Xiaomi's EV Triumph Overshadowed by $5,600 Loss Per Car and 57% Profit Wipeout

Xiaomi delivered 30,000 EVs in May and launched the YU7 GT, but a 57% profit collapse and shrinking smartphone sales sent shares to a 52-week low. Heavy buybacks aim to stem the decline.

Xiaomi delivered a record 30,000 electric vehicles in May, pushed its new YU7 GT SUV onto the road, and spent millions hoovering up its own shares. Yet the stock is hovering near its 52-week low at €3.10, down almost 48% from a year ago. The disconnect between operational momentum and market sentiment has rarely been wider.

The EV milestone was driven by the YU7 GT, a premium SUV that started reaching customers on May 29 and quickly racked up strong reservations. Management is sticking to its full-year target of 550,000 vehicles — a 34% jump from last year. Analysts at China International Capital Corporation see auto margins gradually recovering, even though heavy launch costs squeezed first-quarter profitability.

But the rosy EV narrative collides with a brutal reality check from the core business. First-quarter net profit collapsed 57% to 4.7 billion yuan, while revenue fell 11%. The EV division alone posted an operating loss of 3.1 billion yuan — roughly $5,600 for every car it shipped. And the smartphone market, Xiaomi’s traditional bread and butter, is shrinking at an alarming clip. Global handset sales are forecast to drop 14% in 2026 to 1.08 billion units, with Xiaomi’s own volumes expected to slide 28%.

Component costs are compounding the pain. Prices for mobile memory chips are surging roughly 200% in the second quarter, a direct hit to margins. Xiaomi’s shares have already lost over 30% year-to-date and trade 28% below their 200-day moving average. The relative strength index sits at 39.4, a neutral-to-slightly-oversold reading.

To stem the bleeding, the company has been aggressively buying back class B shares in Hong Kong, scooping up nearly 15 million in recent days alone. A broader buyback mandate — authorising repurchases of up to 10% of outstanding shares — is expected to be approved at the annual general meeting. The board has authorised a 20 billion Hong Kong dollar buyback programme, one of the largest in Xiaomi’s history.

The hardware strategy, meanwhile, is pushing deeper into the living room. A new TV FX Mini-LED series launched in India earlier this month, ranging from 43 to 75 inches with 120 Hz gaming features. It’s part of the "Human x Car x Home" ecosystem linking smartphones, IoT and electric mobility. But smartphone volumes remain sluggish, even as average selling prices tick up — a sign of premium positioning in a contracting market.

On the technology front, Xiaomi is expected to unveil the "18 Pro Max" in September. Leaks point to an aggressive spec sheet: an 8,500 mAh battery and a dual 200-megapixel camera system — a clear bid to reclaim high-end market share.

Analyst opinions remain sharply divided. Jefferies rates the stock a sell with a target of 25.49 Hong Kong dollars. Goldman Sachs insists it’s a buy, pegging fair value at 40 Hong Kong dollars.

Management will report second-quarter results on August 26. Until then, the direction of the stock hinges on two forces: the monthly EV delivery numbers and the trajectory of memory chip prices. Xiaomi has proved it can build cars. Proving it can build sustainable profits is the next, far tougher test.