Xiaomi Posts Stronger-Than-Expected Quarter as EV Surge Offsets Smartphone Slowdown

Xiaomi Corp. reported quarterly revenue of 116 billion yuan, up 31% year-on-year and slightly above analyst expectations, as booming demand for its recently launched YU7 SUV helped offset softer smartphone sales and lifted net income to 11.9 billion yuan, Bloomberg reported.

The results underscore the company’s growing dependence on electric vehicles to reinvigorate growth.

Xiaomi delivered 81,302 cars in Q2, bringing first-half deliveries to more than 157,000, a pace that puts the company on track to exceed its 2024 volumes.

Strong demand and stretched wait lists for the YU7 have helped Xiaomi sustain sales momentum in a crowded EV market and supported expanding gross margins. Co-founder Lei Jun has said the car business could turn profitable in the second half of the year.

Top-Line & Profitability Snapshot

Revenue rose to 116 billion yuan versus roughly 115 billion yuan in analyst models, while net income roughly doubled to 11.9 billion yuan.

Bloomberg Intelligence analysts noted potential margin gains from scale in the EV business and an improved Internet-of-Things product mix, even as promotional smartphone discounts and input cost pressures cloud near-term handset margins.

Xiaomi continues to face slowing smartphone demand and promotional pressure from major sales events, forcing discounting alongside peers Apple and Huawei.

By contrast, its Internet-of-Things and smart-home segments, and the nascent EV unit, appear to be expanding market share and offsetting weakness in handsets.

High-Stakes EV Ambition

The YU7’s strong reception is central to Xiaomi’s $10 billion EV bet; the company has publicly targeted a spot among the world’s top five automakers.

That ambition has helped propel Xiaomi’s market value higher (roughly $120 billion of market-cap gains over the past year), but it also exposes the firm to significant scaling risks as it wrestles with production constraints and supply-chain complexity. Wait times for the SUV have reportedly stretched to over a year.

Xiaomi is also doubling down on AI and chip design, unveiling a 3-nanometre Xring O1 chip for devices such as the Tablet 7 Ultra and pledging around $7 billion in semiconductor investment this decade, part of a broader move to internalise key components of its hardware stack.

Regulatory & Market Dynamics

The company has so far avoided deep discounting in recent government-nudged efforts to end a protracted price war in China’s auto market; regulators intervened in June to limit destructive competition across the supply chain.

Xiaomi must balance aggressive growth targets with profitability and regulatory sensitivities as it scales vehicle output.

Xiaomi’s near term will hinge on its ability to expand EV production, manage handset promotions and convert scale into sustainable margins. Management’s guidance that the car unit may reach profitability in H2 will be watched closely by investors seeking evidence that the EV gamble is moving from growth investment toward earnings contribution.