China's new energy vehicle (NEV) sector has undergone a significant transformation, shifting from an era characterized by "burning cash to scale up" to a new paradigm where "profitability is the key to survival." In the third quarter of 2025, Xiaomi announced impressive financial results, with revenue soaring to RMB 113.1 billion and an adjusted net profit reaching RMB 11.3 billion. Notably, its smart electric vehicle and innovative business division achieved an operating profit of RMB 700 million in its inaugural quarter, positioning Xiaomi as one of the select few profitable domestic NEV manufacturers.

The segment dubbed "smart electric vehicles and AI-driven innovative businesses" has swiftly become Xiaomi's second-largest revenue generator, with Q3 income surging to RMB 29 billion. This remarkable performance can be attributed to the benefits of economies of scale and a premium-focused strategy, which collectively boosted delivery volumes and average selling prices. During Q3 2025, Xiaomi's automotive gross margin reached an impressive 25.5%. Lu Weibing, a key figure at Xiaomi, observed that while the gross margin may see a dip next year, the company remains committed to ramping up its investment in research and development (R&D).

Xiaomi's overarching strategic ambition is to construct a holistic "human-vehicle-home" ecosystem. As part of this vision, the company has outlined plans to make its foray into the European market by 2027. Interestingly, on the day of the earnings announcement, Xiaomi Group's stock price experienced a 2.81% decline, with its total market capitalization witnessing a drop of over 30% from its September peak.