Xiaomi Revenue Surges 30% to RMB 116 Billion as Electric Vehicle Deliveries and Smart Home Sales Drive Record Quarter
Xiaomi's Electric Gamble Pays Dividends as Tech Giant Rewrites Growth Playbook
Automotive triumph masks smartphone vulnerabilities in landmark quarter
BEIJING — Xiaomi Corporation, the Chinese technology giant that built its reputation on affordable smartphones and more, reported second-quarter 2025 financial results that signal a fundamental business transformation. Revenue surged 30.5% year-over-year to RMB 116 billion, while adjusted net profit exploded 75.4% to RMB 10.8 billion—figures that reflect the company's aggressive expansion beyond mobile devices into electric vehicles, home appliances, and connected devices.
The results, announced today, showcase a diversified technology ecosystem strategy that few companies have successfully executed at scale. Xiaomi's automotive division, launched just 18 months ago, delivered 81,302 electric vehicles in the quarter—a 197.7% year-over-year increase—while its Internet of Things and lifestyle products segment grew 44.7% to RMB 38.7 billion. Simultaneously, air conditioner sales jumped 60%, washing machines increased 45%, and refrigerators climbed 25%.
This convergence of growth across disparate product categories illustrates what industry analysts describe as genuine ecosystem effects: customers acquiring Xiaomi products in one category subsequently purchase complementary devices, creating cross-selling opportunities that traditional single-category manufacturers cannot replicate.
"Ecosystem effects" describe the powerful competitive moat created when a network of interconnected products and services become more valuable to customers as a whole than as individual parts. This network strengthens through mechanisms like cross-selling between partners, which increases customer loyalty and makes it difficult for rivals to compete.
The Electric Vehicle Catalyst
Xiaomi's automotive division delivered what industry observers are calling a masterclass in rapid market penetration. With 81,302 electric vehicles delivered in the quarter—a staggering 197.7% increase—the company has achieved something that eluded many established automakers: profitable scale within 18 months of market entry.
The segment's RMB 20.6 billion in revenue represents more than just successful vehicle sales; it demonstrates the power of technology transfer from consumer electronics to automotive manufacturing. The 26.4% gross margin reported for Xiaomi's "innovative businesses" segment, which includes automotive operations, suggests the company has avoided the margin compression that has plagued traditional automakers entering the electric vehicle space.
Did you know that Xiaomi's electric vehicle deliveries surged by nearly 200% year-on-year in the second quarter of 2025, delivering over 81,000 EVs—a 7% increase from the previous quarter? This rapid growth helped push Xiaomi’s EV revenue to approximately 20.6 billion yuan in just three months, substantially contributing to the company’s overall 30% quarterly revenue rise and positioning Xiaomi as a fast-rising player in the global EV market.
More telling is the market response to Xiaomi's YU7 model launch. The vehicle accumulated 240,000 pre-orders within 18 hours, creating delivery wait times extending 38 to 60 weeks. This demand signal, while positive, presents execution risks that could determine whether Xiaomi's automotive success proves sustainable or represents a peak enthusiasm moment.
"The convergence of automotive technology with consumer electronics has created opportunities that didn't exist five years ago," noted one Beijing-based automotive analyst who requested anonymity. "Xiaomi's ability to leverage its existing supply chain and software capabilities represents a structural advantage that traditional automakers struggle to replicate."
Smartphone Business Under Pressure
While automotive operations captured headlines, Xiaomi's core smartphone business revealed underlying vulnerabilities that merit investor attention. Despite maintaining a 14.7% global market share with 42.4 million units shipped, the segment experienced notable average selling price (ASP) decline as the company pursued market share in emerging economies through budget-oriented Redmi models.
Global Smartphone Market Share by Vendor in Q2 2025
| Vendor | Market Share (%) | Notes |
|---|---|---|
| Samsung | 19 | Largest vendor globally |
| Apple | 16 | Second place |
| Xiaomi | 15 | Strong in emerging markets |
| vivo | 9 | Stable mid-tier growth |
| TRANSSION | 9 | Fifth place |
| OPPO | ~9 | Strong entry-level segment |
The strategic tension is evident: Xiaomi continues to dominate the 4,000-5,000 RMB smartphone segment in China, where premium model sales now represent 27.6% of domestic revenue, yet global ASP pressure persists. This divergence suggests that while the brand benefits from an automotive "halo effect" in China, international markets remain price-sensitive and commoditized.
The smartphone division's RMB 45.5 billion in revenue underscores its continued importance as the ecosystem's primary customer acquisition channel, even as margins face pressure. Industry observers note that Xiaomi appears to be rationally prioritizing user base expansion over short-term smartphone profitability—a strategy that makes sense only if alternative monetization channels prove sustainable.
The IoT Ecosystem Advantage
Perhaps the most underappreciated aspect of Xiaomi's performance lies in its Internet of Things and lifestyle products division, which generated RMB 38.7 billion in revenue, representing 44.7% year-over-year growth. This segment's success illuminates the company's genuine competitive moat: the ability to cross-sell complementary products through integrated software experiences.
Air conditioner sales surged 60%, washing machines increased 45%, and refrigerators grew 25%, driven partly by government trade-in subsidies but sustained by genuine consumer demand for connected home experiences. With IoT connected devices approaching one billion units and monthly active users reaching 731 million, Xiaomi has achieved the scale necessary for sustainable ecosystem effects.
The strategic implications are profound. While competitors like Apple have focused on premium hardware ecosystems, Xiaomi has created a mass-market alternative that generates recurring engagement across multiple product categories. This diversification provides revenue stability that pure-play smartphone manufacturers lack.
Internet Services: The Margin Engine
Xiaomi's internet services division, generating RMB 9.1 billion in quarterly revenue with approximately 75% gross margins, represents the financial foundation enabling the company's aggressive hardware expansion. The segment's 10.1% growth, while modest compared to hardware divisions, provides the cash flow certainty that justifies capital-intensive automotive investments.
(Table summarizing Xiaomi's gross margins by business segment in Q2 2025, showing the relative profitability of innovative business segments, IoT & lifestyle products, and smartphone segments based on reported financial data.)
| Business Segment | Gross Margin Q2 2025 | Notes |
|---|---|---|
| Innovative Businesses (EV, AI) | 26.4% | Highest margin segment; includes EV business with improving profitability |
| IoT & Lifestyle Products | 22.5% | Strong margin driven by home appliances, lifestyle products, and wearables |
| Smartphones | Not explicitly stated | Revenue declined 2.2%, margin pressured by lower average selling prices, strong volume |
Significantly, overseas internet services revenue reached a record 33% share of total services revenue, suggesting that Xiaomi's international expansion creates sustainable value beyond hardware sales. This geographic diversification reduces dependence on Chinese regulatory environments while creating optionality for future monetization.
Capital Position and Strategic Flexibility
With cash reserves of RMB 235.9 billion, Xiaomi maintains what analysts describe as Beijing's strongest balance sheet among technology companies. This financial strength provides strategic patience—the ability to absorb automotive scaling costs without compromising investment in research and development, which increased 41% year-over-year to RMB 7.8 billion.
The capital position also enables Xiaomi to weather potential price competition in electric vehicles without panic discounting. As Chinese automotive markets face increasing pressure from subsidy reductions and international competition, financial strength becomes a competitive differentiator.
Investment Implications and Forward Outlook
From an investment perspective, Xiaomi's Q2 results suggest a company successfully transitioning from device manufacturer to platform operator. The ecosystem strategy—connecting smartphones, vehicles, IoT devices, and internet services—creates customer lifetime value that extends far beyond traditional hardware margins.
However, execution risks remain significant. The automotive division's ability to convert pre-orders into deliveries while maintaining margin discipline will determine whether current valuations prove justified. Similarly, the smartphone division's margin trajectory in emerging markets could impact overall profitability.
Market analysts suggest that investors should monitor several key metrics in coming quarters: monthly automotive delivery rates, smartphone ASP trends in international markets, and IoT revenue growth as government subsidies normalize. The company's ability to maintain growth across multiple divisions simultaneously will test management's operational capabilities.
"Xiaomi represents a unique experiment in technology conglomerate strategy," observed one Hong Kong-based fund manager. "The question isn't whether individual divisions can succeed, but whether the ecosystem effects create sustainable competitive advantages that justify the operational complexity."
For investors seeking exposure to China's technology transformation, Xiaomi offers diversified growth across multiple secular trends: electric vehicle adoption, smart home penetration, and emerging market smartphone expansion. However, this diversification comes with execution complexity that requires careful monitoring of operational metrics across disparate business lines.
The company's Q2 performance suggests that ecosystem strategies can create genuine competitive moats, but only if management can maintain focus across an increasingly complex portfolio of businesses. Success will require balancing growth investment with profitability discipline—a challenge that will define Xiaomi's trajectory in an evolving technology landscape.
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