Xiaomi’s Electric Vehicle Ambitions Face Market Skepticism

Xiaomi KYG9830T1067

While Xiaomi's electric vehicle division posts impressive operational results, its stock continues to face significant headwinds. The company is navigating a complex landscape where robust delivery figures, new model launches, and aggressive financing collide with intensifying competition in China's EV sector. This analysis explores the disconnect between the division's fundamental strength and its weak market performance.

The EV unit surpassed its own expectations in 2025, delivering a foundational year that established a path toward scalability. Key operational highlights include:

• 2025 Deliveries: Approximately 410,000 electric vehicles, significantly exceeding the initial forecast of 300,000.
• 2026 Target: The company aims to deliver 550,000 vehicles next year, representing a 34% year-over-year increase.
• Q3 2025 Milestone: The segment reported its first quarterly profit, generating revenue of 28.3 billion yuan.
• Record Month: December 2025 saw over 50,000 vehicles delivered, a monthly record, with the annual target being met in early December.

Achieving profitability in the capital-intensive auto business so quickly is a critical step for Xiaomi. The strong finish to 2025 sets the stage for an ambitious expansion goal in 2026.

Product Evolution: A Pivot to Safety and Premium Positioning

On January 7, pre-orders opened for the updated SU7 sedan, scheduled for an April market launch. This refresh, with technical upgrades and adjusted pricing, squarely targets the mid-to-high-end segment.

The new SU7 version introduces several key features:
* Standard LiDAR sensors
* A maximum range of up to 902 kilometers
* A pre-sale price starting at 229,900 yuan

This represents a 6.5% price increase over its predecessor but remains 2.4% cheaper than Tesla's Model 3. During the presentation, CEO Lei Jun emphasized safety as the "foundation and prerequisite," marking a strategic shift in messaging. The move from highlighting speed and performance to focusing on safety and technological reliability comes amid public scrutiny following several accidents involving Xiaomi EVs.

Competitive Financing to Capture SUV Market Share

Xiaomi is concurrently sharpening its attack on the lucrative SUV segment. The company now offers a seven-year, low-interest financing plan for all variants of its YU7 SUV.

The financing terms are structured as follows:
* Down payment from 49,900 yuan
* Monthly installments starting at 2,593 yuan
* Applicable to all YU7 models, which have a starting price of 253,500 yuan—roughly 10,000 yuan below Tesla's Model Y.

The YU7 proved to be a volume driver in 2025, with 39,089 units delivered in December alone (a monthly record) and 153,673 deliveries for the full year. By combining a price advantage over the Model Y with attractive financing, Xiaomi aims to seize further market share.

An Increasingly Crowded and Competitive Landscape

The battle for dominance in China's EV market is intensifying. Huawei is expanding its automotive footprint through the Harmony Intelligent Mobility Alliance, which has already produced over one million vehicles. Tesla is applying pressure with new financing offers and its Model Y L.

In response, Xiaomi has outlined a broad model offensive for 2026, including:
* The refreshed SU7 sedan
* An executive version of the SU7
* Two new SUVs featuring range-extender technology

This expanded portfolio is designed to tap into additional customer segments and significantly enlarge the company's addressable market.

Technical Weakness Contrasts with Analyst Confidence

Despite operational progress, Xiaomi's share price chart shows sustained weakness. The stock has been in a long-term downtrend since October 2025 and fell below its 20-day moving average on January 13. Shares currently trade approximately 41% below their 52-week high of 7.11 euros, reached in March 2025.

Market analysts, however, maintain a generally positive outlook, as reflected in these recent assessments:
* Macquarie (Jan 2026): Price target of 54 HKD with a "Buy" rating.
* HSBC: Price target of 62.80 HKD with a "Buy" rating.
* Jefferies (Dec 2025): "Hold" rating with a price target of 43.36 HKD.

The average price target of 58.25 HKD implies a potential upside of about 54% from current levels. These ratings reflect confidence in the EV division's growth trajectory, tempered by varying assessments of the risks in China's fiercely competitive market.

Conclusion: Operational Momentum Meets Market Pressure

Xiaomi's strategy combines strong delivery execution, early EV profitability, and an aggressive product rollout supported by competitive pricing and financing. However, these efforts are set against a backdrop of mounting pressure from rivals like Tesla and Huawei, alongside an ongoing industry-wide price war.

For investors, the narrative is one of robust operational tempo paired with a technically damaged equity chart. The key determinants for 2026 will be the achievement of the ambitious 550,000-unit delivery target, market reception for the new SU7 generation, and the successful scaling of the expanded EV portfolio.