Xiaomi’s sales beat estimates after smartphone recovery and as firm prepares to take on China’s EV market

Xiaomi posted better-than-expected revenue growth after the smartphone market showed signs of life during the holiday quarter, spurring hopes of an end to a years-long electronics slump.

The Beijing-based firm reported an 11 per cent rise in sales to 73.2 billion yuan (US$10.2 billion) in the December quarter, versus the average analysts’ estimate of 72.5 billion yuan. Net income rose 50 per cent to 4.7 billion yuan, also beating projections.

The results are a welcome boost for Xiaomi as co-founder Lei Jun prepares to launch his biggest bet in years, a multibillion-dollar effort to break into a Chinese electric vehicle (EV) market dominated by Tesla and BYD. Xiaomi is slated to sell its first EV models next week, more than two years after billionaire Lei Jun announced what he has called his final major endeavour.

Smartphone maker Xiaomi dials into China’s EV market with much-awaited SU7

The EV business could drive Xiaomi’s revenue 4 per cent higher this year as its maiden SU7 model is likely to sell for 220,000 to 260,000 yuan, similar to Tesla’s Model 3, according to Bloomberg Intelligence analysts.

Xiaomi is counting on EVs for an additional growth driver but remains largely reliant on its consumer electronics business for now.

The world’s third-largest smartphone maker posted a 23 per cent jump in global shipments in the quarter thanks to holiday promotions, according to data from research firm IDC.

That not only outpaced the market’s 8.5 per cent growth but also key rivals including Apple and Vivo. However, in the domestic market Xiaomi is mired in fierce competition with a resurgent Huawei Technologies, which is riding a wave of popularity with its 5G-capable Mate 60 Pro handset.