Xiaomi: After the subsidy is gone, can its cars really hold up its reputation?

Xiaomi Group released its financial report for the third quarter of 2025 (ending in September 2025) after the Hong Kong stock market closed on the evening of November 18, 2025, Beijing time. The key points are as follows:

1. Overall performance: Xiaomi Group's revenue reached 113.1 billion yuan, a year - on - year increase of 22.3%. Among them, the revenue of traditional businesses (mobile phones x AIoT) only increased by 1.6% year - on - year. The growth this quarter was mainly driven by the automotive business.

The gross profit margin increased to a relatively high level of 22.9%, mainly supported by the structural change brought about by the increased proportion of the automotive business. However, the gross profit margin of the mobile phone business declined due to intensified competition.

2. Automotive business: Xiaomi Group's automotive - related revenue this quarter was 29 billion yuan, basically in line with expectations. The company's automotive shipments this quarter reached 109,000 units, and the average price per vehicle further increased to 260,000 yuan. This was mainly due to the increased shipments of the relatively high - priced YU7, which structurally drove up the average price of automobiles.

The gross profit margin of the automotive business this quarter continued to increase to 25.5%, compared with the market expectation of 25.6%. However, it slightly declined compared with the previous quarter, mainly because the proportion of the high - gross - profit - margin SU7 Ultra decreased.

Dolphin Research estimates that the core operating profit of Xiaomi's automotive business this quarter was 680 million yuan (the 1.1 billion yuan disclosed in the financial report after excluding 400 million yuan of equity - incentive - related expenses), achieving profitability for the first time.

3. Mobile phones: The revenue was 46 billion yuan, a year - on - year decline of 3.1%, in line with the market expectation of 45.8 billion yuan. Among them, the shipments of Xiaomi mobile phones increased by 0.5% year - on - year this quarter, while the average price of Xiaomi mobile phones decreased by 3.6% year - on - year. Affected by market competition, the gross profit margin of the mobile phone business continued to decline to 11.1% this quarter.

Looking at different markets: The shipments of Xiaomi mobile phones in the domestic market decreased by 1.8% year - on - year, while the shipments in the overseas market increased by 2.7%. With the tightening of national subsidies, the shipments and market share of Xiaomi mobile phones in the domestic market declined again year - on - year. If the storage prices continue to rise in the future, the mobile phone business will face not only sales problems but also pressure on the gross profit margin.

4. IoT: The revenue was 27.6 billion yuan, a year - on - year increase of 5.6%, compared with the market expectation of 38.1 billion yuan. The growth rate of IoT dropped significantly (it increased by more than 40% year - on - year in the first three quarters). The decline in the growth rate this quarter was mainly dragged down by the decline of large household appliances.

Since the unit price of large household appliances is relatively high, the subsidy for some products may reach 1,000 - 2,000 yuan. Therefore, after the subsidy was tightened, it directly affected the demand for the large - household - appliance business.

5. Internet services: The revenue was 9.4 billion yuan, a year - on - year increase of 10.8%, compared with the market expectation of 9.2 billion yuan. The growth was mainly driven by the advertising business, while the value - added services declined slightly compared with the previous quarter. Among them, the number of MIUI users increased by 8% year - on - year, while the ARPU value only increased by 2%.

Looking at different regions: The overseas Internet revenue this quarter was 3.3 billion yuan, while the domestic Internet revenue was about 6.1 billion yuan. The number of MIUI users in both the domestic and overseas markets continued to grow this quarter.

6. Profit side: The core operating profit of the main business was 6.7 billion yuan. The adjusted net profit was 11.3 billion yuan (Dolphin Research does not agree with the way of adjusting the net profit. This is for reference only and does not require too much attention).

Among them, the core profit of Xiaomi's traditional business was about 6.03 billion yuan, and the automotive business achieved profitability for the first time with 680 million yuan. The quarter - on - quarter decline of the company's core profit this quarter was mainly affected by the shrinking profit of traditional businesses.

Dolphin Research's overall view: After the subsidies end, what can drive growth?

Xiaomi's current financial report situation is quite clear compared with what was communicated during the previous preview. The core operating data basically meets the previously - lowered expectations in the preview.

This financial report mainly shows the pressure on traditional businesses. The mobile phone business was affected by intensified market competition, with a decline in revenue and gross profit margin this quarter. At the same time, under the situation of "tightening national subsidies", the growth rate of the IoT business dropped significantly to about 5% this quarter.

Especially for large household appliances in the IoT business, the final payment price may differ by 1,000 - 2,000 yuan or more with or without national subsidies, which directly affects the purchasing behavior of end - users. Originally, large household appliances were the main driving force for the company's IoT business, but the domestic revenue from large household appliances even showed a double - digit decline this quarter.

Compared with this financial report, Xiaomi's stock price has continuously declined from over HK$50 to around HK$40, which actually reflects the market's double concerns about the company's automotive business and traditional businesses:

a) Automotive business: The "vacuum period" for new product launches + the decline in orders. The supply - demand pattern may reverse next year.

Xiaomi's automotive deliveries in October increased to 48,600 units, an increase of more than 6,000 units compared with September. Benefiting from the company's previously accumulated orders and the ramping - up of the second - phase factory, this mainly reflected the past order performance of Xiaomi cars.

Compared with deliveries, the market is more concerned about Xiaomi's current order situation. Judging from the recent order situation, Xiaomi's weekly orders have declined to around 4,000 - 5,000 units, roughly corresponding to less than 20,000 new orders per month, which is actually a rather dangerous signal.

This means that the consumption of Xiaomi's current orders is faster than the generation of new orders (the monthly consumption of accumulated orders is about 30,000 units). As the "reservoir" of Xiaomi's orders decreases, the supply - demand relationship of Xiaomi cars may change from "supply falling short of demand" to "supply exceeding demand".

Looking at the reservation situation on Xiaomi's official car website, the delivery cycle of the basic version of the current Xiaomi SU7 is 28 - 31 weeks, and the delivery cycles of the SU7 Pro and SU7 Max are only 6 - 9 weeks; the delivery cycle of the YU7 remains at 32 - 40 weeks.

The shortened delivery cycle of the SU7 Pro and SU7 Max to before the Chinese New Year may be a company strategy to increase the overall average price of the SU7 and reduce the impact of VAT subsidies on the company.

Overall, Dolphin Research estimates that the current comprehensive delivery cycle of Xiaomi cars is still about 30 weeks, corresponding to nearly 400,000 on - hand orders.

If Xiaomi does not launch new cars in the near future, if the company maintains a weekly order volume of 4,000 - 5,000 units and considering the ramping - up performance of the second - phase factory, Dolphin Research estimates that the company will exhaust its "accumulated" orders by mid - next year and enter a demand - driven situation of "supply exceeding demand".

b) Traditional businesses (mobile phones x AIoT): The tightening of national subsidies and the rising storage prices have lowered the market's expectations for the company next year.

① The growth rate of IoT significantly declined: Driven by national subsidy policies, the company's IoT business achieved a year - on - year growth of more than 40% for three consecutive quarters.

After local governments adjusted the national subsidy policy to the form of "grabbing vouchers or lottery draws" (actually a disguised "tightening"), the year - on - year growth rate of the IoT business this quarter dropped significantly to single - digit growth.

[After all, national subsidies can bring a 15 - 20% discount. If consumers fail to obtain the national subsidy qualification, some may choose not to buy or delay their purchases.]

The company's performance this quarter directly shattered the previous expectation of continuous high - growth in the IoT business. If the national subsidies continue to "tighten" next year, there is a possibility of negative growth in the IoT business on the basis of this year's high base.

② The mobile phone business faces pressure from rising storage prices: Xiaomi advanced the launch of its flagship new products this year by more than a month again, following Apple's lead and launching them at the end of September. The new products are named "17/17Pro/17ProMax" in full - scale comparison with Apple.

However, compared with the sincerity of the basic version of the iPhone 17, which "offers more for the same price" (the price remains the same while the storage capacity increases from 128G to 256G), Xiaomi's newly launched mobile phones this time are rather mediocre.

In other words, after the national subsidy, the price of the new Apple 17 (256G) is 5,499 yuan, narrowing the price gap with Xiaomi's flagship models, while Xiaomi did not offer a more attractive price this time.

The market was not satisfied with this product launch. Xiaomi's stock price declined again on the day after the launch event.

On the other hand, the continuous rise in storage prices directly affects next year's expectations. The increase in storage costs can either be borne by terminal manufacturers or transferred to consumers through price increases. The former will affect the company's gross profit margin, and the latter will affect market demand.

The company's mobile phone gross profit margin has dropped to around 11% this quarter. If storage prices continue to rise next year, the demand and gross profit margin of mobile phones and other electronic products will continue to be under pressure.

Overall, affected by the double pressure on "traditional businesses + automotive business", the company's stock price has declined frequently. At this stage, it is relatively more important to calculate the bottom valuation of Xiaomi after this round of decline.

Under the pessimistic scenario assumption, Xiaomi's traditional businesses will achieve single - digit growth in 2026, and the automotive business will end the "supply falling short of demand" situation in the second half of the year. It is estimated that the after - tax core operating profit of the company's traditional businesses in 2026 will be about 30 billion yuan, and the revenue of the automotive business will be about 220 billion yuan.

Generally speaking, Xiaomi is currently affected by multiple negative factors. The launch of new mobile phone products has been completed, and the launch of new automotive products has entered a "vacuum period", which is difficult to inject confidence into the market in the short term. A more detailed value analysis has been published in the article with the same title in the [Dynamic - Research] section of the Changqiao App.

The following is a detailed analysis

I. Overall performance: The automotive business becomes the main driving force

With the addition of the automotive business, Xiaomi's current financial report now includes two new categories, "Automotive and Innovative Businesses", in addition to the previous "Mobile Phones X AIoT".

Xiaomi's separate disclosure of "Automotive and Innovative Businesses" shows the company's high level of attention to the automotive business. The company's market value breaking through the one - trillion - yuan ceiling is mainly due to the expectations brought by the automotive business, which is also a key factor for the company's further breakthrough in the future.

1.1 Revenue side

Xiaomi Group's total revenue in the third quarter of 2025 was 113.1 billion yuan, a year - on - year increase of 22.3%, compared with the market expectation of 112.5 billion yuan. The company's growth this quarter mainly came from the automotive business.

1) The original businesses - the mobile phones x AIoT business (traditional business) achieved a revenue of 84.1 billion yuan, a year - on - year increase of 1.6%. The hardware business performed weakly. The mobile phone business continued to decline year - on - year, and the growth rate of the IoT business dropped to single - digit growth.

2) This quarter, Xiaomi's new businesses such as smart cars achieved a revenue of 29 billion yuan. Both the shipments and the average price increased this quarter, mainly driven by the ramping - up of the YU7's mass production.