Xiaomi's Stock Bleeds as EV Unit Loses $5,600 Per Car and Smartphone Margins Shrink

Xiaomi's stock nears 52-week low as EV unit burns cash, smartphone margins shrink, and a new EREV sub-brand enters a contracting market.

Xiaomi is fighting a war on multiple fronts. Its stock is trading near a 52-week low in Frankfurt at €2.70, down roughly 40% since the start of the year, as losses in the electric vehicle division deepen and the core smartphone business comes under fresh pressure. A newly authorised share buyback of up to HK$20 billion – with over 30 million shares already repurchased since early June – has done little to arrest the decline.

The EV unit burned through 3.1 billion yuan in operating losses in the first quarter of 2026 on revenue of 19.9 billion yuan. That works out to a loss of around $5,600 for every vehicle delivered. Xiaomi is banking on scale to turn the tide, but the numbers tell a different story. In May, the company delivered 32,759 cars, an 11% drop from April. The cumulative five-month tally stands at 150,317 units, up 13.5% year-on-year, yet the annual target of 550,000 vehicles looks increasingly out of reach. To hit that goal, monthly deliveries from June through December would need to average nearly 57,500 cars – well above the current record of 50,000 set in December 2025.

Meanwhile, the smartphone segment is not providing the cushion it once did. Rising memory-chip costs have squeezed gross margins in the mobile business to 10.1%. R&D spending jumped 33.4% in the first quarter to 9.0 billion yuan, with the full-year budget pegged at around 40 billion yuan. The investment is directed in part at developing a proprietary 3-nanometer chipset, dubbed 'XRING 02', which has consumed roughly $14.5 billion in research over a decade. The chip is designed not only for smartphones but also for future electric vehicles, part of a broader push toward in-house operating systems and localized AI solutions.

As Xiaomi's core earnings deteriorate, the company is also wading into a crowded and contracting niche. Approval from China's Ministry of Industry and Information Technology has cleared the way for production of extended-range electric vehicles under a new sub-brand called Skynomad. The first model, internally code-named Kunlun N3, is a full-size SUV measuring over 5.3 meters in length, offering a total range of around 1,500 kilometers, of which 400 to 500 kilometers is pure electric. Priced at roughly 200,000 yuan, it undercuts rivals such as Li Auto and the Huawei-backed Aito, whose models typically start above 250,000 yuan. However, the timing is awkward: China's EREV market has shrunk by nearly 25% just as Xiaomi prepares its entry.

Adding to the headwinds, the company is locked in a legal dispute over unauthorized imports of its SU7 sedan into Germany. A startup called Autohelden had planned to bring up to 50,000 Xiaomi cars to Europe in the first full year, with a third destined for Germany. Xiaomi has forcefully rejected the move, warning it will pursue EU-wide border seizures to protect its own market-entry strategy and service infrastructure.

Analysts are losing patience. Jefferies downgraded the stock to 'underperform', citing thinning margins and weak demand for EVs. Goldman Sachs expects a 50% profit plunge in the second quarter. The stock's relative strength index stands at 25.3, technically oversold, but the buyback has failed to provide even a floor.

All eyes are now on August 26, when Xiaomi reports second-quarter results. Investors will be looking for evidence that vehicle deliveries are stabilizing the operating business and that the massive R&D spending is beginning to pay off. For now, the stock remains trapped near its lows, and the Skynomad gamble – entering a shrinking market with an aggressive price point – could either be the breakthrough or another weight on the shares.