Xiaomi's R&D Bill Jumps 33% as EV Unit Burns Through 3.1 Billion Yuan

Xiaomi's Q1 R&D rose 33.4% to 9.0 billion yuan as its EV and AI unit lost 3.1 billion yuan despite 20.1% gross margin.

Xiaomi is spending heavily to reinvent itself, and the price tag is coming into sharp focus. First-quarter research and development outlays climbed 33.4% year on year to 9.0 billion yuan, with the Chinese group now employing 26,048 staff in that function as of the end of March 2026. Management is steering the bulk of that cash toward artificial intelligence and electric mobility — the two fronts on which it hopes to shed its smartphone-only identity.

The early returns from the EV and AI segment are a study in contrasts. Revenue from the division reached 19.9 billion yuan in the quarter, 19.0 billion yuan of which came from cars alone. A gross margin of 20.1% shows the hardware can be sold profitably at the unit level, yet the segment still posted an operating loss of 3.1 billion yuan, a reminder that scale has not yet caught up with ambition.

Deliveries Race Toward a Demanding Finish Line

Volume tells a similar story of momentum colliding with arithmetic. Xiaomi shipped 80,856 vehicles in the first three months of the year, up 6.6% from the same period a year earlier, and the company has set its full-year 2026 target at 550,000 units. Through the first nine months, deliveries totaled roughly 286,500 — a little over half the goal. Clearing the remaining distance would require an average monthly run rate above 87,000 vehicles in the final quarter, a step change from anything the business has managed so far.

Xiaomi is hardly alone in that squeeze. Established Chinese automakers are also struggling to hit their own sales projections, hemmed in by a punishing price war at home and the threat of trade barriers abroad. Against that backdrop, the company is widening its lineup to reach more buyers. The Sky Nomad range, a range-extender series launched about a month ago, drew more than 10,000 binding pre-orders immediately after sales opened, priced from 209,900 yuan in China. Xiaomi also intends to enter Europe from 2027 through a network of dealers.

Smartphones Keep the Lights On

The legacy business continues to bankroll these expensive bets. Xiaomi shipped 33.8 million handsets in the quarter, generating 44.3 billion yuan in segment revenue at a 10.1% gross margin, while holding an 11.3% share of the global market. The average selling price rose 8.2% to 1,310 yuan, evidence that the push upmarket is gaining traction. Fresh hardware keeps the pipeline full: the Redmi Note 17 series was unveiled recently, and the premium Xiaomi 18 Fold got off to a strong start in September.

Management is also leaning on buybacks to steady the share price. Between the start of the year and May 22, the group repurchased roughly 250.5 million shares for about 8.4 billion Hong Kong dollars, and it has earmarked up to 20 billion Hong Kong dollars for further B-share repurchases over the next twelve months.

Market Sentiment Stays Subdued

Investors have yet to be convinced. The stock closed at EUR 2.76 on Friday, down 36% since the start of the year, and it has shed 12% over the past 30 days. The cautious mood reflects a broader wariness toward the sector as much as anything specific to Xiaomi — a company whose transformation is now consuming capital far faster than its new car business is returning it.