One of Tesla’s most fearsome Chinese rivals has just cracked the code to profiting from EVs.
Smartphone maker Xiaomi said on Tuesday that its electric vehicle business had turned a quarterly profit for the first time, less than two years after launching its first car.
The Apple rival’s EV, AI, and other new initiatives division reported a gross profit of $98.5 million for the quarter ending in September.
Revenues in the division hit a record high of $4 billion, with 28.3 billion yuan ($3.98 billion) coming from EV sales and 0.7 billion yuan ($98.5 million) from “related businesses.”
Hitting profitability caps a meteoric rise for Xiaomi’s EV venture.
Like Western rival Apple, the Chinese tech giant invested billions in building an electric car to rival Tesla and BYD — but unlike Apple, Xiaomi actually managed to ship an EV, launching the sleek SU7 sedan in March 2024.
The SU7 was a smash hit, selling over 130,000 units last year, and Xiaomi’s second vehicle, a Tesla Model Y competitor called the YU7, amassed 240,000 preorders in 24 hours when it launched in June 2025.
Xiaomi has faced headwinds, with the company’s stock price falling after a fatal crash involving an SU7 earlier this year, but sales have continued to grow. Xiaomi said on Tuesday it had delivered over 100,000 EVs in the third quarter, up from around 40,000 over the same period last year.
A tough road to profitability
Making money from selling EVs is notoriously difficult. By reaching profitability in under two years, Xiaomi has joined the small list of companies that have avoided the so-called “Valley of Death” that has claimed many promising EV startups.
Elon Musk’s Tesla reported its first profitable quarter in 2013, around 10 years after the company’s foundation and five years after Tesla began deliveries of its first vehicle, the Roadster.
It took Tesla another seven years to report a full year of profitability, during which the company nearly went bankrupt as it scaled up production of new models. Tesla reported $1.62 billion in operating income in the most recent quarter.
BYD, China’s largest seller of EVs, has also been consistently profitable. The Chinese automaker reported $1.1 billion in net income in the third quarter and saw its revenues eclipse Tesla’s for the first time last year.
However, BYD benefits from selling both hybrids and pure battery-electric vehicles, unlike Tesla and Xiaomi.
Other automakers have struggled to make money from building electric vehicles. Detroit giants Ford and GM continue to lose billions on their EV businesses, while startups Lucid and Rivian both reported losses of around $1 billion in the third quarter.
Even in China, where electric vehicle adoption is far ahead of the US, brutal price wars and cutthroat competition mean that only a few companies have managed to turn a profit.
Xiaomi rival Nio reported a net loss of nearly $700 million in the second quarter of 2025, while fellow EV startup Xpeng is closing in on profitability after cutting its own loss to just $50 million in the third quarter.
Leapmotor, a Chinese EV startup that has partnered with Jeep owner Stellantis, reported its second straight quarterly profit on Monday.
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