China’s automotive sector experienced growing output but shrinking profits in 2025. The China Passenger Car Association reported an annual profit margin of 4.1%, the lowest in a decade, with December margins falling further to 1.8%. Price wars, rising raw material costs, and sustained R&D spending pressured automakers’ earnings.
Amid this challenging market, Xiaomi reported full-year revenue of 457.3 billion yuan, up 25% from 2024, and an adjusted net profit of 39.2 billion yuan, a 43.8% increase.
The company’s smart electric vehicle (EV) division was a key driver of growth. Revenue from the division reached 106.1 billion yuan, a 223.8% increase from the previous year, and it posted an annual operating profit of 900 million yuan, with automotive operations contributing 103.3 billion yuan. The division’s gross margin climbed to 24.3%, up 5.8 percentage points from 2024.
Xiaomi’s EV success is attributed to a premium product mix and efficient supply chain management. High-end models such as the SU7 Ultra (529,900 yuan) and YU7 SUV (starting at 253,500 yuan) lifted the company’s average selling price above 260,000 yuan. Deliveries of 411,082 vehicles in 2025 helped spread fixed costs, while operational discipline from Xiaomi’s electronics business kept production costs under control.
Compared with other Chinese EV startups, Xiaomi reached profitability quickly. While XPENG, NIO, and Li Auto also posted profitable quarters in 2025, each relied on different strategies, including extended-range technology or premium service models. Xiaomi’s approach demonstrates that a new entrant can achieve profitability rapidly by focusing on premium vehicles and operational efficiency.
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