FILE PHOTO: Xiaomi founder and CEO Lei Jun stands next to Xiaomi's newly unveiled first electric vehicle (EV) SU7, at an event in Beijing, China December 28, 2023. REUTERS/Florence Lo/File Phot © Thomson Reuters

On Wednesday, Xiaomi Corp of China announced that its revenue for the second quarter exceeded expectations, marking the first disclosure of its automotive division's contribution, which amounted to 6.2 billion yuan ($869.2 million).

For the quarter ending in June, Xiaomi's revenue surged by 32% to reach 88.9 billion yuan, surpassing the analysts' forecast of 85.8 billion yuan, as reported by LSEG.

The company initially ventured into the electric vehicle sector in 2021 as part of its strategy to diversify beyond its primary smartphone business. In early April, Xiaomi commenced shipments of its SU7 electric vehicles, pricing them competitively against Tesla's models.

During the second quarter, the company delivered 27,307 electric vehicles, generating 6.2 billion yuan in revenue, marking the first financial report to include specifics about its automotive segment.

Following the earnings announcement, Xiaomi's President Lu Weibing expressed confidence in achieving the goal of delivering 120,000 electric vehicles by the end of the year.

Since June, the company has adopted double-shift operations to ensure monthly deliveries exceed 10,000 units.

Despite these efforts, Xiaomi's automotive division continues to operate at a loss, reporting an adjusted loss of 1.8 billion yuan for the quarter, with a gross profit margin of 15.4%.

Lu indicated that as delivery volumes increase, the profitability of the unit is anticipated to improve over time.

The global smartphone market has shown signs of recovery since late last year after a prolonged downturn. In the second quarter, Xiaomi's global smartphone shipments rose by 27.4% to 42.3 million units, allowing the company to secure a 14.8% market share and rank third, according to IDC.

In its largest market, China, smartphone shipments increased by 16.5%, as reported by IDC. The adjusted net income for the quarter was 6.18 billion yuan, exceeding the analysts' estimate of 4.8 billion yuan.