In-depth Analysis of Xiaomi's Automotive Business Profit Breakthrough and Lin Bin's Share Reduction Plan

Based on the latest market data and research materials, I will provide an in-depth analysis of Xiaomi’s automotive business and the market signals from the executive’s share reduction plan.

: Xiaomi’s automotive business achieved its first positive operating profit of RMB 700 million in Q3 2025 [1], a milestone marking the transition of Xiaomi’s car-making business from the investment phase to the harvest phase. Morningstar Research estimates that Xiaomi’s electric vehicle sales will reach approximately 380,000 units in 2025 [1].

:

• Quarterly Delivery Volume Changes
  : Need to closely track whether monthly and quarterly delivery volumes can sustain growth
• Capacity Utilization
  : The capacity ramp-up of Xiaomi’s auto factory directly affects the room for profit margin improvement
• Performance of New YU7 Model
  : Lei Jun announced he will conduct a YU7 teardown live stream, demonstrating confidence in the new model’s market promotion [2]
• Gross Margin Level
  : The average profit margin of the automotive business in the first 8 months of 2025 was only 4.5% [1], so need to pay attention to whether it can improve subsequently

[3][4]:

• Timeline
  : Starting from December 2026, to be completed over 4 years
• Reduction Scale
  : No more than USD 500 million per year, cumulative up to USD 2 billion (~HKD 15.6 billion)
• Current Holdings
  : Lin Bin holds approximately 1.881 billion Class B ordinary shares (8.74%) and 448 million Class A ordinary shares (9.94%) of Xiaomi [3]
• Purpose of Cash-out
  : Mainly for establishing an investment fund

:

1. Non-immediate Reduction
   : Unlike the market’s concern of “immediate reduction of HKD 14 billion”, the plan starts only at the end of 2026, leaving time for market adjustment
2. Phased Exit Strategy
   : The annual upper limit of HKD 3.9 billion reduction is a moderate proportion relative to the holding scale (~HKD 33 billion)
3. Historical Comparison
   : Lin Bin previously conducted large-scale reductions in 2019 and 2020, and had promised a lock-up period [4]
4. Divergence in Executive Behavior
   : Xiaomi Chairman Lei Jun recently increased holdings at an average price of HKD 38.58 to support the stock, contrasting with Lin Bin’s reduction plan [4]

:

• Monthly delivery volume year-over-year and quarter-over-quarter changes
• Order conversion rate and backlog of undelivered orders
• Sales structure of SU7 and YU7 models
• Expansion speed of sales channels

:

• Whether the automotive business gross margin can break through the 10% threshold
• Changes in R&D investment as a percentage of revenue
• Degree of impact of the automotive business on the overall group’s profit margin

:

• Deviation degree of Xiaomi’s share price from fair value (Morningstar gives a target price of HKD 36, current share price is HKD 39.22 [1])
• Changes in institutional investor positions
• Support of smartphone main business performance for the automotive business’s investment capacity

The profit breakthrough of Xiaomi’s automotive business shows that its “Human-Vehicle-Home Full Ecosystem” strategy is making substantial progress, but Lin Bin’s share reduction plan reflects that core executives may hold a cautious attitude towards short-term stock prices. Against the backdrop of intensifying competition in the new energy vehicle market, it is recommended that investors focus on the sustainability of delivery volume growth, the room for gross margin improvement, and whether the smartphone main business can continue to support the automotive business with capital.

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:
[1] Morningstar maintains Xiaomi (01810) fair value at HKD36, believes current price is too high (https://hk.finance.yahoo.com/news/晨星維持小米-01810-公允價值36-港元-認為現市價過高-022601463.html)
[2] Live Car Teardown | Lei Jun Invites Netizens to Celebrate New Year, Announces Tomorrow Night’s Live Stream Where Engineers Will Teardown YU7 (https://hk.finance.yahoo.com/news/現場拆車-雷軍約網民跨年-預告明晚開直播-工程師現場拆yu7-080000200.html)
[3] Xiaomi’s Lin Bin Plans to Reduce Holdings, Cashing Out No More Than HKD3.9 Billion Annually (https://hk.finance.yahoo.com/news/小米林斌擬減持-每年套現不逾39億-180900904.html)
[4] Starting Next Year, Reduce Holdings Over 4 Years for Up to USD2 Billion! Xiaomi’s “No.2 Person” Lin Bin Reduces Holdings Again (Previously Cashed Out Over HKD8.5 Billion) (https://hk.finance.yahoo.com/news/明年起減持4年最多20億鎂-小米-二號人物-林斌再度減持-此前累計套現逾85億港元-020512056.html)