Xiaomi’s Kunlun N3 Hybrid SUV Clears Regulatory Hurdle, but Stock Sinks to 52-Week Low on Profit Squeeze and Delivery Gap

Xiaomi's first extended-range SUV, the Kunlun N3, wins final approval but shares tumble to €2.79 as sales miss targets and core business struggles.

China's Ministry of Industry and Information Technology has granted final production approval for Xiaomi’s first extended-range electric vehicle, the Kunlun N3 full-size SUV. The decision ends weeks of speculation and opens the door for the tech giant to challenge established players like Li Auto and Aito in one of the country’s fastest-growing EV segments – yet the stock market response has been anything but celebratory.

Xiaomi shares touched €2.79 on Thursday, a new 52-week low, leaving the stock just a hair above €2.80. Since the start of the year, the equity has lost roughly 38% of its value, and the decline from last June’s peak of €6.69 exceeds 58%. The relative strength index now sits at 28.7, deep in oversold territory, a sign that bargain hunters have so far failed to materialize.

The Kunlun N3, set to debut under the Skynomad sub-brand, targets families with a price tag of around 200,000 yuan – significantly undercutting Li Auto and Aito models that typically start at 250,000 yuan. The vehicle measures over 5.3 metres in length and boasts a combined range of approximately 1,500 kilometres. Its battery alone delivers between 400 and 500 kilometres of driving range.

Xiaomi plans to launch the N3 in the second half of 2026, a tight schedule given that two additional EREV models – a five-seater and a seven-seater – are also slated for this year. Alongside them, an updated SU7 sedan with 902 kilometres of range and an SU7 Executive Edition will round out a four-pronged product offensive.

The acceleration into hybrids is a direct response to ambitious delivery targets. Xiaomi has set a goal of 550,000 vehicle handovers in 2026, a 34% jump from the previous year. But the numbers so far tell a different story. From January to May, the company delivered just 150,317 units, representing a year-on-year increase of only 13.5%. May saw a nearly 11% sequential decline.

Compounding the pressure, the broader EREV market in China contracted sharply in May, with total sales dropping by almost a quarter. Dominant players like Li Auto continue to command the segment, and Xiaomi’s late entry means it must claw back market share from entrenched competitors.

Beyond the auto division, Xiaomi’s core smartphone business is struggling. First-quarter adjusted net profit plunged 43% to 6.1 billion yuan, while smartphone shipments fell 19% to 33.8 million units – the steepest drop among the top five global vendors. The company’s EV division remains loss-making, and first-quarter EBIT collapsed by 70%.

Analysts have responded with caution. Jefferies downgraded Xiaomi to “Underperform” after the weak quarter, citing cooling EV sales, shrinking smartphone margins, and rising component costs. The bank set a new price target of 25.49 Hong Kong dollars, equivalent to roughly €2.82. Goldman Sachs, meanwhile, warned of a weak second quarter, forecasting a 9% revenue decline and a halving of adjusted net profit to 5.4 billion yuan if the auto and AI units are excluded.

Management is fighting back with a record HK$20 billion share buyback programme, but the market remains unconvinced. The stock’s slide suggests investors are looking for tangible delivery momentum, not financial engineering.

The Kunlun N3 approval is a concrete step forward. Yet the timeline from regulatory green light to volume production spans months, and Xiaomi’s 550,000-unit target will not wait. Whether the new EREV models can reverse the delivery slowdown and restore investor confidence will be decided in the second half of this year – and the clock is already ticking.