Xiaomi's $5,600-Per-Car Loss and Chip Squeeze Leave Buybacks in the Dust

Xiaomi reports €400M quarterly auto loss, $5,600 per vehicle; smartphone revenue drops 11%. Record buybacks fail to halt 36% stock decline. New EREV brand faces contracting market.

The price tag for Xiaomi's electric-vehicle ambition is becoming painfully clear. In the first quarter, the auto division bled roughly €400 million (3.1 billion yuan) at the operating level, translating to a staggering $5,600 loss on every vehicle sold – a dramatic leap from the $900-per-car deficit a year earlier. While the company accelerated deliveries to 32,700 units in May, the headline growth masks a worrying trend: the SU7 sedan posted its eighth consecutive year-on-year decline, and the YU7 SUV its fifth.

That red ink is compounding a crisis in Xiaomi’s core smartphone business. Revenue slumped 11% to 99.14 billion yuan in the first quarter, and adjusted net income collapsed 43%. The culprit is a vicious surge in memory-chip costs. Analysts expect conventional DRAM prices to jump as much as 63% in the second quarter and NAND flash to rise 75%. Xiaomi, which dominates the low- to mid-tier handset market where margins are already razor-thin, saw domestic shipments tumble 35% to 8.7 million units during the quarter – the worst performance among the global top-five manufacturers.

Management has fought back with a record-breaking share buyback. The group completed its 70th repurchase yesterday, scooping 7.8 million shares. A new 20-billion-Hong Kong-dollar programme kicked off at the start of June. Yet the stock keeps sliding. On Friday it closed at €2.89, barely above the fresh 52-week low of €2.82. Year-to-date, the equity has shed nearly 36% (the exact drop stands at 35.45%). The buybacks, which have removed almost three billion shares from the market this year, are being shrugged off by investors.

The technical picture offers no comfort. The relative strength index at 32.4 signals oversold conditions, but that alone rarely marks a turning point. The 200-day moving average sits at €4.23, leaving the current price more than 31% below that level. Even massive support buying has failed to build a sustainable floor.

Undeterred, Xiaomi is doubling down on its automotive bet. China’s Ministry of Industry and Information Technology has approved the production of extended-range electric vehicles (EREVs) under a new sub-brand called Skynomad. The first model, codenamed “Kunlun N3”, targets a combined range of around 1,500 kilometres and an aggressive starting price of roughly 200,000 yuan – undercutting Li Auto’s lineup. The strategy aims to separate the sporty SU7 line from family-oriented haulers.

Timing, however, is everything. The EREV market is already contracting: wholesale sales in China fell nearly 25% in May, and the segment’s market share slipped to 7%. Even Li Auto, the sector leader, has reported steep delivery declines for its flagship model. At the same time, Xiaomi’s full-year delivery target of 550,000 units looks increasingly out of reach. To hit that number, the company would need to average 57,500 deliveries a month from June through December – well above its previous peak of 50,000.

The company now faces two chokepoints: the smartphone division’s margin squeeze from exploding component costs, and the EV unit’s deepening losses. With the EREV entry at a moment of shrinking demand and memory-chip headwinds intensifying, the buyback programme looks like a costly placeholder. A critical deadline arrives on 17 June, when the public comment period for the final EREV approval expires. Until then, the market will watch whether June deliveries can finally reverse the declines in Xiaomi’s core models.