Xiaomi's European EV Ambition Gains Traction Amid Profitable Auto Shift

Xiaomi's EV unit turns profitable, fueling a 5% stock rise. The firm is hiring Tesla talent for a 2027 Europe entry, targeting 550k deliveries in 2026 despite EU tariffs.

Xiaomi's stock rose over 5% to EUR 3.59, a welcome reprieve after a 20% decline since the start of the year. The uptick reflects growing investor confidence as the Chinese tech giant's capital-intensive electric vehicle division finally turns a profit. For the full year 2025, the auto segment generated an operating profit of approximately EUR 113 million on revenue of EUR 13 billion.

This financial milestone coincides with a major strategic push into Europe. The company is systematically building its operational backbone for a planned 2027 market entry, poaching key talent from rival Tesla. Dieter Lorenz, a former Tesla Senior Manager of Delivery Operations with over six years of experience building logistics networks in Germany, Poland, and the Czech Republic, has joined as Head of Delivery & Logistics Europe. His core task is to move vehicles efficiently from port to customer. Reports suggest he is part of a broader recruitment drive targeting professionals with EV logistics expertise.

The foundation for this expansion is a booming home market. Xiaomi is targeting 550,000 EV deliveries for 2026, building on 411,082 units delivered the previous year. Cumulative deliveries had already surpassed 600,000 vehicles by mid-February 2026. The new SU7 model is the clear driver, having garnered over 40,000 orders since deliveries began in late March. In Q2 2025, the EV unit reported revenue of RMB 20.6 billion with a gross margin exceeding 24%, with management targeting break-even for the auto business in the second half of 2026.

However, the path in Europe presents distinct hurdles. EU countervailing duties on Chinese electric cars, effective since October 2024, add significant cost pressure. Furthermore, while Xiaomi enjoys over 95% brand recognition in Europe for smartphones, its identity as an automaker remains nascent. To support the necessary infrastructure and development, the company has budgeted over RMB 40 billion for R&D expenses in 2026.

Technical preparations are advancing. The SU7 Ultra model received European road certification in July 2025, and prototypes have since been spotted with increasing frequency on roads in Germany, Poland, and the Netherlands. The company had already established a research and design center in Munich in 2025 to adapt models to European standards.

Back in China, the transition is not entirely seamless. Demand for the older YU7 model appears to be normalizing, with wait times plummeting from a peak of 56 weeks to just 7-14 weeks. To manage this shift and hit its 2026 delivery target, Xiaomi has hired former Tesla manager Kong Yanshuang to lead automotive sales. The strategy involves a rapid expansion of its vehicle lineup, including launching four to six new models this year under a "Pure Electric + Extended Range" dual-track approach, positioned in a target price band of 200,000 to 550,000 yuan (approximately $29,000 to $79,700).

Investors, who have seen the stock lose about 30% over the past year to trade just above its 52-week low of EUR 3.41, are now looking ahead. The upcoming Q1 2026 results, expected by the end of May, will be scrutinized for updates on the EV unit's profitability and concrete progress in building its European organization.