Xiaomi’s EV Push Accelerates as Production Hits 500,000 Milestone

TLDRs;

• Xiaomi hits 500,000 EV production milestone amid 2025 delivery target of 400,000+ units.
• EV and AI division posts 700 million yuan profit, though margins face pressure from chip costs.
• Rising memory prices and reduced tax incentives may challenge Xiaomi’s EV growth outlook.
• Analysts highlight automotive memory demand as critical for future EV profitability and tech expansion.

Xiaomi has achieved a major milestone in its electric vehicle (EV) ambitions, rolling out its 500,000th vehicle from production lines just 19 months after launching its first SU7 EV sedan.

The Beijing-based electronics giant expects to deliver more than 400,000 cars in 2025, surpassing its previous target of 350,000 units.

This achievement underscores Xiaomi’s accelerated push into the automotive sector, signaling its commitment to becoming a notable player in China’s EV market. “Reaching the half-million mark is an important validation of our production capabilities and market strategy,” a company spokesperson said.

EV and AI Division Shows Profitability

Despite operational challenges, Xiaomi’s EV and AI segment reported a profit of 700 million yuan (approximately US$98 million) in the latest quarter.

This performance demonstrates early financial traction for the company’s automotive ambitions, even as profit margins remain bundled across hardware and AI-related services, leaving the precise contribution from each segment somewhat opaque.

Analysts note that the company achieved a 25.5% gross margin, which translates to roughly 6,434 yuan profit per vehicle delivered in the quarter. While promising, margins may fluctuate depending on component costs and the split between hardware and software revenue.

Rising Costs Challenge Growth

Xiaomi faces mounting cost pressures as global memory chip prices surge. DRAM prices, particularly automotive-grade chips, have risen dramatically, sometimes two to three times the cost of standard consumer chips, driven by the increasing demand for advanced driver-assistance systems that require 8–32 GB of memory per vehicle.

Adding to the complexity, China’s EV purchase tax incentives are set to be reduced by half next year, which may dampen consumer demand.

Together, these factors pose short-term challenges to Xiaomi’s profitability and could impact the company’s ability to maintain its current gross margin levels.

Automotive Memory Market Offers Opportunity

Industry experts highlight that growth in automotive-specific memory will be critical for companies like Xiaomi looking to expand their EV footprint. Global demand for automotive memory is projected to jump from $13.7 billion in 2025 to $33.1 billion by 2030.

Companies with automotive-qualified memory components, extended temperature screening, and AEC-Q100 certification are likely to benefit the most from this growth.

Xiaomi’s ability to secure reliable memory supplies and navigate a volatile chip market will be a key determinant of its long-term success in the EV sector.

Looking Ahead

While Xiaomi has made remarkable strides in EV production, the company must carefully manage rising component costs and changing regulatory incentives. The firm’s ability to separate hardware and software profitability, secure key chip supplies, and maintain competitive vehicle pricing will be central to sustaining growth in a competitive Chinese EV market.

For now, the 500,000-vehicle milestone stands as a tangible sign that Xiaomi’s automotive strategy is gaining momentum, even as challenges in supply chain and margin pressures loom on the horizon.

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