Xiaomi’s European EV Push Gathers Pace, but the Stock Tells a Different Story

Xiaomi opens Munich R&D center for European EV entry by 2027, but shares hit 52-week low as EV deliveries halve and smartphone margins shrink.

Xiaomi is racing ahead with its electric vehicle ambitions in Europe, yet the market is punishing its shares with a vengeance. The Chinese tech giant opened a new research and development center in Munich, staffed by over 100 engineers poached from the likes of BMW, Mercedes-Benz, Porsche, and Lamborghini. The facility will tailor vehicle models specifically for European roads and regulations, with a market entry penciled in for the second half of 2027.

The company’s EV roadmap is now set in stone. Management laid out three guiding principles at the Investor Day in Beijing: premium vehicles first, developed markets before emerging ones, and left-hand drive ahead of right-hand drive. Right-hand drive markets are expected to follow in the first half of 2028. Xiaomi has already hired former Tesla executive Dieter Lorenz to oversee delivery and logistics in Europe, and is adapting its models to meet local safety and performance standards.

But the stock is plumbing depths. Xiaomi’s shares hit a fresh 52-week low of around €3.28, down roughly 27% since the start of the year and more than 38% below where they traded a year ago. The gap to the 52-week high of €6.69 is a staggering 50%. Even a massive buyback program — shares worth HK$7.4 billion repurchased by April 24, exceeding the total for all of 2025 — has failed to stem the bleeding.

The disconnect between strategy and market sentiment is stark. On the EV front, Xiaomi delivered roughly 79,000 vehicles in the first quarter of 2026 — less than half the 145,000 units it shipped in the final quarter of 2025. To hit its full-year target of 550,000 deliveries, the company needs to average over 52,000 units per month for the rest of the year. Demand still outstrips capacity at its Beijing plant, with the new SU7 model racking up over 63,000 confirmed orders by the end of April, of which 26,000 have already been handed over.

The core smartphone business is adding to the pressure. Key component costs have quintupled since the start of 2025, crushing gross margins in the segment to 8.3% in the fourth quarter of 2025 — a sharp retreat from the low double-digit levels of recent years. JPMorgan sees little relief ahead, forecasting smartphone gross margins will remain in the high single digits through 2026 and 2027. Management expects the global smartphone market to shrink by at least 10% in 2026, though it hopes rising average selling prices can cushion the blow. In response, Xiaomi has pulled forward the launch of the 17T and 17T Pro to the second quarter of 2026, roughly four months earlier than usual.

Analysts are split on the company’s direction. Morgan Stanley sees Xiaomi evolving into a leading AI software player, highlighting its vertical integration of artificial intelligence across the product portfolio as a key growth driver. Goldman Sachs points to the company’s AI agent capabilities and its “human-vehicle-home” ecosystem strategy as a competitive moat. JPMorgan, however, struck a more cautious note on the same day, acknowledging the long-term strategy but warning that monetizing AI investments will take time.

On the software side, progress is tangible. A new over-the-air update has lowered the activation threshold for advanced driver assistance systems from 1,000 to 300 kilometers driven. Company studies claim the systems can reduce accident rates by around 30%.

Market observers attribute the selling pressure to sector-wide rotation out of technology and AI stocks after other industry heavyweights recently missed expectations. Adding to the uncertainty, the EU’s AI Regulation comes into force on August 2, 2026, centralizing oversight of AI systems and affecting planning certainty for all players.

Xiaomi’s long-term ambition is nothing less than breaking into the world’s top five automakers within 20 years. But for now, the market is asking a different question: how much is that vision worth when the present is this painful? The first-quarter 2026 earnings, due in May, will provide the first real test.