Xiaomi's $10 Billion EV Bet Pays Off as Smartphone Sales Slow

In the second quarter of 2025, Xiaomi Corporation reported a 31% year-over-year increase in revenue, slightly exceeding analyst expectations. This growth was driven in large part by the successful launch of the company's second electric vehicle, the YU7 sport utility vehicle, which helped offset slowing demand for Xiaomi's smartphones.

Xiaomi delivered 81,302 cars in Q2 2025, bringing the total number of EVs sold in the first half of the year to over 157,000 units. This strong performance puts the company on track to surpass its 2024 EV sales figures. The high demand for the YU7 SUV, which co-founder Lei Jun unveiled at the end of June, has led to wait times of over a year for the vehicle.

Despite the production challenges of scaling up its EV business, Xiaomi remains committed to its $10 billion gamble on the fast-growing but crowded electric vehicle market. The company aims to become one of the world's top five carmakers, taking on established players like Tesla and BYD. Xiaomi's EV division is expected to turn profitable in the second half of 2025, according to Lei Jun.

The company's stock has gained over $120 billion in market value over the past year, buoyed by its push into the EV space. Xiaomi has managed to avoid getting embroiled in the industry's price war, as demand for its vehicles remains high. However, the stock is now trading at more expensive valuations than both BYD and global smartphone rival Samsung Electronics.