(Yicai) April 24 -- Xiaomi Automobile, the Chinese smartphone giant’s electric vehicle unit, expects to have a gross profit margin of between 5 percent and 10 percent, founder Lei Jun said, after earlier saying its first model was being sold at a loss.

Most suppliers of Xiaomi’s SU7 sedan also supply Mercedes-Benz, BMW, and Audi, so the gross margin will not be high, Lei said at an investor conference yesterday.

At the model’s launch on March 28, Lei had said Xiaomi was selling them at a loss based on current pricing. The standard SU7 is priced at CNY215,900 (USD29,790), the SU7 Pro at CNY245,900, and the SU7 Max at CNY299,900.

Orders have exceeded expectations, topping 70,000 as of April 20, he said, with the Beijing-based firm trying to expand production capacity and targeting 100,000 deliveries this year.

Xiaomi Auto, which is less than two years old, aims to become one of the world's top five carmakers in about 15 to 20 years and make large profits, Lei added.

The carmaker will focus on the home market over the next three years, with global expansion to follow naturally after the team is well prepared, he said.

Lei said he admires Tesla's sensitive market response when talking about losses and the price war in the new energy vehicle industry, but noted that the best way to deal with competition is product power rather than price wars.

Xiaomi's intelligent driving team has an annual budget of about CNY1.5 billion (USD207.1 million), with over 1,000 engineers, which will rise to 1,500 this year and 2,000 next year, Lei said. The firm plans to invest an additional CNY11 billion to CNY12 billion (USD1.5 billion to USD1.7 billion) in new businesses, including Xiaomi Auto.

Lei said that he has invested a lot of energy in the auto business over the past three years while focusing on Xiaomi’s mobile phone business to ensure its stable development, adding that he is most focused on vehicles, Xiaomi HyperOS, and artificial intelligence.

Editor: Martin Kadiev