The range extender market is shrinking, and Xiaomi has secured 70,000 orders.

Despite an overall decline in the extended-range vehicle market, Xiaomi's new car secured over 70,000 orders in its first month. This battle for the family SUV market has gained a new competitor with substantial order volume.

On October 9, Xiaomi Group's stock price closed up 9.72% at HK$25.96. Previously, Xiaomi Auto disclosed that during its first sales month from September 7 to October 7, the Pengcheng N70 and N90 series accumulated over 70,000 orders.

These orders have already begun to be delivered. Deliveries of the extended-range series began on September 12th, with over 10,000 units delivered in September alone, compared to over 40,000 Xiaomi Automotive units delivered during the same period. Following the SU7 and YU7 pure electric series, extended-range products are becoming another source of increased deliveries for Xiaomi.

Hu Qimu, deputy secretary-general of the China Digital Economy 50 Forum and chief researcher of the Digital Economy Think Tank, said that as production capacity ramps up further in the fourth quarter, Xiaomi's Pengcheng series is expected to continue to release growth momentum, pushing Xiaomi's car delivery scale to a new level, while accelerating the pace of new energy vehicle substitution in the 200,000 to 300,000 yuan family SUV market.

Data from the China Passenger Car Association (CPCA) shows that from January to August this year, the cumulative retail sales of new energy passenger vehicles in China reached 6.674 million units, a year-on-year decrease of 12.1%. Among them, the cumulative retail sales of range-extended passenger vehicles reached 606,000 units, a year-on-year decrease of 19.3%. Before Xiaomi entered the market, the terminal sales of range-extended vehicles were already under pressure, and the decline was even greater than that of the overall new energy vehicle market.

In August, domestic retail sales of new energy passenger vehicles declined by 10.1% year-on-year, but Leapmotor's total retail sales of passenger vehicles across all brands increased by 65.9% year-on-year, reaching 85,000 units. Despite the overall market downturn, some companies maintained growth. In a phase of shrinking terminal sales, companies need to strive for market share to grow. Xiaomi's large number of locked-in orders provided the initial demand foundation for this new business expansion.

Automakers are expanding their efforts to increase sales volume as their product lines broaden. Xiaomi has added range extenders to its pure electric SU7 and YU7 models, while Leapmotor's D19 offers both pure electric and range extenders. Both companies are able to attract customers with different energy needs. When Xiaomi entered the range extender market, it already had a pure electric business and delivery volume. This gave existing range extender brands a competitor operating across different powertrain lines.

Pengcheng targets the 200,000 to 300,000 yuan family SUV market, while Leapmotor's D19 falls within the 200,000 yuan price range. With more brands entering the same price range, existing products will face competition from these new models to maintain their prices and sales volume. If existing brands lower their prices to attract orders, they need to consider how much profit margin they can retain after the price reduction; if they maintain their original prices, they need to ensure customers continue to be willing to buy their existing products. New entrants leave the choice to the customers, and also leave this trade-off to their competitors.

The initial sales orders gave Xiaomi a short-term opportunity to boost production. The ramp-up of production capacity in the fourth quarter will help convert this demand into deliveries more quickly, potentially increasing short-term sales. As these initial sales orders are gradually fulfilled, greater production capacity will need to be supported by a continuous influx of new demand. Xiaomi will then focus on securing new orders each month after the initial launch, ensuring that customer acquisition keeps pace with delivery.

Sales expansion also comes at a cost to operations. Before its IPO, Xiaomi's gross profit margin for its smart electric vehicles and AI-related innovative businesses was 19.2% in the second quarter, down from 26.4% in the same period last year. The company attributed the decline to a lower proportion of SU7 Ultra deliveries, rising prices of core automotive components, and increased costs related to its AI business.

The change in the delivery ratio of the SU7 Ultra has already affected the segment's gross profit margin; the type of vehicle sold also changes operating results. Increased sales volume will increase the proportion of family SUVs in the product mix, allowing Xiaomi to expand its sales scale. The gross profit contribution from new deliveries depends on the actual sales structure and costs.

Xiaomi secured 70,000 pre-orders, adding another strong competitor to the extended-range SUV market. While the market is shrinking, new car models are still increasing, with more and more vehicles priced over 200,000 yuan featuring large batteries and spacious interiors. With brands like Xiaomi and Leapmotor crowding into the same price range, a new round of competition for family car-buying budgets has begun.

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