Xiaomi-Autos haben sich fast schon in die Gewinnzone begeben.

On August 19th, Xiaomi Group released its financial report for Q2 2025: revenue reached 116 billion yuan, a year-on-year increase of 30.5%; adjusted net profit was 10.8 billion yuan, a year-on-year increase of 75.4%.

This financial report has attracted high market attention because it is another financial report released by Xiaomi Group after the official launch of the second product of Xiaomi Auto, the YU7 series. The outside world is curious about what changes Xiaomi Auto has brought to the operation of Xiaomi Group?

From this financial report, the smartphone business remains the cornerstone, but its growth is sluggish; the IoT business is growing rapidly and has become the largest source of gross profit; the Internet services are performing stably, and the high gross profit margin provides important cash - flow support for Xiaomi; the auto business is growing rapidly and is “almost” profitable.

The financial report shows that Xiaomi delivered a total of 81,300 vehicles in Q2, bringing in revenue of 20.6 billion yuan, with a gross profit margin of 26.4%. Calculated by the delivery volume, the gross profit per Xiaomi vehicle is about 67,000 yuan.

More importantly, the loss margin of Xiaomi Auto is narrowing rapidly. It narrowed from an operating loss of 500 million yuan in Q1 to 300 million yuan in Q2, an improvement of 40%. According to the current trend, Lei Jun's previous prediction of “achieving profitability in the third and fourth quarters of 2025” is not impossible.

Xiaomi Group is one of the star companies on the Hong Kong stock market this year. Its stock price once soared to HK$60 in early July after the release of Xiaomi YU7. Before the release of this financial report, it closed at HK$52.4 on the Hong Kong stock market, with a market value of HK$1.36 trillion.

At present, Xiaomi's “bread - winning” model is successful. However, this model also faces significant challenges: the growth of the smartphone business is sluggish, with both ASP and gross profit margin declining; although the IoT business is growing strongly, it faces fierce competition from traditional giants.

The auto industry is a capital - intensive industry. Whether Xiaomi can win on multiple fronts simultaneously tests not only its resource allocation ability.

1

The auto business is just one step away from profitability

Compared with Q1, there have been significant changes in Xiaomi Auto in Q2.

First, look at the gross profit margin in Q2. It increased from 23.2% in Q1 to 26.4%.

Then, look at the delivery volume. In Q1, 75,900 vehicles were delivered, and in Q2, 81,300 vehicles were delivered, a quarter - on - quarter increase of 7.2%. Although the increase is not large, the market is concerned about whether the delivery volume can skyrocket in Q3 after the start of deliveries of Xiaomi YU7.

Most importantly, look at the loss margin. In Q1, the operating loss of Xiaomi Auto's business was 500 million yuan, and it narrowed to 300 million yuan in Q2, an improvement of 40%. Considering that Xiaomi Group's operating profit increased by 300 million yuan quarter - on - quarter to 13.4 billion yuan in Q2, the reduction of losses in the auto business also made an important contribution to the growth of the group's operating profit.

This improvement speed far exceeds market expectations.

Normally, the gross profit margin of auto companies is often under pressure during the rapid expansion period. However, Xiaomi Auto has achieved simultaneous growth in scale and profitability. Combining the views of multiple interviewees, there are mainly two reasons:

The main reason is the scale effect of a single model. Although the absolute number of Xiaomi's quarterly deliveries is not large, it is basically the sales volume of a single model, the SU7. Therefore, this scale can already bring about an obvious cost - spreading effect. The procurement cost and manufacturing cost of Xiaomi SU7 are both decreasing rapidly. Especially for core components such as batteries and chips, as the procurement volume increases, suppliers will offer more favorable prices.

The short - term factor is the optimization of the product structure. In Q2, Xiaomi started delivering the SU7 Ultra model, which has a higher selling price and a higher gross profit margin. The optimization of the product structure has increased the overall gross profit margin.

Image source / Xiaomi Auto Weibo

From the economic model of a single vehicle, Xiaomi Auto is very close to profitability:

Revenue per vehicle: 253,700 yuan

Gross profit per vehicle: 67,000 yuan (gross profit margin of 26.4%)

Allocated expenses per vehicle: about 73,000 yuan (5.9 billion in operating expenses ÷ 81,300 vehicles)

Net loss per vehicle: about 6,000 yuan

That is to say, theoretically, Xiaomi Auto only needs to reduce the allocated expenses per vehicle by 6,000 yuan, or increase the gross profit per vehicle by 6,000 yuan through price increases or cost reduction, to achieve profitability.

Although the gross profit margin is high, Xiaomi Auto is still making losses. The reason is simple: the expenses are too high. The operating expenses of Xiaomi Auto's business in Q2 were 5.9 billion yuan, including various expenses such as R & D, sales, and management.

According to the rules of the auto industry, as the delivery volume increases, the allocated expenses per vehicle will continue to decline. Based on the Q2 data, for Xiaomi Auto to achieve profitability in the second half of the year, the monthly average delivery volume needs to be stable at 30,000 - 35,000 vehicles.

An investor who follows Xiaomi analyzed to “Dingjiao One” that if the monthly delivery is stable at 30,000 vehicles, the quarterly delivery will be 90,000 vehicles. Calculated at a gross profit of 67,000 yuan per vehicle, the quarterly gross profit will be about 6 billion yuan. If the quarterly expenses are controlled within 6 billion yuan, profitability can be achieved.

This goal does not seem far away:

Xiaomi Auto will not have any trouble selling in the second half of the year. The Xiaomi YU7, which was officially launched at the end of June, received 289,000 large - scale orders in one hour. The market expects that the current backlog of orders exceeds 200,000 units.

The key is that the production capacity of Xiaomi Auto is also being released rapidly. A total of 157,200 vehicles were delivered in the first half of this year, and more than 30,000 vehicles were delivered in July, with a cumulative delivery of nearly 190,000 vehicles. To achieve the annual target of 350,000 vehicles, the monthly sales need to be maintained at 32,000 vehicles in the remaining five months. And Xiaomi's second - phase auto factory is about to be put into production, so it is not difficult to achieve the established goal.

According to the current trend, Xiaomi Auto is likely to achieve quarterly profitability at the end of 2025 or the beginning of 2026, possibly earlier than XPeng and NIO.

2

Other businesses need to continue to “support the family”

Although Xiaomi Auto is almost profitable, other businesses still need to continue to “support the family” before it achieves real profitability.

Judging from the figures, Xiaomi Auto had an operating loss of 300 million yuan in Q2, and this 300 million yuan needs to be subsidized by other businesses. So, who is supporting this “almost - profitable cow”?

In Q2, the smartphone revenue was 45.5 billion yuan, accounting for 39.3% of the total revenue, and it remains the cornerstone of Xiaomi. Simply calculated, the gross profit of the smartphone business in Q2 was about 5.2 billion yuan (45.5 billion × 11.5%). Although the gross profit margin is not high, the absolute amount is large, and it is still an important source of profit for Xiaomi.

However, the smartphone business is actually not doing well: the year - on - year decrease of 2.1% and the quarter - on - quarter decrease of 10.1% in revenue are a warning sign; in terms of shipments, 42.4 million units were shipped globally in Q2, with only a year - on - year increase of 0.6%, and the growth rate has almost stagnated; what is even more worrying is the significant decline in ASP (average selling price) and the decline in the gross profit margin.

In Q2, the ASP of Xiaomi smartphones was 1,073 yuan, a quarter - on - quarter decrease of 11.3% and a year - on - year decrease of 2.7%; the gross profit margin was 11.5%, with a nearly 1% decrease both year - on - year and quarter - on - quarter.

The reasons for the decline in ASP are multi - faceted. The direct reason is the adjustment of the product structure: Xiaomi launched entry - level products such as the REDMI A5 series in Q2, which pulled down the overall ASP. The most important reason is the intensification of market competition and the setback in high - endization: in the overseas market, Xiaomi faces fierce competition from brands such as Samsung, OPPO, and vivo. To maintain its market share, Xiaomi has to adopt a more aggressive pricing strategy, resulting in a slow process of high - endization in the global market.

However, there are also bright spots in Xiaomi smartphones. In the global market, Xiaomi still ranks third, with a market share of 14.7%. In Southeast Asia, Xiaomi regained the crown of the smartphone market, with a market share of 18.9%, topping the list again after four years.

Image source / Xiaomi Corporation Weibo

If the smartphone business is worrying, then the IoT business is eye - catching.

The revenue of IoT and consumer products in Q2 was 38.7 billion yuan, a year - on - year increase of 44.7%, reaching a record high. This growth rate is the most prominent among all of Xiaomi's businesses.

More importantly, the gross profit margin of the IoT business reached 22.5%, a year - on - year increase of 2.8 percentage points. Calculated at this gross profit margin, the gross profit of the IoT business in Q2 was about 8.7 billion yuan.

The main growth is in smart home appliances, with revenue increasing by 66.2% year - on - year and 133.7% quarter - on - quarter. This growth rate far exceeds that of the smartphone business. The significant increase in the shipment volume of air conditioners in smart home appliances has become the biggest bright spot.

In addition to air conditioners, other IoT categories of Xiaomi, including wearables (with a year - on - year revenue increase of 70.9%), tablets (with a year - on - year revenue increase of 41.4%), and laptops, have also achieved good growth.

The IoT business is becoming Xiaomi's new “cash cow.” This business has a relatively high gross profit margin, and the competition is not as fierce as that in the smartphone market, so it can “transfuse blood” for the auto business.

However, the competition in the air - conditioner market in the IoT business is becoming increasingly fierce. Since Q2, traditional giants such as Gree and Midea have started to fight back. Xiaomi needs to maintain growth while coping with the competitive pressure from traditional home appliance manufacturers.

The revenue of Internet services in Q2 was 9.1 billion yuan, a year - on - year increase of 10.1%, with a gross profit margin as high as 75.4%. Although the revenue scale is not large, the extremely high gross profit margin makes it an important source of profit for Xiaomi. Calculated at this gross profit margin, the gross profit of Internet services in Q2 was about 6.9 billion yuan.

The advertising business is the main source of revenue for Internet services, with revenue of 6.8 billion yuan in Q2, a year - on - year increase of 14.6%; in addition, the revenue of the game business was 1.1 billion yuan, a year - on - year increase of 5.1%.

Overall, the marginal cost of the Internet services business is very low, providing important cash - flow support for Xiaomi.

Let's simply calculate the gross profit contribution of each of Xiaomi's businesses in Q2:

Smartphone business: about 5.2 billion yuan

IoT business: about 8.7 billion yuan

Internet services: about 6.9 billion yuan

Auto business: about 5.6 billion yuan

The total gross profit is about 26.4 billion yuan, which is basically consistent with the 26.1 billion yuan disclosed in the financial report.

Judging from the gross profit contribution, an important change is that the IoT business has surpassed the smartphone business and become the largest source of gross profit for Xiaomi.

According to the current trend, Xiaomi's “bread - winning” model is sustainable. The growth of the gross profit of the IoT business and Internet services can cover the losses of the auto business. Moreover, as the scale of the auto business expands, the loss margin is still narrowing.

3

Xiaomi is still good at saving money

The reason why Xiaomi's “bread - winning” model works is also because of the company's careful budgeting.

The Q2 data shows that the overall expense ratio of Xiaomi Group is 13.9%, a year - on - year decrease of 2.2 percentage points and 3.7 percentage points lower than that in Q4 2023 before the start of car - making. Normally, when a company enters a new business field, the expense ratio will increase significantly. However, after Xiaomi started making cars, the overall expense ratio not only did not increase but also decreased.

Specifically, the R & D expense ratio is 6.7%, a year - on - year decrease of 0.1 percentage point; the sales expense ratio is 6.7%, a year - on - year decrease of 0.6 percentage point; the management expense ratio is 1.4%, a year - on - year decrease of 0.4 percentage point. This expense ratio is much lower than that of new car - making forces.

How did Xiaomi achieve this?

The primary reason is the scale effect. Xiaomi's revenue in Q2 was 116 billion yuan, a year - on - year increase of 30.5%. The rapid growth of the revenue scale has spread the fixed expenses. Taking R & D expenses as an example, the R & D expenditure in Q2 was 7.8 billion yuan, a year - on - year increase of 41.2%. Although the absolute amount has increased significantly, due to the faster revenue growth, the R & D expense ratio has decreased slightly.

Xiaomi also pays attention to the allocation of R & D investment. Most of the R & D expenses in Q2 were used for the auto business. However, this part