Xiaomi’s Skynomad Bet: Entering a Shrinking EREV Niche as the Stock Sheds 40%

Xiaomi secures approval to build extended-range EVs under new brand Skynomad, but faces a contracting EREV market, a 40% value drop, and delivery targets slipping out of reach.

Xiaomi has obtained official approval from China’s Ministry of Industry and Information Technology to build extended-range electric vehicles (EREVs) — a milestone for its second automotive brand, Skynomad. But the timing could hardly be more awkward. The group’s shares, at €2.72, are hovering just above a 52-week low of €2.67, while the broader EREV market is contracting sharply. Since the start of the year, Xiaomi’s market value has been cut by nearly 40%.

A Family SUV with a Submarket Flaw

The first Skynomad model, codenamed Kunlun N3, is a full-size SUV stretching over 5.3 metres. It will house a battery pack of more than 70 kWh and offer a pure-electric range of 400 to 500 kilometres. Xiaomi plans to price the vehicle at around 200,000 yuan — undercutting rivals Li Auto and Aito, whose comparable models typically start at 250,000 yuan. The official launch is scheduled for the second half of 2026.

The strategic rationale is to avoid diluting Xiaomi’s sporty, tech-led brand image. By routing family-oriented SUVs through Skynomad, management hopes to capture a different buyer segment without alienating core customers. Yet the segment itself is losing momentum. Wholesale EREV sales tumbled nearly 25% in May — the steepest monthly drop in five years — pushing the segment’s market share down to 7.0%. Even segment leader Li Auto saw deliveries of its flagship L9 plunge 74% year-on-year in the first four months of 2026. Li Auto and Huawei-backed Aito together produced seven of the ten best-selling EREV SUVs in 2025.

Delivery Numbers Widen the Target Gap

Operational pressures remain acute. Xiaomi handed over 150,317 vehicles in the first five months of 2026, a 13.5% increase year-on-year. In May alone, deliveries reached 32,759 units — 17% above the prior-year month but 10.7% below April’s level. To hit the official annual target of 550,000 vehicles, the company would need to sustain 34% growth for the rest of the year — a pace that looks increasingly out of reach.

Analysts at Jefferies have already cut their own forecast to 495,000 units. They downgraded the stock to “Underperform” and slashed their price target to HK$25.49. The EV unit itself remains a drain: it posted an operating loss of 3.1 billion yuan in the first quarter, while the wider company’s delivery volumes slumped from 145,000 units in the previous quarter to just 81,000.

Valuation Squeeze and a Modest Buyback

The investment bank also marked down its valuation multiple for the electric-vehicle division from 2.2x to 1.5x of projected 2026 revenues. That revision reflects both the delivery shortfall and the shrinking EREV market. Meanwhile, Xiaomi’s ongoing share buyback programme has failed to stem the selling pressure. The relative strength index stands at 26.3, deep in oversold territory, and the stock now trades more than 34% below its 200-day moving average.

What Could Turn the Tide

Management continues to bet on product cycles. Xiaomi president Lu Weibing has promised a new model on an entirely fresh platform for the second half of 2026, and the company is pouring 40 billion yuan into research and development this year. A new software cycle could also revive the smartphone business, historically a catalyst for demand. Yet the immediate hurdle is proving that the EV losses can be stabilised. The next quarterly report is due in August, and June delivery figures will be the first test of whether a recovery is under way.

Between the Kunlun N3’s approval and series production lie months of ramp-up. Whether the SUV can reach meaningful volumes before year-end will determine not just the 2026 delivery goal but also whether Xiaomi’s stock can claw its way back from the brink.