Xiaomi’s EV Fire Probe Casts a Shadow Over 20 Billion HKD Buyback Effort

When a Xiaomi SU7 Ultra burst into flames on a bridge in Nanchang on June 7, the company’s stock was already trading within a whisker of its 52-week low. The fire, which produced no casualties, now threatens to compound the headwinds battering a share that has shed a third of its value this year.

Firefighters extinguished the blaze on the Yingxiong Bridge in Jiangxi province, and Xiaomi moved quickly to issue a preliminary assessment. The company said the drive battery had been functioning normally before the incident and that it saw no signals of thermal runaway, effectively ruling out a spontaneous battery fire. But the conclusion remains provisional, pending the official fire department report — a verdict that could become a key catalyst for the stock.

A Buyback of Monumental Scale

The same day as the fire, Xiaomi was buying back 3.6 million Class B shares on the Hong Kong exchange for roughly HK$98 million. That transaction marked the opening salvo of a massive repurchase programme authorised by shareholders in early June. Up to HK$20 billion is available, allowing the company to retire as much as 10% of its outstanding shares over a maximum of 12 months — or until the 2027 annual general meeting, whichever comes first. The shares bought so far are earmarked for cancellation.

Alongside the buyback, Xiaomi issued nearly 150,000 new shares to participants in an internal equity plan, but the net effect still shrinks the total share count significantly. Management clearly sees the depressed valuation as an opportunity to deploy capital, yet the stock failed to find a floor. The shares closed Tuesday at €2.99, just 1.7% above the 52-week trough of €2.94 struck on June 9. The year-to-date loss stands at 33%, while the 12-month decline approaches 50%.

Should investors sell immediately? Or is it worth buying Xiaomi?

EV Losses Weigh on Sentiment

The fire lands at a delicate moment for Xiaomi’s electric-vehicle division, which remains deep in the red. In the first quarter, the EV segment generated revenue of 19.0 billion yuan but reported an operating loss of 3.1 billion yuan, with a gross margin of 20.1%. Overall group revenue slipped to roughly 99 billion yuan, and net profit also fell year-on-year.

Deliveries added another cause for concern. The company handed over 80,856 vehicles in Q1, a drop of 44% from the preceding quarter, which it attributed to the phase-out of the first-generation SU7 and fewer YU7 deliveries than expected. The pivot to newer models has disrupted the ramp-up just as the buyback programme was supposed to signal confidence.

Technical Picture Holds Little Comfort

The 200-day moving average sits at €4.28, about 30% above the current price, while the relative strength index at 35 is not oversold but shows no buying conviction either. The support zone around €2.94 is therefore critical. A clean break below that level could invite further selling, whereas a successful defence would lend credibility to the HK$20 billion backstop.

Xiaomi at a turning point? This analysis reveals what investors need to know now.

For now, the market is waiting on two outcomes: the fire investigation and the effectiveness of the buyback. A clean bill of health from the fire department would contain reputational damage. Any other finding, however, would put the entire EV programme under regulatory and public scrutiny — and test whether Xiaomi’s management can buy its way out of trouble.

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