Xiaomi (01810-HK) shares have fallen more than 57% since their June 2025 peak, with market value evaporating by nearly a trillion Hong Kong dollars. In Q1 2026, Xiaomi’s global smartphone shipments fell 19.2% year over year; the decline was 35% in the China market, pushing it out of the top five handset makers. Its smartphone gross margin shrank to 10.1% as memory chip costs rose 80% to 100%, hitting a two-year low.
Xiaomi’s Auto Strategy Shift: From Pure EV to Range-Extended SUVs
Xiaomi’s product strategy for its automotive business is being adjusted. Previously, Xiaomi focused on the pure-electric market with the SU7 and YU7, with monthly deliveries steady at about 35,000 units. However, facing a new landscape in which the penetration rate of new-energy vehicles has surpassed 60% and the market has entered stock-driven competition, Xiaomi has chosen to enter the range-extended track.
Pǒngchéng SkyNomad is positioned for the family-vehicle market priced at RMB 300,000 to 400,000. It is seen as a key product for Xiaomi to reach its full-year delivery target of 500,000 units. Its main competitors include Li Auto (理想) and AITO (问界), which have already built brand awareness in this price segment.
Competition in the range-extended segment is fierce, and Xiaomi also faces challenges in converting brand recognition. Consumers’ existing perception of Xiaomi is concentrated around “performance and handling.” Entering the range-extended market, which is led by family needs, requires higher costs for brand transition.
A Double Blow in Volume and Pricing for the Phone Business: Gross Margin Drops to 10.1%
In Q1 2026, Xiaomi’s global smartphone shipments fell 19.2% year over year, while in the China market the decline reached 35%, causing it to drop out of the top five smartphone makers. Gross margin contracted to 10.1%—a two-year low—as the cost of memory chips surged sharply (up 80% to 100%).
On the competitive front, Huawei’s Mate and Pura series have returned strongly, regaining share in the mid-to-high-end segment. Apple, meanwhile, cut prices in the mid-tier market, further squeezing Xiaomi’s room to survive, creating a pincer effect. Core raw-material costs are difficult to pass on to consumers, keeping Xiaomi in a situation where it struggles to break into the high-end market and faces pressure on share in the mid-to-low-end market as well.
Financial Pressure in Q1 2026: Auto Business Losses of RMB 3.1 Billion
In Q1 2026, Xiaomi’s key financial pressure indicators were as follows:
Operating loss from the auto business: RMB 3.1 billion; net loss per vehicle of about RMB 40,000. The losses were mainly driven by factors including production capacity gaps caused by model iterations, rising battery material costs, and purchased tax subsidies provided proactively.
Smartphone business gross margin: 10.1%, a two-year low; mainly due to memory chip costs rising 80% to 100%.
Net cash flow from operating activities: -RMB 1.79 billion, the first time it has turned negative in recent years.
AI R&D budget: RMB 16 billion, unchanged.
To cope with financial pressure, Xiaomi has already started optimizing and adjusting staffing across multiple departments. The smartphone business cannot continue to deliver stable cash flow, while the auto and AI R&D businesses continue to consume funds, creating a structural “scissors gap.”
FAQ
By how much has Xiaomi (01810-HK) stock fallen from its peak?
Since its peak in June 2025, Xiaomi’s stock has fallen by more than 57%, and its market value has evaporated by nearly a trillion Hong Kong dollars. As of the time this article was reported in July 2026, capital markets have valued Xiaomi as a traditional hardware manufacturing company rather than an ecosystem company.
What are the market positioning and annual delivery target of Xiaomi’s Pengcheng SkyNomad range-extended SUV?
SkyNomad is positioned for the family-vehicle market priced at RMB 300,000 to 400,000, and is Xiaomi’s first product as it enters the range-extended segment. Xiaomi’s full-year delivery target is 500,000 vehicles, and its monthly deliveries are currently steady at about 35,000 units.
What is the per-vehicle loss for Xiaomi’s auto business in Q1 2026?
In Q1 2026, Xiaomi’s auto business recorded an operating loss of RMB 3.1 billion, with net loss per vehicle of about RMB 40,000. The main reasons include capacity downtime during model iterations, rising battery raw-material costs, and spending on purchased tax subsidy outlays.
