 billion yuan of revenue from its EV division. Net income also beat expectations at 5.1 billion yuan, after a one-time investment gain of almost 550 million yuan. But it booked an adjusted loss of about 1.8 billion yuan from the car arm.

The better-than-anticipated results may fuel investors’ hope that Xiaomi has lit upon a new source of growth.

Founder Lei Jun has pledged to invest US$10 billion on carmaking, making a bold bet to replicate the success it enjoyed in smartphones. His company launched its first EV in March, albeit into a space already crowded with far bigger players from Tesla to BYD. The billionaire has said the firm aims to become one of the top five carmakers in 15 to 20 years. 

Xiaomi’s shares have risen about 16 per cent since the company started selling EVs in late March. The Beijing-based company raised delivery targets for its SU7 model soon after the vehicle’s debut: In May, Xiaomi raised its target for vehicle deliveries to 120,000 in 2024, versus a previously announced target of about 100,000.

And on Aug 21, president Lu Weibing said he expects shipments to continue accelerating in the coming months, and losses to gradually diminish.

“Scale is important. As we grow in scale, costs will be better distributed,” Mr Lu told reporters after the results. “We are in a good position in terms of orders as of August. That means we’ll gain scale and costs will continue to come down.”

While Xiaomi is selling only the SU7 in China, it showcased the sedan during the Olympic Games in Paris and set up a pit garage at Germany’s famed Nürburgring race track. Mr Lei said in Paris the company will make the vehicle available globally, without providing a time frame. That fuelled speculation that Xiaomi is keen to enter the European market despite the European Union’s move to slap tariffs on imports of made-in-China EVs. 

The company is now developing more models in its EV line-up to better compete with industry leaders, with plans to sell a sport utility vehicle similar to Tesla’s Model Y as early as 2025, Bloomberg News has reported. It is also expanding its capacity, buying a site in Beijing recently.

Over the past quarter, Xiaomi saw some recovery in its core smartphone business. The world’s third-largest smartphone supplier shipped 28 per cent more handsets compared to the year-ago period, the company said in its statement. But in the June quarter, component costs rose, squeezing margins. BLOOMBERG