Xiaomi’s Twin Headwinds: A Legal Fight Over the SU7 and a Bleeding EV Division
Published on 06/19/2026 at 08:26 | Redaktion boerse-global.de
Xiaomi is caught between two very different narratives. On the racing circuit at the NĂĽrburgring, the company claims an autonomous YU7 SUV has set an unofficial lap record, burnishing its engineering credentials. But in the real world of sales and supply chains, the picture is far less glossy: a legal battle to stop unauthorised imports of its SU7 electric car in Europe, a smartphone business squeezed by rising component costs, and an auto division that lost 3.1 billion yuan in the first quarter alone.
The auto business has become Xiaomi’s biggest cash drain, with each vehicle sold generating a loss of roughly $5,600. Brunt margins narrowed to 20.1 percent as the company cut prices and faced more expensive parts. Delivery shortfalls make matters worse. Xiaomi aims to hand over 550,000 cars this year, but by the end of May it had delivered only around 150,000 units. May sales even slipped month on month. To hit the target, the company now needs to churn out more than 50,000 vehicles every month for the rest of the year – a level it has reached only once.
Part of the problem is the chaotic path to European expansion. Xiaomi has filed a lawsuit against Autohelden, a German platform run by Christoph Wicke that planned to import and sell the SU7 and YU7 without the manufacturer’s approval. The outfit had ambitions to open 80 to 100 locations across Europe and sell 50,000 cars in the first year, a third of them in Germany. Xiaomi denies any business relationship with Autohelden and is threatening EU-wide border seizures of unauthorised vehicles. The message is clear: Xiaomi wants to control its own European market entry. But the legal wrangling has delayed any official launch of the SU7 in Germany indefinitely.
Should investors sell immediately? Or is it worth buying Xiaomi?
In its core smartphone business, Xiaomi is adjusting production priorities to protect margins. For the upcoming 18-series, the Pro version will roll out first, planned for September 2026, with the standard model to follow later. The reason: memory modules and other components have become significantly more expensive. By launching the higher-priced Pro model first, Xiaomi can shield its profitability. CEO Lei Jun expects the cost pressure to last another two years. Meanwhile, software development continues, with Android 17 feeding into HyperOS 4 and features such as “App Bubbles” for multitasking and enhanced privacy controls scheduled for the fourth quarter of 2026.
Analysts are losing patience. Jefferies has downgraded Xiaomi to “underperform”, citing shrinking margins and weak auto demand. Goldman Sachs expects a 50 percent profit plunge in the second quarter. Even a massive share buyback programme has failed to prop up the stock.
The numbers tell a brutal story. Xiaomi’s shares closed at €2.72 to €2.73, just a whisker above the 52-week low of €2.67 hit in the previous session. The stock has lost about 39 percent since the start of the year and more than half its value over the past twelve months. The relative strength index stands at 26.4, deep in oversold territory, while the share price sits 34 percent below its 200-day moving average.
With no quick fix in sight, all eyes are on the second half of the year, when Xiaomi plans to launch two new EREV models. Only a massive volume boost from those vehicles can salvage the annual delivery target. Until then, the NĂĽrburgring lap times will do little to close the gap between ambition and market reality.
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