Xiaomi gave red envelopes to distributors.

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Author | Zhou Zhiyu

Editor | Zhang Xiaoling

As the end of the year approaches, Lei Jun is giving out over 100 million yuan in red envelopes.

Recently, news emerged that Xiaomi will provide financial subsidies to dealers, mainly targeting car integration stores, with the total amount expected to exceed 100 million yuan. Xiaomi has confirmed to Wallstreetcn that this information is true.

In the automotive industry, OEMs giving subsidies to dealers is common practice, but for Xiaomi, this is the first time.

By providing subsidies to dealers, OEMs can ease dealer pressure and incentivize dealers to push for higher sales. Automakers typically increase cash incentives to dealers at sales peak times such as mid-year or year-end. Earlier this year, BYD provided cash rewards for dealers achieving sales targets for three consecutive years, at 666 yuan per car, with some outlets receiving over 500,000 yuan in subsidies.

This time, Xiaomi is giving each store built in 2024 a subsidy of 100,000 yuan, while stores newly built before December 15, 2025 will get up to 500,000 yuan. Furthermore, there are no binding conditions attached to this round of financial support.

According to a channel insider, some Xiaomi delivery centers were converted from traditional 4S dealerships, resulting in higher operating costs. In addition, influenced by recent public opinion, some Xiaomi outlets are under pressure. For Xiaomi, stabilizing its channels is critical to maintaining normal sales operations, and giving dealers subsidies is the most practical solution.

Currently, Xiaomi EV's monthly deliveries have exceeded 40,000 units, but there are still gaps in its distribution channels and service capabilities.

In the past year, Xiaomi both took over venues from luxury car 4S stores in places like Wuhu, Anhui, converting them into delivery centers, and accelerated aftermarket service channel coverage by lowering entry barriers.

In February this year, Xiaomi announced its recruitment plan for authorized after-sales service partners, for the first time allowing authorizations for pure after-sales service centers rather than "4S store priority". Through a "shop-in-shop" model, partners are allowed to share facilities such as car wash and bodywork/paint areas, pushing Xiaomi’s after-sales service centers to further penetrate lower-tier markets.

Data shows that by the end of 2024, Xiaomi EV will have 200 stores in 58 cities nationwide. By November 30, 2025, Xiaomi EV will own 441 stores in 131 cities, with 249 service outlets covering 144 cities; 36 more stores are planned for December, expanding coverage to seven lower-tier cities including Hengyang and Mianyang.

However, the expansion of stores and service outlets has not kept pace with Xiaomi EV’s sales growth. As of the end of November, Xiaomi EV’s sales already exceeded 360,000 units this year, with cumulative deliveries over 500,000 units—multiple times last year’s figures.

Xiaomi faces short-term pressure. Since late September, Xiaomi's stock price has dropped more than 30% from its peak. Some short sellers are concerned that Xiaomi’s smart EV business could experience a sluggish performance in 2026 similar to Li Auto in 2023.

Nevertheless, Bank of China International believes this view is too pessimistic, and expects that Xiaomi EV will still be in a product upcycle in 2026. Institutions like Goldman Sachs forecast Xiaomi sales will be above 650,000 units in 2026, a downward revision from previous estimates of 700,000-800,000 units.

Handing out red envelopes to dealers is just one part of Xiaomi’s efforts to stabilize morale.

Xiaomi has made it clear that its development focus for 2026 will shift from "scale expansion" to "quality improvement". Recently, Xiaomi China has also initiated a series of personnel changes across core operational roles in smartphones, autos, and home appliances; Wang Xiaoyan, former GM of Sales Operations Unit I, will personally take on the role. In addition, Xiaomi is planning to orderly close over 1,000 inefficient and loss-making stores nationwide, focusing on existing "inefficient + loss-making" inventory stores opened before January 1, 2025; Xiaomi will bear about 27.26 million yuan in one-off losses.

At present, facing competitive pressure in smartphones, autos, and home appliances, Xiaomi is issuing active incentive policies to stabilize its channels and strengthen its "allies."

After a period of rapid growth, Xiaomi is also making adjustments and working hard to meet new challenges.

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