Xiaomi Achieves Profitability with Electric Car Division

Xiaomi has reported quarterly profits in its electric vehicle (EV) division for the first time since entering this market, marking a significant milestone for the company in its efforts to diversify beyond mobile phones.

The unit posted a profit of 700 million yuan (approximately 89 million euros) between July and September, compared to a loss of 300 million in the previous quarter. This result boosted the group's total net profit to 12.3 billion yuan, far exceeding the 9.62 billion forecasted by analysts.

The progress comes at a delicate time for the Chinese tech giant. Intense competition with Apple in the high-end segment and delays in deliveries of its first electric models have pressured its stock price. Xiaomi shares have plummeted around 20% since May, becoming the worst-performing stock among major Chinese tech companies in recent months.

In the mobile business, the company has intensified its offensive after launching a $630 smartphone in September to compete directly with the iPhone 17. However, according to Counterpoint Research, one in four phones sold in China last month was an iPhone, while Xiaomi failed to match Oppo's growth.

Additionally, the rise in memory chip costs has eroded margins, and the company has struggled to pass on these cost increases to consumers.

In the electric vehicle sector, Xiaomi maintains its target of delivering 350,000 units in 2025, following its entry into the sector in early 2024. The company reported about 40,000 deliveries in October, the same figure as the previous month, although strong demand and production bottlenecks continue to cause waits of up to nine months for some models. The success of the SU7 sedan led its co-founder, Lei Jun, to predict profits for the division in the second half of this year, a prediction that is now coming to fruition.

The launch of Xiaomi's first SUV, which has already accumulated solid orders, has bolstered optimism about the company's ability to compete not only with local rivals like BYD but also with Tesla in international markets.

The company maintains its ambition to rank among the world's top five car manufacturers and plans to start selling its EVs in Europe in 2027, as announced by its president, Lu Weibing, last August.

Despite the progress, investors remain cautious. Concerns about the safety of some models and delays in production plants have weighed on market sentiment and increased bearish bets among hedge funds.