As we delve into the current landscape of Xiaomi, it becomes evident that the tech giant is experiencing one of its most remarkable periods in historyOn January 3rd, the company saw its stock price surge by an impressive 6.62%, reaching a breathtaking 36.25 HKD per share, effectively setting a new recordThis price point solidified Xiaomi's market capitalization at an astounding 909.7 billion HKD, surpassing notable players in the automotive industry like BYDThis resurgence marks a significant milestone for a company that hadn’t seen such heights for four years.

The upward trajectory of Xiaomi's stock is closely intertwined with the burgeoning success of its automotive division

Since August of the previous year, the stock has more than doubled, and Chairman Lei Jun has personally witnessed his wealth skyrocket, effectively doubling to approximately 29.6 billion USD by the year’s end according to Bloomberg’s Billionaires IndexIt’s noteworthy to mention that his fortune increased by a staggering 15.3 billion USD in 2024 alone.

This rise in fortunes can be attributed, in great part, to bullish market expectations surrounding Xiaomi's foray into the automotive industryDuring a livestream on December 31, while welcoming the New Year, Lei disclosed that the company has invested over 13 billion RMB in research and development for its automotive sector aloneWhen factory construction and payroll are factored in, the total investment easily exceeds 30 billion RMB, signaling Xiaomi’s serious commitment to this new venture.

Interestingly enough, during a market survey undertaken at the start of 2024, predictions for sales of Xiaomi's SU7 model seemed rather grim, with estimations pegged at a mere 2,000 units per month

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Contrasting this outlook, Lei Jun set an ambitious internal target, expecting monthly sales to reach 7,000 units, alongside a supply chain preparation capacity of 7,600 unitsAs of December 28, the SU7 had already exceeded a remarkable total of 130,000 units delivered for the yearThis performance certainly caught the industry off guard, with Lei Jun himself admitting the unexpectedly positive reception for Xiaomi's vehicle.

Lei's declaration of entering the automobile sector came on March 30, 2021. He emphasized the weight of this undertaking, calling it the last major entrepreneurial project of his life and vowed to stake his reputation on its successSince the SU7 commenced deliveries in April of the previous year, it has remained in high demand, to the point where Xiaomi's President, Lu Weibing, noted in mid-December that customers hoping to order a vehicle would face a wait time of four to five months

The disparity in sales results is often humorously likened to "others counting their sales by what they can sell, while Xiaomi's is determined by how much the factory can produce."

Financials reveal that in Q3 of the previous year, Xiaomi's automotive division posted revenues of 9.5 billion RMB, alongside a loss of 1.5 billion RMB, showing a reduction in losses per vehicle from the second quarter’s 66,000 RMB down to 37,700 RMBAlongside this, gross margins have improved from 15.4% in Q2 to 17.1%, suggesting effective cost control measures are in placeWithin the listed automotive enterprises, only a few like Seres, BYD, Li Auto, and Great Wall Motor boast gross margins exceeding 20%, with Seres and Li Auto being the only two new players achieving profitability.

As we look ahead to 2025, Lei has set an ambitious target for Xiaomi to deliver 300,000 vehicles within that year, anticipating that market expectations may exceed even that figure

He noted that surpassing this milestone won't be a trivial task, citing that it took BYD a decade to achieve similar figures, and many firms have spent over ten years without reaching 300,000 salesLei’s vision is for Xiaomi to realize this production goal within two years, which would position them prominently among emerging automotive forces; a potential reflection of his stated competitive advantage of being a latecomer to the field.

Furthermore, market analysts are optimistic that Xiaomi's automotive division is on the cusp of turning profitable, with some predicting this could happen in the first half of 2025. The widely held belief is that achieving a gross margin of 20% marks a significant turning point towards profitabilityWith increased sales and an optimistic outlook, Xiaomi’s automotive division might follow a much shorter timeline to profitability compared to competitors like Seres and Li Auto, which took four and eight years respectively, and Tesla which required a lengthy 17 years.

While Xiaomi currently does not face selling challenges, the overarching condition of the automotive industry raises substantial concerns

He Xiaopeng, CEO of XPeng Motors, in a December 31 internal memo, acknowledged that the automotive sector will enter a phase of elimination from 2025 to 2027, predicting intensified competition in 2025. NIO’s Chairman, Li Bin, voiced similar sentiments last month, pointing out that the Chinese automotive industry has entered its "most fierce, most brutal stage of competition, with a higher-dimensional rivalry at play.”

The realities of overcapacity in 2024 birthed a fierce price war within the Chinese automotive landscape, severely impacting the sales and profits of traditional manufacturers while numerous new energy vehicle companies remain in the redBrands like Nezha, Jiyue, and Hechuang find themselves on the brink of being pushed out of the market

Thus, the sustainability of Xiaomi’s current momentum remains uncertain.

Beyond their automotive endeavors, Xiaomi also excels in the realms of smartphones, IoT, and consumer electronicsAfter experiencing a two-year slump, the smartphone market rebounded in 2024. According to Canalys, Xiaomi secured its position among the top three global smartphone brands for 17 consecutive quarters, closely following Samsung and AppleIn China, Xiaomi’s ranks improve continuously, with 12.43 million units activated in Q4 of 2024, making it the second in terms of market share, just after Huawei.

Since its launch at the end of October, the Xiaomi 15 series achieved over a million sales just within ten days, ultimately surpassing 1.76 million units sold by the end of December

The REDMI K80 series followed closely behind in similar fashion, breaking the one-million sales barrier in a record timeframe, thus setting a new milestone for that product line.

As we entered 2025, Xiaomi unveiled a more extensive consumer subsidy policy, incorporating mobile phones, tablets, and smartwatches into the rebate plan, offering a maximum 500 RMB discount on products priced below 6000 RMBThis policy is a promising development that could further aid Xiaomi’s prospects.

Xiaomi's expansion in IoT and consumer electronics has also yielded impressive sales figuresLei Jun, during the New Year livestream, indicated a solid performance in the major appliance sector following the company's confirmation of its "Human-Car-Home Ecosystem" strategy

In the most recent quarterly report, revenue from IoT and consumer products hit 26.1 billion RMB, representing a 26.3% year-on-year growthLeading the charge were major appliances like Xiaomi TVs with shipments nearing 1.65 million units, securing a 20% market share in China; air conditioners with sales exceeding 1.7 million, surging over 55%; refrigerators surpassing 810,000 units, marking over 20% growth; and washing machines surpassing 480,000 units with over 50% growth year-on-yearSuch achievements allow Xiaomi to position itself within the top five in the major appliance market.

Xiaomi’s robust market presence has incited a ripple effect reminiscent of the "catfish effect," as seen with Gree Electric’s chairperson, Dong Mingzhu, who has expressed her discontent regarding Xiaomi’s air conditioning products

In a December program, she humorously deflected a question about Xiaomi’s air conditioning by urging the audience to ask Xiaomi directlyShe also mentioned that Xiaomi compensated Gree 500,000 RMB for patent infringementXiaomi’s president, Lu Weibing, acknowledged Dong's frequent publicity of Xiaomi, expressing gratitude but also reminding the industry to adapt to evolving trends.

In a competitive atmosphere marked by challenges, Xiaomi’s upturn stands out, albeit grounded in a firm rationaleThe brand's longstanding commitment to cost-effectiveness and technological innovation has cemented its appeal, particularly among the youth, with Lei Jun’s relatable and humble image paving the way for his popularityOn social media, the 55-year-old entrepreneur boasts over 37 million followers on Douyin and more than 25 million on Weibo, earning him the title of the entrepreneur who best understands the younger generation.

However, as the competitive landscape intensifies, Xiaomi must remain vigilant, particularly regarding its reliance on Lei Jun's persona for marketing