Xiaomi’s Electric Vehicle Division Turns Profitable, Marking a Strategic Pivot

Xiaomi Corporation has reached a significant financial milestone in its 2025 fiscal year, with its nascent electric vehicle (EV) business unit achieving operational profitability for the first time. This segment is now accelerating to become the primary engine for the Chinese technology giant’s expansion, even as its core smartphone operations experience a slight contraction. The company’s strategic focus is undergoing a substantial realignment toward smart mobility and artificial intelligence.

Financial Performance and Market Reaction

On a group level, Xiaomi’s annual net profit surged by an impressive 76.3% to 41.56 billion Chinese Yuan (CNY), a leap powered substantially by its automotive and AI initiatives. Revenue from the electric vehicle and AI applications division skyrocketed by 223.8% to 106.1 billion CNY. Crucially, the EV segment itself reported an operating profit of 900 million CNY, demonstrating that the company’s heavy investment in the automotive sector is beginning to yield tangible financial returns.

Despite this fundamental strength, the equity market has yet to reflect the positive developments. Shares closed at 3.59 euros on Friday, representing a decline of over 20% since the start of the year and trading notably below their 200-day moving average.

Should investors sell immediately? Or is it worth buying Xiaomi?

Strategic Drivers: The SU7 Model and AI Commitment

The operational momentum is largely driven by the successful launch of the SU7 model. The vehicle garnered more than 30,000 firm orders within just three days of sales commencing. The top-tier version of the car boasts an estimated range of up to 902 kilometers. To bolster its technological credentials, particularly in autonomous driving, Xiaomi is implementing extensive strategic adjustments. The company has allocated over 16 billion CNY for artificial intelligence investments in the current 2026 fiscal year, with plans to commit a total of 60 billion CNY in the medium term.

This massive reallocation of resources helps offset softness in the former core business, where smartphone revenues recently saw a modest 2.8% dip. With a global base of 754 million monthly active users and a rapidly expanding Internet of Things (IoT) segment, Xiaomi is shaping an interconnected ecosystem where the automobile is increasingly taking center stage. The now-profitable automotive business provides a solid financial foundation for the further expansion of this integrated infrastructure.