Xiaomi Corp’s founder and CEO Lei Jun announced on Monday that the company expects its electric vehicle (EV) business to turn profitable in the second half of 2025, bolstering investor confidence as the smartphone giant aggressively expands into China’s fast-evolving EV marketplace.
The projection, revealed at Xiaomi’s annual shareholder meeting, signals optimism about the future of Xiaomi’s automotive venture — even as the broader EV sector faces intense competition and slowing growth in the world’s largest car market.
Xiaomi’s Bid to Become a Major EV Player
Xiaomi, a global tech leader better known for its smartphones and smart home devices, officially entered the electric vehicle market with the launch of its SU7 sedan in March 2024. The move marks a significant pivot as the company seeks to diversify revenue streams in a maturing smartphone industry.
Lei Jun told shareholders, “We are confident in our technology, unique user experience, and cost management. Our EV business is expected to achieve profitability by the second half of next year.” The announcement was first reported by Reuters.
Ambitious Growth Targets Amid Fierce Competition
Xiaomi’s push into EVs comes as established Chinese automakers and newcomers alike race to capture shares of a sluggish but still massive market. For context, China accounted for nearly 60% of global EV sales in 2023, according to the China Passenger Car Association (CPCA). However, industry-wide profit margins have come under pressure due to fierce price wars among brands like BYD, Nio, XPeng, and Tesla.
Despite these challenges, Xiaomi’s EV launch has been met with strong consumer interest. The SU7, starting at 215,900 yuan ($30,000), is positioned as a tech-forward alternative to Tesla’s Model 3 and BYD’s Han sedan, with advanced connectivity and smart features designed to appeal to Xiaomi’s vast base of “Mi Fans.”
Investments and Production Capacity
Xiaomi has pledged to invest $10 billion over the next decade in its automotive division. Its manufacturing partner, state-owned BAIC, assembles the SU7 at a Beijing plant with an annual capacity of 200,000 vehicles. Lei said that, since sales commenced, the company has delivered over 10,000 vehicles, with thousands more on order, indicating strong early demand.
Competitive Advantages and Challenges
Analysts highlight Xiaomi’s robust technology ecosystem and extensive retail network as assets that few rivals can match. “Xiaomi’s deep integration of hardware and software and its massive user community give it an edge, at least in the short term,” said Zhang Xiang, an automotive industry analyst at North China University of Technology. However, he cautioned that achieving profitability in such a crowded sector will test Xiaomi’s ability to control costs and sustain demand.
Market Reaction and Industry Perspective
Following Lei’s announcement, Xiaomi shares rose 2% in Hong Kong trading, reflecting investor optimism about the company’s new revenue streams. “Xiaomi is leveraging its brand power and tech expertise, but the EV business is capital-intensive, and the payback period will depend on maintaining sales momentum and competitive pricing,” said Jia Xinguang, executive director at the China Automobile Dealers Association.
Can Xiaomi Deliver on Its Profit Promise?
Xiaomi’s forecast of turning a profit by the second half of 2025 aligns with the company’s push to become a “top five global automaker,” a goal Lei Jun boldly revealed last year. However, market observers suggest that delivering on this ambition will require navigating ongoing price wars, evolving regulation, and consumer preferences for smart, connected vehicles.
As the company ramps up production and delivery throughout 2024 and 2025, all eyes will be on whether Xiaomi can replicate its smartphone success in the fiercely competitive EV space.
Sources Used:
- Reuters: China’s Xiaomi founder expects EV business to turn profitable in H2 2025
- China Passenger Car Association (CPCA)
- Statements by Zhang Xiang and Jia Xinguang (as quoted in prior news reports)
- Xiaomi Investor Relations
