In the cutthroat world of electric vehicles, where even giants like Tesla have navigated razor-thin margins, China’s Xiaomi Corp. has pulled off a remarkable feat. Just 18 months after launching its first EV, the company reported its inaugural quarterly operating profit from the division in the third quarter of 2025. This achievement places Xiaomi in an elite club of profitable EV makers, including Tesla and BYD, at a time when many rivals are bleeding cash amid price wars and softening demand.

Drawing on its roots as a smartphone powerhouse, Xiaomi entered the EV market with the SU7 sedan in March 2024, priced aggressively to challenge Tesla’s Model 3. The strategy paid off: Xiaomi delivered 109,000 vehicles in Q3 2025, hitting its annual target of 350,000 units ahead of schedule. According to Pandaily, the company’s overall net profit surged 80.9% to 11.3 billion yuan ($1.59 billion), with EV and AI initiatives contributing significantly.

Rapid Ramp-Up in a Volatile Market

The EV industry has been a graveyard for profits, with startups like Rivian and Lucid posting massive losses despite hype. Xiaomi’s success stems from its integrated ecosystem approach, leveraging smartphone tech for smart cabins and autonomous features. “We’re making strong progress in ramping up production,” said Xiaomi CEO Lei Jun in a post on X, formerly Twitter, where he announced raising the 2025 delivery target to 350,000 vehicles.

Industry analysts credit Xiaomi’s supply chain prowess and cost efficiencies. A report from IndexBox noted that despite economic headwinds, strong demand propelled Xiaomi toward profitability by year-end. In Q3, the EV segment generated 700 million yuan in operating revenue, marking its first profitable quarter, as per CarNewsChina.

From Phones to Wheels: Strategic Synergies

Xiaomi’s journey mirrors its smartphone playbook: high-volume, low-margin hardware paired with software monetization. The company invested 24.1 billion yuan in R&D in 2024, focusing on EVs and AI, according to Lei Jun’s X post. This has enabled features like seamless integration with Xiaomi’s IoT ecosystem, appealing to tech-savvy Chinese consumers.

Comparisons to Apple are inevitable—Apple scrapped its EV project, deeming it too challenging, while Xiaomi “speedran” the process, as described in Sherwood News. Xiaomi’s Q1 2025 earnings showed EV revenue at 18.6 billion yuan with 75,869 deliveries, per Reuters, highlighting early momentum.

Navigating Industry Headwinds

The broader EV landscape is fraught with challenges. Global sales growth slowed in 2025 amid high interest rates and subsidy cuts. Yet Xiaomi thrived in China, the world’s largest EV market, by undercutting competitors. “Xiaomi has reported an impressive 81% increase in third-quarter profit, driven by strong growth in electric vehicle sales,” stated ETAuto.

Profitability remains elusive for most. Tesla, profitable since 2020, reported Q3 2025 deliveries of 169,294 vehicles but faces margin pressure. BYD, another Chinese leader, leverages vertical integration for profits. Xiaomi joins this “tiny list,” as noted in an MSN article, by achieving breakeven faster than peers.

Innovation and Expansion Plans

Xiaomi’s SU7 has been a hit, with cumulative deliveries exceeding 400,000 since launch, per posts on X by analyst Lei Xing. The company launched a new electric SUV in 2025, boosting revenue. CleanTechnica reported a 17.1% gross profit margin in Q3, underscoring efficient operations.

Looking ahead, Xiaomi aims to double sales in 2026, with analysts predicting 650,000 units, as shared in an X post by Strombock. This ambition is backed by a Beijing factory employing diverse workers, including many women, as highlighted in a video shared on X by S.L. Kanthan.

Financial Milestones and Market Impact

Q3 revenue hit 113.1 billion yuan, up 22.3% year-over-year, with EVs playing a pivotal role, according to Digitimes. “Beijing-based company sells nearly 109,000 electric vehicles in three months, underscoring pivot from smartphones,” reported South China Morning Post via an X post by Paul Triolo.

Stock reactions were mixed; shares fell slightly amid production concerns, per Bitget News. However, the profit milestone eases doubts, positioning Xiaomi as a formidable player.

Challenges on the Horizon

Despite successes, risks loom. Intense competition from Tesla, BYD, and newcomers like Li Auto could spark further price wars. Regulatory scrutiny in China and potential trade barriers for exports add uncertainty. Xiaomi’s average SU7 price of around $32,000 in 2024, as per X posts, must sustain amid rising material costs.

Analysts remain optimistic. “Would you believe that Xiaomi sold 100,000 vehicles in just 3 months?” asked Ranjan Singh on X, noting the EV business’s profitability and Xiaomi’s top-three smartphone ranking.

Broader Implications for Tech-Auto Convergence

Xiaomi’s model could inspire other tech firms. Its 136,000 patents worldwide, as mentioned in Kanthan’s X post, provide a competitive edge in AI-driven EVs. The company’s 2024 net profit of $3.3 billion on $50 billion revenue sets a strong foundation.

As EVs evolve into “computers on wheels,” Xiaomi’s smartphone heritage gives it an advantage. “Xiaomi is on track to make its electric vehicle segment profitable by the end of the year,” affirmed IndexBox, reflecting industry confidence.

Future Trajectories and Global Ambitions

Expansion beyond China is key. While currently focused domestically, Xiaomi eyes international markets, potentially exporting to Europe and Southeast Asia. Lei Jun’s X updates emphasize commitment to core technologies, with R&D investments fueling innovation.

In Q3 2025, the innovative business division, including EVs and AI, achieved profitability for the first time, with revenue of 700 million yuan, as detailed in CarNewsChina. This milestone not only validates Xiaomi’s pivot but also signals a maturing EV sector where efficiency trumps hype.