For an EV maker, pure electric sedans usually struggle to get high sales, with SUVs being the main support for sales and profits, an industry watcher said.

(Image credit: Xiaomi)

Chinese smartphone giant Xiaomi's (HKG: 1810, OTCMKTS: XIACY) second model could be launched within the year, as its first model which was officially launched yesterday.

Xiaomi could release an SUV (sport utility vehicle) model by the end of this year, local media outlet Lanjinger said in a report today, citing sources.

The company officially launched its first model, the SU7 electric sedan, yesterday evening at a starting price of RMB 215,900 yuan ($29,870), 30,000 yuan lower than the starting price of the Tesla Model 3 in China.

About half an hour after the SU7 began taking orders, Xiaomi said the model received 50,000 firm orders in the first 27 minutes.

Unlike many other new local car makers that launch SUVs first, Xiaomi's first model is a sedan, a choice that has sparked quite a bit of discussion over the past few months.

Other EV makers, including Nio (NYSE: NIO), Li Auto (NASDAQ: LI) and Xpeng (NYSE: XPEV), have all started with SUVs as their first models to cater to local consumers' preference for more space. Currently Nio and Xpeng's models are mainly SUVs, while Li Auto's models are all SUVs.

On March 24, Xiaomi founder, chairman and CEO Lei Jun said in a Weibo video that cars are for driving, and sedans have a better driving experience and are more suitable for one person to drive on a daily basis, as well as to take care of a two-person world and a small family.

Sedan market demand is very big, with the total amount about the same as SUVs, Lei said at the time.

Creating a good pure electric sedan is very difficult, and there are actually not many good pure electric sedans on the market today, he said.

For an EV makers, pure electric sedan is usually difficult to get very high sales, while SUV is the main support for sales and profits, Lanjinger quoted Feng Li, a senior automotive industry watcher, as saying in today's report.

For Xiaomi, however, the brand image of the first model is the most important, which is in line with the new energy vehicle (NEV) industry practices, Feng said.

Generally speaking, it's normal for the first car to be unprofitable, and it makes sense for the second car not to bring in a profit, but the third model must turn a profit so it can survive, he said.

($1 = RMB 7.2289)

Xiaomi joins crowded EV space with launch of SU7, prices undercut Tesla