About the company

Xiaomi Corporation is a Chinese multinational company that focuses on the manufacture and sale of electronic devices such as smartphones, smart TVs, laptops and other consumer electronics. Over the years, Xiaomi has gained a lot of popularity in different parts of the world, including Asia, Europe and Latin America. The company strives to maintain a competitive position in the market by continuously innovating and offering quality products at reasonable prices. It is also investing in the areas of artificial intelligence, Internet of Things (IoT), cloud services and e-commerce.[1]  The company is also expanding its presence through retail and online stores.

Xiaomi has been blacklisted by the Trump administration as a company that could have ties to the Chinese government. US investors were thus forced to withdraw their holdings from the company. It was removed from the list in May 2021 after winning a lawsuit. Nevertheless, to this day, it still does not officially sell its products in the US.[2]

The first electric vehicle

Last December, Xiaomi revealed details of the SU7, the name of the electric car launching this month. In the words of the company's CEO Lei Jun, it is meant to compete with global automakers such as Porsche and Tesla, but at the same time, the company wants this vehicle to be ground-breaking and usher in a new era in the automotive industry. There is a 400V available as well as an 800V variant, with both versions supporting different charging speeds. According to Xiaomi, the HyperEngine engine with the versions of V6, V6s or V8s offers impressive performance and acceleration. Just a 5-minute fast charge of the 800 V version can increase the range by 220 km, and a 15-minute fast charge can even increase the range by up to 510 km. This electric vehicle is also said to incorporate advanced obstacle perception and recognition algorithms for a high level of autonomous driving. The "brain" of the car is powered by a Snapdragon 8295 chip to support AI features and a Smart Cabin with intuitive controls. The system supports more than a thousand Xiaomi devices and is compatible with common apps. This support is expected to expand to up to 5 thousand apps in the near future.[3] Just before the vehicle goes on sale in China at the end of March, its price will also be announced.

Chinese competition

Xiaomi's vehicles will be produced at the Beijing factory owned by state-owned automaker BAIC Group, which has an annual production capacity of 200,000 units.[4]  Many Western electric car manufacturers have been forced to cut prices because of intense competition. The flood of electric cars from China into the European and American markets has put pressure on the prices of electric cars from Western manufacturers, who also have to compete with combustion-engine vehicles, while Chinese ones are already close to conventional cars in terms of affordability. However, Western manufacturers also have to meet investors' profit expectations. In just the first two months of this year, sales of Chinese battery-powered electric cars rose by 18 %. That is according to data from the Chinese Automobile Association. For comparison, during the full year 2023, this increase was 21 %.*[5]

Smartphones as part of the Xiaomi ecosystem

At the Mobile World Congress, held annually in Barcelona at the end of February, Xiaomi globally launched its latest smartphone Xiaomi 14 and its variant Xiaomi 14 Ultra, which are designed to compete with major manufacturers such as Apple and Samsung. These models have already gone on sale in China in November 2023 and in India in early March this year. The Xiaomi 14 includes an advanced camera with lenses from German company Leica, which with its movie mode allows you to create professional videos and photos. The company is also looking to expand its portfolio with various smart bracelets and watches to create a comprehensive ecosystem of connected devices that have a unified HyperOS operating system.[6]

Financial results

In 2022, Xiaomi recorded 280 billion CNY (39 billion USD) in revenue and 8.5 billion CNY (1.18 billion USD) in profit, which was a year-on-year decline in profit of up to 61.4 %. Xiaomi has not yet released its full-year 2023 earnings results. The latest reported figures are for the third quarter, which is the period from July 1 to September 30, 2023, and represent 70.9 billion CNY (9.9 billion USD) in total revenue, with a 0.6% year-on-year increase, with a net profit of 4.87 billion CNY (677.3 million USD). Revenue for the 9 months of 2023 is 197.7 billion CNY (27.55 billion USD) and net profit is 12.7 billion CNY (1.78 billion USD).[7] The third quarter showed a significant year-on-year increase in profitability. Much of this success was due to smartphone sales, which accounted for more than half of total revenue. The company is also significantly ramping up its investments in AI and advertising.[8]  Since the announcement of the new electric car's sale date, the share price has risen slightly on the Hong Kong Stock Exchange.*

Xiaomi's share price development over the past 5 years. (Source: Google Finance)*

Conclusion

With the introduction of its own electric vehicle, Xiaomi is entering a highly competitive electric vehicle market at home and abroad, where the emphasis on vehicle handling alone is no longer important, but also the technological features that enhance the comfort and overall experience of consumers. It will therefore be important to cater to all these needs. At the same time, this product is entering the market at a time of tepid demand and tense geopolitical relations, which may result in restrictions on the export of Chinese technology products to the west, where most of the purchasing power is located. [1]  

Adam Austera, principal analyst at Ozios

* Past performance is no guarantee of future results

[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or on the current economic environment, which may change. Such statements are not guarantees of future performance. They involve risks and other uncertainties that are difficult to predict. Results may differ materially from those expressed or implied by any forward-looking statements.

[1] https://www.mi.com/global/discover/article?id=2626#:~:text=Xiaomi%20owns%20the%20world's%20leading,IoT%20devices%20around%20the%20world

[2] https://www.nbcnews.com/tech/tech-news/us-removes-chinese-smartphone-maker-xiaomi-blacklist-rcna919

[3] https://www.techradar.com/vehicle-tech/hybrid-electric-vehicles/xiaomi-reveals-more-about-its-debut-su7-ev-including-the-hyperos-iot-ecosystem

[4] https://www.reuters.com/business/autos-transportation/chinas-xiaomi-says-it-will-start-deliveries-its-first-ev-model-march-28-2024-03-12/

[5] https://fortune.com/asia/2024/03/10/china-electric-vehicles-competition-spurs-unusual-features-byd/

[6] https://www.financialexpress.com/life/technology-xiaomi-on-why-the-14-ultra-costs-1-lakh-who-should-buy-it-and-whats-next-from-watch-to-foldables-and-more-3419531/

[7] https://www.investing.com/equities/xiaomi-financial-summary?cid=1095988

[8] https://www.reuters.com/technology/chinese-smartphone-maker-xiaomis-fourth-quarter-revenue-profit-slides-2023-03-24/#:~:text=The%20company's%20revenue%20for%202022,billion%20yuan%2C%20down%2061.4%25