Xiaomi’s Dueling Narratives: EV Ambitions in Munich vs. a Smartphone Rout

Xiaomi races into Europe with EVs and a flagship phone, but soaring memory-chip costs crush smartphone margins, sending shares down 28% in 2026.

Xiaomi is telling two very different stories right now. One is about a bold push into Europe with a new electric vehicle and a high-end smartphone comeback. The other is a tale of margin compression, a 28% share price slide since the start of 2026, and a core business under siege from soaring memory-chip costs.

The Chinese tech giant is racing to build a bridgehead in Munich. Since 2025, a new research and design centre in the Bavarian capital, led by former BMW manager Rudolf Dittrich, has been tailoring vehicles for European regulations and tastes. The team, which includes engineers poached from BMW, Porsche, Lamborghini and Mercedes-Benz, has already put its stamp on the YU7 GT, a high-performance version of the YU7 SUV destined to be Xiaomi’s first European offering. The official German market launch is pencilled in for 2027.

To bolster its automotive push, Xiaomi has also raided Tesla for talent. Kong Yanshuang and Song Gang, both with direct experience in the Chinese market and Shanghai production, have been brought on board for sales and distribution. The timing, however, is tricky. According to the ACEA industry group, pure battery-electric vehicles accounted for just 17% of new registrations in Europe in 2025, with hybrids dominating the market.

Back in China, the factory floor tells a different story. At the Beijing plant, a vehicle rolls off the line every 76 seconds, with more than 700 robots handling over 90% of the work in some areas. Xiaomi delivered 26,000 units of the revamped SU7 series at the Beijing Auto Show and has 60,000 firm orders in hand. The company is targeting roughly 550,000 vehicle deliveries this year, a significant jump from 2025.

Yet the EV momentum has done little to lift the stock. Since the start of 2026, Xiaomi’s shares have lost about 28%, with a decline of over 11% in the past month alone. The culprit is the smartphone division, which remains the group’s core profit engine. First-quarter 2026 handset shipments slumped 19% year-on-year, a far steeper drop than those suffered by Apple and Samsung.

The main driver is a brutal surge in memory-chip costs. DRAM and NAND prices jumped roughly 90% in the quarter. Xiaomi, traditionally strong in the price-sensitive entry-level segment, has found it nearly impossible to pass those costs on to consumers. The first concrete test of the damage comes on 26 May, when the board meets to approve first-quarter results. Investors will see how deeply the memory-chip cost wave has cut into the core business — and whether EV momentum can cushion the blow.

Management is trying to steady the ship. Xiaomi has announced an automated share buyback programme of up to HK$2.5 billion, and has already repurchased around HK$200 million worth of stock in recent trading days. In Frankfurt, the shares closed at €3.27 at the end of April.

On the smartphone front, there is a glimmer of hope. Internal leaks point to the launch of the Xiaomi MIX 5 in 2026, the first flagship model to be sold in Europe and India since 2019. Codenamed “Hongkong”, the device will feature the new Snapdragon 8 Elite Gen 6 Pro processor, an under-display camera for a seamless screen, and advanced magnetic lens technology promising unprecedented focal lengths. Mass production reportedly began in February.

Longer term, Xiaomi is betting big on technology as the way out. The company plans to invest 200 billion yuan in research and development over the next five years, focusing on chips, artificial intelligence and operating systems. The Chinese EV price war, which is squeezing margins across the industry, hits a newcomer like Xiaomi especially hard. The 26 May results will show whether the company’s twin-track strategy — EVs in Europe and a smartphone comeback — can deliver the financial firepower to match its industrial ambition.