Claiming to lose money but turning a profit afterward? There's a hidden secret behind Xiaomi's car profitability that they dare not openly admit.

Since the launch of the Xiaomi SU7, the automotive industry has been in a constant uproar. On one side are the widespread press releases praising its product strength, while on the other side, industry insiders repeatedly chant, “How can new forces in car manufacturing not lose money? Every car sold is a loss,” leaving consumers confused, genuinely thinking Xiaomi is engaging in “charitable car manufacturing” while suffering huge losses. However, the narrative suddenly changed, and news of Xiaomi’s profitability emerged, instantly slapping the faces of many skeptics. Yet, the intricacies behind this profitability are indeed thought-provoking.

When Xiaomi first announced its entry into the automotive market, many people were ready to watch the spectacle, asserting that it would inevitably be mired in a money-burning quagmire. After all, predecessors like NIO and Xpeng have each endured years of losses before barely touching the threshold of profitability. Xiaomi’s entry time is short, with astronomical investments in R&D, factories, and supply chains. By conventional logic, it should take at least three to five years to break free from losses. Because of this, the narrative of “losing money on every car sold” became rampant, providing a tragic tone for the car companies and making consumers feel that buying one was a gain.

But now that the news of profitability has been released, the stark contrast is bound to raise doubts about whether this is a carefully orchestrated public relations stunt. Some perceptive individuals have pointed out that this so-called profitability is merely a trick of financial metrics. Only the material and manufacturing costs of the complete vehicle are counted, which appears profitable, but the initial investments in factory construction, equipment depreciation, and exorbitant R&D costs have all been selectively ignored. In simple terms, it’s about hiding the major costs while showcasing minor profits to create the illusion of overtaking competitors.

Of course, some insist that Xiaomi’s automotive division genuinely recovers its costs through strength. The market enthusiasm for the Xiaomi SU7 is indeed unmatched, with sales skyrocketing. As economies of scale come into play, the per-unit costs decrease significantly, and coupled with Xiaomi’s robust supply chain bargaining power, achieving positive gross profit is not mere talk. However, even so, it does not hide its deliberate blurring of financial concepts and manipulation of public opinion, gaining goodwill through the narrative of “losing money on car manufacturing” while simultaneously flaunting its stage profits to show strength, reaping all the benefits.

What’s most interesting is the polarized debate among netizens; one faction believes the official narrative and fervently praises Xiaomi’s commercial miracle, while the other sees through the financial games, stating it’s merely a wordplay. Ultimately, consumers do not care about the profits and losses on the car companies’ books; they are more concerned about the quality of the car and the reliability of after-sales service. Xiaomi’s intentional creation of this public opinion contrast seems to belittle its vision.

The strategies of new forces in car manufacturing are becoming increasingly incomprehensible. They publicly lament losses to garner sympathy, yet turn around and flaunt profits to showcase strength, leaving consumers bewildered. Truly good cars are not packaged through financial jargon but are built on long-term quality and reputation. This recent profitability stunt by Xiaomi may temporarily astonish the market, but once the hype fades, the true product strength and long-term finances will be the only standards to test whether it is an industry dark horse or a marketing expert.