A Third Factory Already? Xiaomi’s “Hyper-Expansion” is a Signal of its Global Automotive Ambition

Just months after its official launch in April 2024, Xiaomi Auto is already making waves that defy market expectations. Now, in a move that underscores its aggressive growth plans, the company has confirmed the construction of its third factory.

From my perspective here in China, this isn’t just a simple capacity expansion. It’s a direct and forceful response to the overwhelming success of its first car, the SU7, and a pre-emptive strike to meet the anticipated demand for its upcoming second model, the YU7 SUV. This is Xiaomi signaling that it’s playing a long game, with global ambitions.

1. Why a Third Factory? The Imbalance of Explosive Demand and Production Capacity

The news is official: Xiaomi has successfully acquired a 485,100 square meter industrial plot in Beijing’s Yizhuang New Town for 635 million RMB (approx. $87 million). The site is adjacent to its existing Phase 2 project, leaving no doubt about its purpose.

The primary driver for this move is the severe production bottleneck created by the runaway success of the SU7. While the car is a certified hit, consistently selling over 20,000 units per month, new customers are now facing a daunting wait time of over 30 weeks.

Let’s look at the numbers:

• Xiaomi’s Phase 1 factory was designed for an annual capacity of 150,000 vehicles.

• To meet demand, it’s currently running a two-shift, full-load schedule, pushing out 20,000-30,000 units per month. This puts its actual operating rate at nearly 300,000 units annually—200% of its designed capacity.

Running a factory at double its intended capacity is unsustainable and introduces risks to equipment longevity, product quality, and long-term operational stability.

The bigger problem on the horizon is the YU7 SUV. Founder Lei Jun has revealed that pre-launch interest for the YU7 is three times higher than it was for the SU7, stating, “It’s more popular than the SU7 was at its initial launch.” With YU7 deliveries set to begin in July, a portion of the already strained Phase 1 capacity must be allocated to the new model, which will inevitably extend the wait times for the SU7 even further.

Even with the Phase 2 factory coming online in mid-June, it’s clear that management has determined that the combined capacity will be insufficient to handle the surging orders for both models. The third factory is not a luxury; it’s a necessity.

2. The Expansion Roadmap: Beyond 400,000 Units and Towards a Global Goal

Here’s a snapshot of Xiaomi’s production footprint with the new addition:

• Phase 1 Factory: 718,000 m², designed for 150,000 units/year (currently operating at ~300,000).

• Phase 2 Factory: Designed for 150,000 units/year, completed mid-June 2025.

• Phase 3 Factory: 485,100 m² plot, slightly smaller than the first two phases.

Industry analysts estimate that once the third factory is operational, the total annual production capacity of Xiaomi’s Beijing plants will exceed 400,000 vehicles. While this still trails Tesla’s Shanghai Gigafactory (950,000 units/year), the speed at which Xiaomi is scaling—just months after entering the market—is incredibly impressive.

3. The “Secret Sauce” and Future Outlook: The “Human x Car x Home” Synergy

Xiaomi’s ability to stand out in the hyper-competitive NEV market can be largely attributed to the immense brand power of its “Mi Jia” ecosystem and the personal IP of its charismatic founder, Lei Jun. By leveraging years of accumulated expertise in smart technology and automation from its smartphone and AIoT device businesses, Xiaomi has created a differentiated product with a powerful built-in user base.

Financially, the signals are positive. The automotive division’s losses narrowed in Q1 2025, and major institutions are bullish on its long-term prospects. Guosheng Securities upgraded its profit forecast for the parent company, citing the “synergy of the perfect ecological layout of ‘human, car, and home’ and overseas market expansion.” Deutsche Bank predicts Xiaomi Auto will become profitable starting in 2026 and will surpass 1 million units in annual production by 2027, making it the largest single business segment within the Xiaomi Group.

Lei Jun himself has laid out an ambitious long-term goal: for Xiaomi Auto to enter the world’s top five automakers within 15-20 years, a feat he estimates will require an annual production capacity of 6 million vehicles.

An Insider’s Conclusion:

The construction of this third factory is far more than a simple response to demand. It’s the first concrete step towards achieving that audacious long-term vision. This aggressive expansion will undoubtedly intensify the nèijuǎn (internal competition) in the Chinese market, but more importantly, it serves as a clear signal to the world: a new, formidable competitor with global ambitions has officially entered the automotive arena.