Xiaomi's Premium Push and European Auto Ambitions Overshadowed by India Probe and Profit Slump

Xiaomi debuts the 18 Fold in China, signs letters of intent with eight German dealer groups for a 2027 car launch, and faces an India investigation.

Xiaomi finds itself navigating a tricky stretch: courting wealthy buyers with pricey foldables, laying groundwork for a European car business, and simultaneously managing a regulatory headache in India and a sharp drop in core earnings.

Premium Foldable Debut Targets Huawei, Apple

Roughly a week ago, Xiaomi kicked off Chinese sales of its new Xiaomi 18 Fold, a device that signals the company's push into the lucrative high-end segment. The foldable was first unveiled in Beijing on September 7, featuring the newly developed Xring-O3 chipset. Its main rival is Huawei, which launched its own foldable flagship around the same time. Both manufacturers timed their top-tier releases to land ahead of an Apple product event, aiming to lock in market share among affluent buyers. According to Reuters, Xiaomi's base version carries a price tag of 10,999 Yuan, while the fully loaded variant costs 14,999 Yuan. For now, the Chinese market remains exclusive for this model, with no European launch attached.

Eight German Dealer Groups Sign Intent Letters

Parallel to its smartphone business, Xiaomi is making visible progress on its European automotive ambitions. At the IFA trade fair in Berlin, the company signed non-binding memoranda of understanding with eight German automotive dealer groups, including Emil Frey Germany, LUEG Mobility, Hahn Automobile, Dinnebier, and Dello. The planned market entry in Germany remains slated for 2027.

Xiaomi left the operational details deliberately vague: no firm information was provided on the distribution model, the number of locations, or the planned sales regions. For investors, the takeaway is that the announcement signals intent rather than a concrete roadmap. Anyone hoping for specific sales figures or pricing structures for the German market will have to wait. At the Berlin exhibition grounds, Xiaomi also displayed its electric vehicle lineup, including the SU7 Ultra and SU7 Max, underscoring its commitment to the European market. The foldable flagship Xiaomi 18 Fold was part of the exhibit as well—though only visible behind glass.

Cost Pressure Hits Core Business

While the auto and foldable headlines grabbed attention, Xiaomi had to react to rising costs in its core business. In Japan, the company raised prices for several smartphone models in early September, including the 17T Pro and variants of the Poco X8 Pro. The reason, according to company statements, is higher costs for memory and other components. Huawei and Honor announced similar price hikes, pointing to industry-wide cost pressure on memory chips.

That pressure already left a mark on Xiaomi's second-quarter results. Revenue fell 6.1 percent to 108.9 billion Yuan, while adjusted net profit plunged 42.6 percent. Smartphone shipments declined 26.5 percent to 31.2 million units. Only the electric vehicle segment delivered growth: deliveries rose 28.2 percent to 104,199 units, and segment revenue climbed 17.1 percent. Management signaled that the peak of memory cost pressure has been reached, with relief expected in the second half of the year.

India Investigation Weighs on Sentiment

Meanwhile, Xiaomi faces regulatory hurdles in one of its most important overseas markets. More than a month ago, India's Serious Fraud Investigation Office recommended a detailed investigation into the company's local activities. The Indian Ministry of Corporate Affairs is reviewing the matter based on relevant documents. At the center are possible irregularities in the business model, compliance with foreign investment regulations, and ownership structures and fund movements.

Xiaomi told Reuters it had not received any communication from authorities and reaffirmed that it complies with the applicable laws of the country. Still, the ongoing uncertainty over regulatory scrutiny weighs on investor sentiment, as the India business represents a key pillar of global sales.

Market Reaction Remains Muted

The mixed signals from product launches and regulatory risks are leaving clear traces on the stock. The share price closed Friday at EUR 2.90, up 2.3 percent from the previous day, but remains down 4.5 percent over a seven-trading-day stretch. Since the start of the year, the stock has lost 33 percent, and compared with its 52-week high of EUR 6.54 set last September, it sits 56 percent below that level. Analyst firm Bernstein cut its price target for the stock to 38 Hong Kong dollars on September 1. The recovery of recent weeks remains fragile as long as neither the operating business nor the Europe plans show tangible contours.