(Yicai) Aug. 22 -- Xiaomi’s Chief Financial Officer Alain Lam has expressed satisfaction with the 15.4 percent gross profit margin that the company’s electric vehicle business achieved in the second quarter of this year.

“I think it is quite good,” Lam said on the Chinese electronics giant’s earnings conference call yesterday. “It exceeded our expectation.” Analysts on the call from Citigroup, Morgan Stanley, and China International Capital Corporation each described it as “outstanding.”

When regulatory credits are factored out, the margin was 15.6 percent. By comparison, US EV maker Tesla reported a 14.6 percent automotive gross profit margin for the same quarter, its narrowest since 2019.

Lam attributed the wide margin to support from suppliers, economies of scale from using one sedan model, and Xiaomi drawing on the capabilities that it developed in other industries. “Future gross margin will definitely be better than the current level,” he added, without making any specific forecast.

Shares of Xiaomi [HKG: 1810] surged 9.2 percent to close at HKD19.10 (USD2.45) each in Hong Kong today. The stock has gained a little over 22 percent since the end of last year.

Following the mass production and delivery of its first car model, the SU7, Beijing-based Xiaomi restructured its business, and now has two segments: smartphone × artificial intelligence of things and smart EV and other new initiatives.

For the three months ended June 30, the smart EV and other new initiatives segment had an adjusted net loss of CNY1.8 billion (USD252 million), the company’s first unaudited earnings report since starting auto deliveries showed yesterday. Revenue stood at CNY6.4 billion (USD900 million), with that from smart EVs accounting for 97 percent.

Xiaomi Automobile, its EV unit, delivered 27,307 vehicles last quarter and expects to hit its delivery goal of 100,000 units in November, ahead of schedule, with its factory continuously ramping up production, its parent company noted, adding that deliveries will likely top 120,000 units this year.

Xiaomi needs to focus on scale to improve cost, according to President William Lu. “In the future, for cost reduction, I think it is foreseeable and then we will develop new car models,” he said.

Xiaomi’s total net profit surged 38 percent to CNY5.1 billion in the second quarter, while revenue jumped 32 percent to a record high of CNY88.9 billion (USD12.5 billion). Income from the smartphone × AIoT segment rose 23 percent to CNY82.5 billion.

For the first half of the year, net profit climbed 17.3 percent to CNY9.2 billion on revenue of CNY164.4 billion (USD23 billion), a 30 percent increase.

Editor: Martin Kadiev