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Lei Jun ventures into the "production capacity hell" again.

中国企业家杂志2025-07-10 08:51
It is extremely urgent for Xiaomi to expand production.

Currently, Lei Jun, the chairman of Xiaomi, is experiencing the "nightmare" that Elon Musk went through eight years ago.

In 2017, during the process of founding Tesla, Musk endured a tough period in car manufacturing. When looking back, he described it as "production hell."

At that time, the official production of Tesla Model 3 began, and the mass - production plan was launched. Musk set a goal for the Tesla factory to produce 5,000 Model 3s per week. He made various calculations for the company and believed that if this mass - production speed couldn't be achieved, the company would be paralyzed due to running out of funds.

To achieve this mass - production goal, from March 2017 to the end of June 2018, Musk spent all day in the factory. From the Gigafactory in Nevada that produces batteries to the Fremont vehicle assembly plant, he took charge of the factory workshop work. He only slept 4 - 5 hours a day and often slept on the floor in the factory. At most, he issued more than 100 orders in the factory in a single day.

Now, Lei Jun is also going through the "production hell" stage in the car - manufacturing process. This is Lei Jun's second challenge. More than six months ago, he just got out of the production ramp - up of the SU7.

On Monday, July 7, 2025, the Xiaomi Auto Super Factory Store located outside the Sixth Ring Road in the southeast of Beijing was still crowded with people coming to visit and test - drive the YU7. Different from most Xiaomi Auto stores in the urban area that only display the main gem - green version, there are a total of six different - colored YU7s available for test - driving here.

Photography: Zhao Dongshan

"I still want to see the visual effect of the real - car paint and make a decision after the test - drive," a test - driver told China Entrepreneur. After test - driving the YU7 for a round, the test - drivers would finally ask the salesperson: "When will your production capacity increase, and when can we pick up the car at the earliest?"

This is the question that Xiaomi Auto salespeople and Lei Jun have been asked the most since the release of the YU7, and it is also the most thorny problem for Xiaomi Auto at present.

After the YU7 went on sale on the evening of June 26, over 200,000 large - scale orders were placed in three minutes, and the number of locked orders (non - refundable deposits) exceeded 240,000 in 18 hours. However, the current production capacity of the Xiaomi Auto factory is far from keeping up, and the backlogged orders have been queued up for more than a year.

"If you are in a hurry to use a car, domestic new energy vehicles are actually very good. For example, you can pay attention to the XPeng G7 and the Li Auto i8 to be released at the end of the month. In addition, the Model Y is a good car. Tesla also launched many preferential policies yesterday, so you can also consider it," Lei Jun said in a live - broadcast on July 2.

The enthusiasm of consumers for the YU7 far exceeded Lei Jun's expectations. Before the launch of the YU7, Lei Jun's psychological expectation was "as long as it is better than last year's SU7." But when Lei Jun saw the sales data for the first time, he blurted out, "Maybe we are all witnessing a miracle in the Chinese automotive industry together."

What does 240,000 locked orders mean? A reference data is that Tesla's sales volume in the Chinese market in the first quarter of 2025 was 137,200 vehicles. The 18 - hour "record" of the Xiaomi YU7 has far exceeded Tesla's sales volume in a quarter in China.

On June 26, Xiaomi prepared a batch of "near - ready cars" in advance, all of which were YU7 Max, with a starting price of 350,400 yuan and a locked - order amount of 20,000 yuan. The cars would be delivered 1 - 5 weeks after the order was locked. After the sale started, this model was also "instantly" sold out. To prevent "scalpers" from snapping up the near - ready cars and exacerbating the order congestion, Xiaomi Auto even urgently introduced a policy of "limiting the purchase to one car per 24 hours."

However, the hot sales of the YU7 are in sharp contrast to the shortage of production capacity. According to the latest forecast data on the Xiaomi Auto APP on July 1, the delivery cycle for the standard version of the YU7 is 57 - 60 weeks; for the Pro version, it is 50 - 53 weeks; and for the Max version, it is 38 - 41 weeks.

This means that if you place an order for the Xiaomi YU7 now, the earliest you can get the car is in March 2026, which is a great test and challenge to consumers' patience.

Currently, the first - phase factory of Xiaomi Auto is approaching full production after last year's production ramp - up. "The delivery volume of the Xiaomi SU7 in June this year was 25,000 vehicles, a decline compared with 28,000 vehicles in May this year, because the first - batch production of the YU7 was squeezed out of the resources from the SU7 production line," a consulting advisor at a Xiaomi Auto store told China Entrepreneur.

In addition, a reporter from China Entrepreneur learned on - site in Yizhuang New City that the main body of the second - phase factory of Xiaomi Auto was completed in mid - June 2025, and trial production started at the beginning of July. Every day, many trucks come in and out to unload parts delivered by suppliers, and workers have already moved into the second - phase factory. However, some areas of the second - phase factory of Xiaomi Auto are still under final construction, and it is expected to be fully put into production and start ramping up production by the end of July.

In the current highly competitive new energy vehicle market, the long delivery cycle behind the hot orders of the Xiaomi YU7 is becoming the Achilles' heel of Xiaomi Auto, and it is urgent to increase the production capacity of the Xiaomi Auto factory.

Competition from Rivals and Dissatisfaction from Users

The long delivery cycle of the Xiaomi YU7 is attracting "interception" from rival companies and dissatisfaction from prospective car owners.

After Xiaomi announced the orders, Zhu Jiangming, the chairman of Leapmotor, said, "I was in a good mood yesterday because I saw that Leapmotor's order volume was quite good. But then I watched Mr. Lei's press conference at night. Selling so many cars in one hour really put a lot of pressure on me."

Huang Zhaokun, the deputy director of the Power Development Department of the Technical Center of Dongfeng Nissan Passenger Vehicle Company, directly "criticized" users who bought Xiaomi cars on the day after the release of the Xiaomi YU7, saying, "There are no such blindly loyal brand fans in any country." However, in the afternoon of the same day, Huang Zhaokun deleted this Weibo post and publicly apologized.

In addition to "envy," more peers have taken practical actions to attract users. On the day of the Xiaomi YU7 press conference, the Jiejie brand under Hongmeng Smart Mobility announced that it would offer a cash subsidy of 20,000 yuan for all Jiejie models, and users could enjoy a maximum of 60,000 yuan in car - purchase benefits.

Photography: Zhao Dongshan

XPeng has urgently adjusted the pricing strategy of the G7 internally. The pre - sale price, originally planned to start at 235,800 yuan, dropped to 195,800 yuan when it was launched on July 3, directly breaking through the users' psychological defense line of 200,000 yuan.

On July 1, Tesla also urgently adjusted its product strategy and updated two models. Among them, the CLTC range of the refreshed Model Y Long Range All - Wheel Drive version increased to 750 km, and the starting price remained unchanged at 313,500 yuan. The CLTC range of the Model 3 Long Range All - Wheel Drive version increased to 753 km, and the 0 - 100 km/h acceleration was improved to 3.8 seconds. The starting price was 285,500 yuan, an increase of 10,000 yuan. At the same time, Tesla also announced policies such as five - year zero - interest loans, 8,000 - yuan insurance subsidies, 8,000 - yuan paint - selection vouchers, and special charging discounts.

In addition, brands such as NIO (including Firefly), Zeekr, IM Motors, Jiejie, and Avatr have also recently launched corresponding preferential policies, including reimbursing a 5,000 - yuan deposit or giving an equivalent amount of electric - card credits, points, etc.

"Recently, I've seen that some car companies have specifically come up with interception response scripts targeting the Xiaomi YU7. Just the exposed part, I've looked at it carefully, and it's really not accurate. In fact, there's no need to do this. It's really not a good thing, and we don't recommend that our peers do this," Lei Jun said in the live - broadcast.

Then, Lei Jun recommended that users could also take a look at the XPeng G7, the Li Auto i8, and the Tesla Model Y. "I think now that we're all in the car - making business, in this industry, there shouldn't only be competition but also brotherly friendship," Lei Jun said.

In the comment section of Lei Jun's Weibo, some users who had locked their orders also requested to refund their deposits. However, the Xiaomi Auto customer service said that after paying the deposit, users need to manually lock the order. Orders will be produced according to the order of the locked - order time. Users can modify the configuration within a seven - day hesitation period. After the hesitation period ends, the order will be automatically locked, and the deposit will not be refunded.

Currently, the expected delivery time is only shown after the order is locked. In fact, this is not a unique policy of Xiaomi. Car companies such as Tesla, NIO, and XPeng all adopt this model. By locking the order, they can determine the real user demand, filter out scalpers, and avoid idle production capacity.

A reporter from China Entrepreneur found on the Xianyu platform that some people who had placed orders for the YU7 were reselling their orders. Currently, there are more than 2,000 real - time updated posts about "transferring Xiaomi YU7 orders" on Xianyu, with the highest markup reaching 20,000 yuan.

If the Xiaomi YU7 is not delivered until 2026, users will miss the deadline for the exemption policy of vehicle purchase tax.

In June 2023, the Ministry of Finance and other departments issued the "Announcement on Continuing and Optimizing the Exemption and Reduction Policy for Vehicle Purchase Tax of New Energy Vehicles," which shows that new energy vehicles purchased between January 1, 2024, and December 31, 2025, are exempt from vehicle purchase tax. Among them, the exemption amount for each new energy passenger vehicle does not exceed 30,000 yuan. For new energy vehicles purchased between January 1, 2026, and December 31, 2027, the vehicle purchase tax will be halved, and the reduction amount for each new energy passenger vehicle does not exceed 15,000 yuan.

For this reason, Lei Jun and Xiaomi executives personally comforted users who had locked their orders, saying, "The delivery time shown on the Xiaomi Auto APP is a reference for the estimated delivery time. As the production line is optimized and the production capacity is increased, the actual delivery time may also change dynamically. We will dynamically update the latest estimated time on the Xiaomi Auto APP, so please keep an eye on it."

Facing the "interception" offensive from rival companies and users' anxiety, Xiaomi Auto has to quickly balance the "Internet - style expansion" and the "long - cycle law of the manufacturing industry" to avoid falling into the vicious circle of "the more orders, the more damaged the reputation."

Expanding Production and Recruiting Workers

According to the news on the Xiaomi Auto APP, currently, the longest waiting time for the standard version of the YU7 may reach 15 months; the waiting time for the Max version is the shortest, but it will still take about 9.5 months at the earliest.

According to a reporter from China Entrepreneur, the reason why the Max version can be delivered relatively quickly is that it uses a modular production line, and it has a high component - commonality rate with the SU7 Max, so the supply chain is more mature. The standard version has the slowest delivery because this version has a newly added low - power motor and lithium - iron - phosphate battery, and the production line needs to be debugged separately. At 10 a.m. on July 6, Xiaomi Auto provided users with a limited - time opportunity to change their order configurations. Some users chose to change from the standard version to the Max version.

Since June 2024, the first - phase factory of Xiaomi Auto has been operating at full capacity, with a two - shift system, and each shift has about 1,000 employees. At the beginning of this year, Xiaomi Auto set a goal of delivering at least 300,000 vehicles in 2025. After the expansion, this goal was revised to 350,000 vehicles. In June 2025, the delivery volume of Xiaomi Auto exceeded 25,000 vehicles.

However, it is a huge challenge to coordinate and solve the production - capacity problems of the Xiaomi SU7 and the YU7 in the same factory. On the one hand, due to the large structural differences between the two models, the SU7 production line cannot directly switch to producing the YU7. On the other hand, there are still a large number of backlogged orders for the Xiaomi SU7, which was launched in 2024, waiting to be delivered.

Fifteen months after its launch, the cumulative delivery volume of the SU7 has approached 300,000 vehicles. June this year was supposed to be the promotional period for the Xiaomi YU7, but Lei Jun said that there were even more new locked orders for the Xiaomi SU7. About 14,000 orders were locked in June. In addition, the number of users who changed their orders from the Xiaomi SU7 to the Xiaomi YU7 accounted for less than 15% of the total number of locked orders for the Xiaomi YU7.

Expanding production is extremely urgent.

Recruiting workers is a crucial step. "From June until now, we've been urgently recruiting workers. The wage is 25 yuan per hour. We require male workers aged between 23 and 38 who can accept shift work, with a shift change every half - month. We provide apartment - style dormitories at 200 yuan per month, which will be directly deducted from the salary, and we also provide two meals a day, with four dishes and one soup," a human - resources supplier for Xiaomi Auto told China Entrepreneur.

In addition, Xiaomi quickly acquired land in Yizhuang, Beijing, to expand its production line.

The website of the Development and Construction Bureau of the Beijing Economic - Technological Development Area shows that on July 25, 2024, Xiaomi Jingxi Technology Co., Ltd. won the right to use Plot 0106 in Block YZ00 - 0606 of Yizhuang New City for about 842 million yuan. Construction started immediately after getting the land. The day after the transaction was completed, Xiaomi started construction on the site to build the second - phase factory of Xiaomi Auto.