Against the backdrop of an overall decline in the range extender market, Xiaomi's new vehicle secured more than 70,000 locked orders in its first month. This battle for family SUVs has welcomed yet another competitor with meaningful order volume.

On October 9, XIAOMI-W (HKEX: 01810) shares closed up 9.72% at HK$25.96. Earlier, Xiaomi Auto disclosed that the Pengcheng N70 and N90 series accumulated more than 70,000 locked orders during their first sales month from September 7 to October 7.

These orders have already begun converting into deliveries. The Pengcheng series started deliveries on September 12, delivering more than 10,000 units in September, while Xiaomi Auto's overall deliveries exceeded 40,000 units during the same period. Following the SU7 and YU7 pure electric series, range extender products are becoming yet another source of delivery growth for Xiaomi.

Hu Qimu, deputy secretary-general of the China 50 Forum on Digital-Real Economy Integration and chief researcher at the Digital Economy Think Tank, stated that as production capacity further ramps up in the fourth quarter, Xiaomi's Pengcheng series is expected to continue releasing growth momentum, pushing Xiaomi Auto's delivery scale to a new level, while accelerating the pace of new energy replacement in the 200,000 to 300,000 yuan family SUV market.

Data from the China Passenger Car Association shows that from January to August this year, domestic new energy passenger vehicle retail sales totaled 6.674 million units, down 12.1% year-on-year. Among them, range extender passenger vehicle retail sales totaled 606,000 units, down 19.3% year-on-year. Before Xiaomi entered, range extender terminal sales were already under pressure, with a decline even larger than that of the overall new energy market.

In August, domestic new energy passenger vehicle retail sales fell 10.1% year-on-year, yet Leapmotor's domestic narrow passenger vehicle retail sales across all brands grew 65.9% year-on-year, reaching 85,000 units. Even as the broader market declines, some companies are still maintaining growth. During a phase of overall terminal contraction, corporate growth requires capturing market share. Xiaomi's large batch of locked orders has provided a demand foundation for this new business expansion.

The scope of automakers competing for incremental growth continues to expand with product routes. Xiaomi has added range extenders alongside its SU7 and YU7 pure electric products, while Leapmotor's D19 offers both pure electric and range extender options. Both companies can attract customers with different energy replenishment needs. When Xiaomi entered the range extender market, it already had pure electric operations and delivery scale, adding a cross-power-route operator to the list of competitors for existing range extender brands.

The Pengcheng targets the 200,000 to 300,000 yuan family SUV market, and Leapmotor's D19 also falls in the 200,000-plus yuan price range. As more brands enter the same price band, existing products seeking to maintain their prices and defend their sales volumes will face a new reference point set by the new vehicles. If existing brands lower transaction prices to win orders, they must consider how much gross margin remains after price concessions; if they maintain original prices, they must keep customers willing to pay for their existing products. New entrants hand the choice to consumers, and leave this trade-off to their peers.

First-sales-period orders have given Xiaomi a short-term opportunity for volume expansion. Fourth-quarter capacity ramp-up will help convert this demand into deliveries faster and may boost short-term sales. As first-sales-period orders are gradually fulfilled, greater production capacity will need to be supported by continuously incoming new demand. What Xiaomi must subsequently secure is the new orders added each month after its market launch, with customer acquisition pace needing to keep up with delivery pace.

Sales expansion also comes with operational costs. Before the Pengcheng launch, Xiaomi's gross margin for its smart electric vehicle and AI innovation business segment in the second quarter was 19.2%, lower than 26.4% in the same period last year. The company attributed the decline to a lower delivery proportion of the SU7 Ultra, rising prices of core automotive components, and increased costs related to AI business.

Among these factors, the change in SU7 Ultra's delivery proportion has already affected the segment's gross margin, meaning what models are sold is also changing operational results. Pengcheng's volume ramp-up will increase the proportion of family SUVs in the product mix. Xiaomi can expand its sales scale, but the gross margin contribution of additional deliveries depends on the actual sales structure and costs.

Xiaomi's 70,000 locked orders have added another strong competitor to the range extender SUV market. The market is shrinking, yet new vehicles keep increasing, with more and more 200,000-plus yuan models featuring large batteries and spacious interiors. Brands like Xiaomi and Leapmotor are squeezing into the same price band, and a new round of competition centered on family car-buying budgets has already begun.