Xiaomi’s Bounce Defies Dueling Headwinds: EV Deliveries Hold but Margins and Competition Gnaw

Xiaomi's 5.89% rally snaps a slide near its 52-week low, but analysts view it as technical relief as memory chip costs erode smartphone margins and EV deliveries lag rivals.

Xiaomi’s stock surged 5.89% on Thursday to €2.63, snapping a brutal slide that had pushed it within a whisker of its 52-week low. Yet for all the relief, the rally looks more like a technical gasp than a fundamental turning point. The Chinese tech giant remains trapped between two powerful forces: a chip-cost squeeze that is crushing smartphone margins, and an electric-vehicle business that is hitting production targets but failing to win over the market.

The stock’s 62% fall from its 52-week high of €6.53 and a year-to-date loss of 44.92% underscore deep investor skepticism. On Wednesday, before the bounce, shares closed at €2.47, just 5.64% above the trough of €2.34 set in late June. Even after Thursday’s jump, the stock is still down roughly 41% since the start of the year, depending on the measurement date.

EV deliveries stabilise, but rivals race ahead

On the EV front, Xiaomi delivered more than 30,000 vehicles for the third consecutive month in June, matching the pace set in April and May. The company disclosed the figure via its official Weibo account, though it did not give an exact number; full data from the China Passenger Car Association is still pending. Based on monthly reports, analysts estimate cumulative first-half deliveries at nearly 180,000 units. That would put Xiaomi on track towards its ambitious full-year target of 550,000 vehicles, a 34% increase from 2025’s roughly 410,000.

Yet the stock has shrugged off the steady EV output. The disconnect is partly explained by competition. Nio delivered 40,597 vehicles in June, up 62.88% year-on-year, while Xpeng and Leapmotor also hit their highest monthly levels of 2025. Xiaomi’s 30,000-plus performance, while consistent, places it only in the sector’s middle tier. Even Li Auto, another direct rival, managed just 30,895 units — a 14.84% year-on-year decline and its second consecutive monthly drop.

The underlying model trends are mixed. The SU7 sedan, Xiaomi’s workhorse, delivered 24,023 units in May, down 14.24% from a year earlier — the eighth straight month of contraction. The YU7 SUV, a challenger to the Tesla Model Y, saw 8,736 deliveries in May, a 11.54% month-on-month fall and its fifth consecutive monthly decline.

Memory costs bleed the core business

The real pressure point, however, lies in Xiaomi’s smartphone operation. Surging prices for memory chips have hammered gross margins in the handset division, and the company has publicly ruled out passing those costs on to consumers. “Xiaomi serves a very price-sensitive audience,” management noted, meaning it must absorb the input-cost shock through software improvements and structural efficiencies. That strategy may work over time, but in the near term it spells continued margin erosion.

This is the fundamental headwind that no technical rally can erase. The stock’s relative strength index had sunk to 21.9 earlier this week, deep in oversold territory, before the bounce lifted it to 38.7. The distance from the 50-day moving average of €3.08 remains wide — roughly 16% below — and the 200-day average sits at €4.26, implying a 38% gap. Such conditions often trigger rapid counter-moves after heavy selling, but they rarely mark durable bottoms without a catalyst.

What could turn the tide

Xiaomi’s management is betting on a product blitz to restore confidence. Group President Lu Weibing has flagged a new operating-system generation for July or August, followed by the unveiling of flagship smartphones in China in September. A multi-billion-dollar stock buyback program is also in place, underscoring the board’s belief in the turnaround plan.

If the new OS and phone cycle generate a fresh wave of demand — or if memory-chip prices finally ease — sentiment could shift quickly. For now, though, the bears have the upper hand. The EV division is still burning cash during its build-out phase and cannot yet compensate for the handset margin squeeze. And while the sector’s strongest rivals are racing higher, Xiaomi is merely holding its ground.

The next concrete test comes in early summer with the OS launch. If it fails to impress, the support level at €2.34 will face a stern examination. A break below that would open the door to the next leg of the decline.