Xiaomi’s new electric vehicle division has turned profitable roughly 19 months after launching its first car. Combining intelligent vehicles, artificial intelligence, and other initiatives, the business unit generated $4.0 billion in operating profit between July and September in pre interest and taxes revenue. Battery electric vehicles (BEV) alone represented $3.9 billion of the revenue generated during the third quarter of the year.
Sales data shows that revenue surged 199% compared to the same period in 2024 and jumped 36 percent from the previous quarter. Vehicle deliveries climbed from 81,302 units in the second quarter to 108,796 units in the third, a 34% increase. Year-over-year sales of Xiaomi EVs exploded by 173% from just 39,790 units the previous year.
Xiaomi reports that average selling prices also rose by 9% annually from $33,500 to $36,558 per vehicle, driven by higher deliveries of the premium YU7 SUV series which commands higher margins.
The YU7 series ranked first in sport utility vehicle sales across mainland China in October, cementing Xiaomi’s position in the competitive segment. Xiaomi attributes its success partly to an expanded sales and service network that comprises 402 retail centers across 119 cities and 209 service centers in 125 cities as of late September. This infrastructure buildout has enabled faster customer acquisition and better post-sale support across the country’s vast geography.
Gross profit margins in the electric vehicle and artificial intelligence segment jumped from 17.1% in 2024 to 25.5% in 2025. Lower component costs, reduced manufacturing expenses per unit, and March deliveries of the performance-oriented SU7 Ultra model contributed to improved margins, Xiaomi says.
Other related ventures within the Smart Electric Vehicles, AI and Other New Initiatives’ segment also boosted profitability. Xiaomi’s new EV and AI unit now accounts for a quarter of Xiaomi’s total group revenue, up from just 18% one quarter earlier.
CEO Lei Jun updated the annual sales target during a recent conference call, saying the company will hit its original 350,000 vehicle delivery goal this week. Xiaomi management now expects over 400,000 deliveries for the full year. Including 2024 production, the tech firm has manufactured approximately 500,000 vehicles total since entering the automotive market, a remarkably fast production ramp for a newcomer competing against established players.
However, significant challenges loom on the horizon. A global memory chip shortage threatens to increase costs across Xiaomi’s smartphone and vehicle businesses, potentially squeezing its margins. Additionally, China’s gradual elimination of electric vehicle purchase tax breaks will likely dampen consumer demand as vehicles become more expensive.
Market uncertainties surrounding these headwinds have already erased much of the share price gains Xiaomi made earlier this year. Whether the smartphone giant can maintain its electric vehicle momentum amid mounting pressures remains an open question for investors and industry observers.
The rise of Xiaomi within the EV space gives North American firms like Bollinger Innovations, Inc. (OTC: BINI) needed encouragement that they too can command significant market share as they ramp up their production.
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