Xiaomi Bets Big on Buybacks and Extended-Range EVs as Smartphone Woes Deepen

Xiaomi's shares hit €2.82 as smartphone margins shrink and EV costs soar; a $2.6B buyback and production approval for range-extender EVs fail to reassure markets.

Xiaomi is fighting on two fronts. Its stock has plunged to a fresh 52-week low of 2.82 euros, down roughly 36% since the start of the year and 50% below the level of twelve months ago. In response, management has activated a massive share repurchase programme, but the market remains unconvinced as the company's flagship smartphone business crumbles under soaring component costs while it pours billions into an untested electric-vehicle division.

On Thursday alone, Xiaomi snapped up 7.8 million of its own shares for a total of 201.9 million Hong Kong dollars. The buyback is part of a much larger scheme that authorises the repurchase of up to 20 billion HKD in equity over the coming months. The timing is telling: the Relative Strength Index has dropped to 29.8, deep in oversold territory, and the stock is trading barely a hair above the 2.82-euro trough touched earlier in the week.

Yet even as the company tries to prop up its share price, it is accelerating an expensive pivot to automobiles. The Chinese Ministry of Industry and Information Technology this week granted production approval for electric vehicles with range extenders, a first for Xiaomi, which until now has only built pure battery-powered cars. Under a new sub-brand called Skynomad, the company is developing a family-sized SUV measuring more than five metres in length. The model is slated to hit the market in the second half of 2026, offering a purely electric range of up to 500 kilometres. That puts it squarely against domestic rivals such as Li Auto and Aito. Xiaomi's overarching target remains ambitious: 550,000 vehicle deliveries in 2026, with European sales pencilled in for 2027.

The problem is that the core business that funds all of this is under severe strain. The price of mobile memory chips has surged by 90% in recent months, and Xiaomi, which dominates the low-end smartphone segment, cannot easily pass those costs on to customers. The impact is brutally visible. Global smartphone shipments slid 19.2% in the first quarter, and in the Middle East and Africa the company's market share shrank to 11%. In the cheapest tier, unit sales collapsed by 41%.

The financial numbers confirm the damage. First-quarter profit plummeted 57% year on year, while revenue contracted to 99.1 billion yuan. The fledgling auto division alone posted a loss of 3.1 billion yuan for the period. There is one bright glimmer: the average selling price of Xiaomi's phones hit a record high of 1,310 yuan, suggesting a gradual shift toward more premium devices. But that improvement is not nearly enough to offset the twin drag of expensive components and a capital-intensive car project that the company is funding with over 100 billion renminbi in technology investments through 2026.

For now, investors are voting with their feet. The buyback may slow the slide, but it does little to address the fundamental challenge: a shrinking, low-margin handset business being forced to bankroll a high-stakes entry into the world's most competitive auto market. Until the Skynomad SUV starts rolling off the line, Xiaomi's stock is likely to remain a hostage to the quarterly earnings reports from a smartphone sector that shows no sign of letting up.