Xiaomi at a Crossroads: Strategic Moves Amid Market Pressures

Xiaomi navigates EV success and a potential Stellantis partnership while facing cost pressures ahead of its 2025 results and possible first final dividend.

Xiaomi finds itself navigating a complex landscape of strategic opportunities and mounting challenges. As the company prepares to release its full-year 2025 results, investors are weighing potential partnerships, surprising electric vehicle (EV) growth, and significant headwinds. The stock currently trades approximately 40% below its level from twelve months prior.

Annual Report and Dividend Signal on the Horizon

The board of directors is scheduled to convene on March 24 to approve the complete financial figures for 2025. A key item on the agenda is the potential authorization of what would be the company’s first final dividend since its initial public offering. This decision is viewed as a critical indicator of whether Xiaomi’s substantial technology investments in recent years are now translating into tangible financial strength.

Potential Stellantis Partnership Opens European Pathway

Reports indicate that Stellantis has engaged in discussions with both Xiaomi and Xpeng to explore options for restructuring its European operations. These talks have reportedly included considerations of taking stakes in brands such as Maserati and gaining access to European manufacturing capacity. Stellantis has only confirmed that it holds discussions with industry players as part of ordinary business operations, stating that no concrete agreements are currently in place.

For Xiaomi, such a collaboration would carry significant strategic weight. It could facilitate the expansion of its EV ambitions onto European soil, allow for the sharing of investment burdens, and provide association with established automotive marques. Regulatory developments may provide additional tailwinds: the effective exclusion of Chinese technology from connected vehicles in the United States starting in 2027 is seen as granting Stellantis greater latitude to pursue European partnerships with Chinese manufacturers.

EV Business Accelerates Despite Competitive Strain

Xiaomi’s electric vehicle division delivered around 410,000 units in 2025, substantially surpassing its own forecast of 300,000. Notably, the segment reported its first quarterly profit in Q3 2025. The company is now targeting deliveries of 550,000 vehicles for 2026, which would represent a 34% year-over-year increase.

Market reaction to this growth has been measured, however, as a persistent price war in China’s EV sector continues to pressure industry-wide margins. On the innovation front, Xiaomi showcased its Vision Gran Turismo concept model at the 2026 Mobile World Congress in Barcelona, marking the first technology company to participate in the Vision GT program. Furthermore, the company is testing its own humanoid robots in its factory, which have reportedly achieved a 90% success rate on the assembly line.

Mounting Cost and Legal Pressures Cloud Outlook

The company faces pressure on multiple operational fronts. According to Counterpoint Research, memory component costs surged between 80% and 90% in the current quarter. Xiaomi has chosen to maintain stable pricing for its flagship smartphones—a strategy that protects market share but squeezes profitability. Unlike competitors such as Apple or Samsung, Xiaomi lacks a deeply entrenched premium customer base that can readily absorb price increases.

Compounding these issues is an escalating tax dispute in India. Authorities have accused Xiaomi of customs evasion related to royalty payments. A preliminary demand of $72 million could potentially swell to over $150 million when penalties and interest are included. Approximately $610 million of the company’s assets remain frozen in the country.

In response to these challenges and the stock’s performance, management has been actively supporting the share price through a buyback program. The company repurchased over HK$3.2 billion worth of its shares in the past month alone, representing its highest buyback activity in two years.