Xiaomi CEO Lei Jun predicts his company’s expensive EV bet could soon start making money

When Xiaomi unveiled its electric car to much fanfare in late 2023, CEO Lei Jun called the project his last entrepreneurial endeavor. 

Fifteen months later, Lei’s bet now seems like it might pay off. At a Tuesday event in Beijing, the Xiaomi CEO suggested that the company’s EV business could be profitable by the second half of the year. A Xiaomi spokesperson confirmed the comments to Fortune. 

Lei’s optimism contrasts with renewed worries that China’s EV sector is about to sink into another price war. BYD, the market leader, cut prices by as much as a third in late May. 

On Sunday, People’s Daily, a state newspaper, warned that “rat-race competition” could harm supply chain security and damage the reputation of Chinese goods, though did not name specific companies.

Xiaomi has reported strong sales of its SU7 EV, delivering almost 76,000 cars in the first quarter of the year. The firm has delivered more than 258,000 cars so far since it formally launched its first EV in March 2024.

Still, EVs are an expensive proposition for Xiaomi. The company reported a 500 million yuan ($69.4 million) loss for its EV unit in Q1 2025, smaller than the 700 million yuan posted for the preceding quarter. 

Xiaomi debuted its second EV model, the YU7 sports utility vehicle, in May, with an expected launch in July. 

Lei hopes that Xiaomi’s EVs will compete in the premium segment of the market, pitting his cars against local firms like Nio and Xpeng and foreign carmakers like Tesla. 

Yet Xiaomi’s branding took a hit earlier this year, when an SU7 crashed on an expressway in Anhui province, killing three people. The driver had engaged the car’s assisted driving software. 

Customers have also blasted the design of some SU7 models, complaining that Xiaomi had overstated some design features. 

Xiaomi first became famous for its smartphones, and has since expanded into home appliances. 

And the company may now be embarking on a new venture, after its EV success. Last month, Xiaomi pledged to invest 50 billion yuan ($6.9 billion) over the next decade towards its own chip development. 

Still, Xiaomi’s chip design efforts could be at risk from Washington. The firm is likely to be one of the first hit by new U.S. rules barring companies from selling chip design software to China, reports the Financial Times citing unnamed sources. 

This story was originally featured on Fortune.com