In-Depth Analysis Report on the Competitiveness of Xiaomi Auto's Business

I have now collected sufficient data. Let me provide an in-depth analysis of the sustainable competitiveness of Xiaomi Auto’s business.

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Xiaomi Auto delivered an impressive performance in its second full delivery year.

[1][2]. This achievement has allowed Xiaomi Auto to establish a firm position among new EV manufacturers, becoming a model of successful cross-border EV manufacturing.

• Xiaomi SU7
  : Remained the sales champion of sedans priced above RMB 200,000, ranking first in cumulative sales in this price segment from January to November 2025
• Xiaomi YU7
  : As its first SUV model, it delivered over 150,000 units within 6 months of launch, 2.3 times the delivery volume of the SU7 in the same period, and has topped the sales rankings of mid-to-large SUVs for consecutive months
• Xiaomi SU7 Ultra
  : Delivered over 10,000 units within less than half a year of launch

Xiaomi Auto’s factory delivered a cumulative total of 500,000 units approximately 20 months after production started, with monthly deliveries exceeding 50,000 units in December 2025[2]. Monthly production capacity has stabilized at over 40,000 units, indicating the rapid maturity of its supply chain management capabilities.

The profitability of Xiaomi Auto’s business validates the sustainability of its business model.

[3][4]. This level is leading among new EV manufacturers, mainly due to:

1. Extreme Focus Strategy
   : Initially concentrating resources to create a single blockbuster model, improving R&D and production efficiency
2. Supply Chain Cost Control
   : Applying strict cost management and scale bargaining power from the consumer electronics industry to the automotive industry
3. Channel Efficiency
   : Combining direct sales channels with online marketing to reduce losses from intermediate links

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Xiaomi’s investment in the safety design of the YU7 reflects its emphasis on product quality. Below is a technical analysis of key safety features:

The Xiaomi YU7 adopts a signature long hood design, which is not just an aesthetic consideration but also a safety engineering choice.

[5].

In the 25% offset crash test, the YU7 demonstrated a unique safety strategy:

• When a collision occurs, the body of the vehicle will bounce to the left after hitting an obstacle, and the wheel will be ejected outward
• Xiaomi staff explained that during a 25% offset crash, the vehicle’s longitudinal beams absorb less energy, and most of the force is directed toward the A-pillar.
  Xiaomi’s strategy is to make the vehicle body slide away as much as possible, so that it has already shifted by the time it would otherwise hit the A-pillar, achieving the effect of “using minimal force to defuse a heavy impact”
  [5]
• To achieve this effect, the cross beams and subframe of the YU7 have a side angle, so the impact force will push the vehicle outward; the wheel will rotate and be ejected upon impact to avoid intruding into the cabin

[5]. Li Xiaoshuang, Vice President of Xiaomi Auto, stated that this design is very leading in terms of safety redundancy.

The Xiaomi YU7 is equipped with an advanced intelligent driving system and a multi-sensor fusion perception solution. In the disassembly video by Yiche,

[5].

The Anhui expressway crash incident in March 2025 had a certain impact on the Xiaomi Auto brand. In May of the same year, Lei Jun admitted at an internal company event: “This incident made us realize that everyone’s expectations and requirements of us are far beyond our imagination.”[3]

• In September 2025, an announcement from the State Administration for Market Regulation showed that Xiaomi recalled approximately 116,900 SU7 standard edition electric vehicles to optimize the advanced driver-assistance system
• On January 3, 2026, Lei Jun disassembled the YU7 during a 4.5-hour live stream, showing the vehicle’s safety design in detail to the public, with over 18 million views on the Weibo platform[5]

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Xiaomi’s commitment to R&D investment demonstrates its determination to deeply engage in the automotive business.

[1][6].

• Expected R&D investment of RMB 32-33 billion in 2025
• Expected investment scale will increase to approximately RMB 40 billion in 2026
• Focusing on three core technology tracks: chips, OS, and AI

[6]. This strategic layout is reflected in:

1. Intelligent Driving
   : Continuous iteration and upgrade of the Xiaomi Pilot intelligent driving system
2. Intelligent Cabin
   : Ecological integration capabilities of the Surge OS in-vehicle system
3. Large Model Applications
   : In-depth application of generative AI in vehicle intelligent scenarios

[3]. The synergistic advantages of this “all-scenario ecosystem of people, vehicle, and home” are reflected in:

• Customer Acquisition Cost Advantage
  : Ecosystem synergy reduces customer acquisition costs to below the industry average
• Integrated User Experience
  : Seamless connection between mobile phones, vehicles, and smart home devices
• Brand Stickiness
  : Brand loyalty of the Mi Fan group is converted into automotive consumption

Xiaomi CarIoT has opened up more than 30 product categories, and has reached in-depth cooperation with 4 automakers including BYD and GAC Toyota[6].

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Dimension	Analysis
Brand Momentum	Lei Jun’s personal IP and Xiaomi’s accumulated brand in the consumer electronics industry provide strong brand endorsement and traffic foundation for the automotive business
Ecosystem Synergy	The “all-scenario ecosystem of people, vehicle, and home” strategy has formed a unique differentiated competitive advantage, with 72% of users being Mi Fans
Cost Control	Supply chain management capabilities from the consumer electronics industry are transformed into cost advantages in automotive manufacturing, with a Q3 gross margin of 26.4%
Channel Efficiency	477 stores (over 400 new stores in 2025) + online direct sales model, with channel costs lower than traditional dealer models
Production Capacity Ramp-Up	Delivered 500,000 units in 20 months, with monthly deliveries exceeding 50,000 units in December, demonstrating strong manufacturing execution

Dimension	Analysis
Brand Trust	As a new entrant, automotive safety incidents have impacted brand trust, which takes time to rebuild
Product Matrix	Currently only has 3 products, covering limited market segments, putting it at a disadvantage against full-category competitors
First-Mover Advantage in Intelligence	In the field of high-level intelligent driving, it started relatively late compared to competitors like Huawei ADS and XPeng XNGP
Channel Sinking	Mainly concentrated in first- and second-tier cities, with penetration in third- and fourth-tier cities yet to be improved

Dimension	Analysis
Market Size	China’s NEV market continues to grow, with penetration further increasing in 2025
Consumption Upgrade	The mid-to-high-end market priced above RMB 200,000 has broad space, and Xiaomi has already established a firm position
Overseas Opportunities	The globalization trend of China’s NEVs is obvious, and Xiaomi has international experience
Technology Window	Intelligent and electrification technologies are still iterating rapidly, allowing latecomers to adopt the latest technologies
Extended-Range EV Market	The planned YU9 extended-range SUV will enter the extended-range EV market dominated by Li Auto and AITO

Dimension	Analysis
Intensified Competition	Giants such as BYD, Huawei (HarmonyOS Intelligent Mobility), and Geely continue to invest heavily, increasing pressure from price wars
Traffic Backlash	The double-edged sword effect of over-reliance on Lei Jun’s personal IP, with a significant magnifying effect on online sentiment
Safety Risks	Battery safety and intelligent driving safety of NEVs remain potential risk points
Supply Chain	Supply stability and cost fluctuations of core components such as chips and batteries
Profitability Pressure	Maintaining gross margin will be tested during the expansion from a single blockbuster model to a product matrix

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Lei Jun announced in his first live stream of 2026:

[2][7]. This target represents a growth of approximately 34% compared to 2025, requiring:

• Average monthly deliveries of approximately 46,000 units (a foundation has been established, as monthly deliveries exceeded 50,000 units in December 2025)
• Continuous improvement of production capacity utilization
• Accelerating the launch rhythm of new models

[7]:

Model	Type	Positioning	Competitive Market
YU9	Extended-Range SUV	Family-oriented “Dad’s Car”	Li Auto L9, AITO M9
SU7 L	Luxury Executive Sedan	Extended body with improved rear-seat space and comfort	Business travel market
YU7 GT	High-Performance Version	Consolidate Xiaomi’s performance label	High-performance SUV market

• Expand the sales store network from approximately 500 stores at the end of 2025 to
  over 800 stores
  [6]
• Accelerate penetration into third- and fourth-tier cities and high-quality prefecture-level cities
• Completed the target of providing free high-level driving training to 10,000 people in 2025

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✅

: Long hood design, “wheel ejection to protect the cabin” strategy, and multiple redundant designs reflect systematic safety thinking
✅ : Integrated die-casting and application of advanced materials ensure body strength
✅ : Continuous iteration and upgrade of the intelligent driving system
✅ : Disassembly live stream showcases technical details to build public trust

⚠️

: Rebuilding trust after safety incidents requires time and more verification

Technology Dimension	Current Situation Assessment	Growth Support
R&D Investment	Commitment of RMB 200 billion over the next 5 years	⭐⭐⭐⭐⭐
Intelligence	Investment in AI large models, iteration of in-vehicle system	⭐⭐⭐⭐
Electrification	Independent R&D capabilities of three-electric systems	⭐⭐⭐⭐
Ecosystem Synergy	Exclusive advantage of the all-scenario ecosystem of people, vehicle, and home	⭐⭐⭐⭐⭐

1. Ecosystem Barrier
   : 72% conversion rate of Mi Fans is a unique competitive advantage that is difficult for other brands to replicate
2. Cost Efficiency
   : 26.4% gross margin proves the sustainability of the business model
3. Brand Momentum
   : The combination of Lei Jun and Xiaomi brings continuous traffic and attention
4. Execution Capability
   : The delivery speed of 500,000 units in 20 months proves manufacturing and supply chain capabilities

1. Product Matrix Expansion
   : Entering new market segments means facing different competitors and cost structures again
2. Brand Dependency Risk
   : Over-reliance on Lei Jun’s personal IP may lead to traffic backlash
3. Safety Reputation Management
   : As a new brand, the impact of safety incidents may be magnified
4. Gross Margin Pressure
   : More models mean challenges from fixed cost allocation and intensified competition

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1. Safety Reputation Rebuilding
   : Requires continuous time verification and a record of zero major safety incidents to rebuild market trust
2. Fulfillment of R&D Investment Commitment
   : The RMB 200 billion R&D commitment needs to be effectively implemented into technological achievements
3. Success of Product Matrix
   : The market performance of new models such as the YU9, SU7 L, and YU7 GT will determine the growth rate
4. Gross Margin Maintenance
   : Whether the 26.4% gross margin can be maintained during the expansion from a single blockbuster model to multiple product lines

Xiaomi Auto is expected to achieve the 550,000-unit delivery target and continue its growth momentum. The YU7 will maintain its leading position in the mid-to-large SUV market.

The key lies in the market performance of the extended-range YU9 model and whether intelligent technologies can form a clear leading advantage.

Whether the synergistic effects of the “all-scenario ecosystem of people, vehicle, and home” can continue to be exerted, and the progress of the internationalization strategy.

1. Safety Risks
   : Battery safety and intelligent driving system safety incidents of NEVs may have a significant impact on the brand
2. Competition Risks
   : Continuous investment by giants such as BYD, Huawei, and Geely may compress market space
3. Valuation Risks
   : The market’s optimistic expectations for Xiaomi Auto’s business may have been partially reflected in the stock price
4. Execution Risks
   : Challenges in quality control, supply chain management, etc., may arise during rapid expansion

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[1] Beijing Daily - Xiaomi Auto to Deliver 550,000 Units This Year (https://www.ncsti.gov.cn/kjdt/kjrd/qtrd_kjrd/202601/t20260107_234515.html)

[2] OFweek NEV Network - Xiaomi Auto Closes 2025 with 410,000 Units Delivered + First-Time Profit! Lei Jun Sets 550,000-Unit Target (https://nev.ofweek.com/2026-01/ART-71000-8110-30678180.html)

[3] The Paper - 2025 Review of New EV Manufacturers: Leapmotor Tops the List, XPeng Makes a Comeback, Li Auto Faces Setbacks (https://m.thepaper.cn/newsDetail_forward_32302387)

[4] Sina Finance - 2025 Life-or-Death Situation for New EV Manufacturers: Leapmotor Delivers 590,000 Units to Become a Dark Horse (https://finance.sina.com.cn/wm/2026-01-05/doc-inhfhpmf1948770.shtml)

[5] National Business Daily - Lei Jun Disassembles Xiaomi YU7 Live (https://news.qq.com/rain/a/20260103A085F900)

[6] Sina Finance - Giants Battle for “People, Vehicle, Home” Ecosystem: Xiaomi to Invest RMB 200 Billion Over Next 5 Years (https://finance.sina.com.cn/stock/t/2025-12-17/doc-inhccfwi7134357.shtml)

[7] Electric Home - Lei Jun Announces Major 2026 Target (https://www.eet-china.com/mp/a464628.html)