Xiaomi Group sees Q3 R&D expenses jump 22% YoY, to conduct second winter car testing soon

Shanghai (Gasgoo)- In a quarterly financial report released on November 20, Chinese consumer electronics and smart manufacturing company Xiaomi Group revealed that its research and development (R&D) expenditure leapt 22% year on year to 5 billion yuan in the third quarter of this year, marking its highest single-quarter R&D spending in the past two years.

Xiaomi attributed this increase to the R&D efforts in its smart electric vehicle business and other innovative ventures.

Photo credit: Xiaomi

As Xiaomi charts its course into the competitive landscape of electric vehicles, the company's President and Partner, Lu Weibing, affirmed during the earnings conference that the volume production target for Xiaomi cars in the first half of next year remains unchanged. Additionally, the company plans to conduct a second round of winter testing. Mr. Lu disclosed that Xiaomi's automotive R&D team consists of around 3,000 professionals.

Since Xiaomi's foray into the automotive industry, the company has been resolute in making substantial investments. Xiaomi Group's Chairman and CEO, Lei Jun, announced at the end of March 2021 that Xiaomi's initial investment in car manufacturing would be 10 billion yuan, out of the company's substantial cash reserves of 108 billion yuan, and the plan was to invest a total of $10 billion over the next decade.

The development of new energy vehicles is a "cash-burning" endeavor, particularly in the initial stages of car model R&D. This encompasses everything from exterior design to the battery, electric motor, electric control systems, powertrains, and intelligent software, resulting in lengthy R&D timelines and high labor costs. According to Lei Jun, Xiaomi plans to allocate 3.3 billion yuan for the initial development of autonomous driving technology alone. Developing a new vehicle typically takes two years, with costs reaching several billion yuan.

Xiaomi's previous financial records indicate that it poured 3.1 billion yuan in the R&D of such new ventures as intelligent electric vehicles. In 2023, Xiaomi allocated a combined 2.5 billion yuan for automotive R&D in the first and second quarters.