Xiaomi‘s electric vehicle and AI business has reported its second straight quarterly operating loss, even as vehicle deliveries continue to grow. The company released its second quarter 2026 earnings, highlighting both financial challenges and ongoing expansion in its new initiatives segment.
Second Quarter Financial Results
Xiaomi‘s new initiatives, which include electric vehicles, AI, and related businesses, recorded an operating loss of $385M (~AUD 541.6M) in the second quarter of 2026. This marks the second consecutive quarter of losses for the segment, though the shortfall narrowed from $459M (~AUD 645.8M) in the first quarter.
Segment revenue reached $3.7B (~AUD 5.2B), representing a 17.1% increase year-on-year and a 25.3% rise from the previous quarter. Of this, EV revenue accounted for $3.5B (~AUD 5B), up 15.9% year-on-year, while revenue from other related businesses, including AI, totaled $148.1M (~AUD 208.3M), up 56.5%.
Profitability and Cost Pressures
The segment’s gross margin declined to 19.2% in the second quarter, down from 26.4% a year earlier and below the 20.1% recorded in the first quarter. Xiaomi attributed this decrease to a lower proportion of Xiaomi SU7 Ultra deliveries, higher prices for core components, and increased costs associated with the AI business.
Operating expenses for the new initiatives segment rose to $1.1B (~AUD 1.5B), a 25.7% increase from a year earlier. Group research and development spending also climbed 18.9% to $1.4B (~AUD 1.9B), driven mainly by investment in AI infrastructure. Capital expenditure for the quarter was about $533.1M (~AUD 749.9M), with $355.4M (~AUD 500M) allocated to the new initiatives segment.
Vehicle Deliveries and Market Performance
Xiaomi delivered 104,199 vehicles in the second quarter, an increase of 28.2% year-on-year. This growth stands out against a 22% decline in overall retail sales of passenger vehicles in China during the same period.
The average selling price per vehicle was $33,956 (~AUD 47,769), down 9.6% year-on-year and 2.5% from the previous quarter, reflecting a smaller share of higher-priced SU7 Ultra models. As of August 17, cumulative deliveries of the Xiaomi SU7 series surpassed 500,000 units. According to Xiaomi, the SU7 series ranked first in sales among pure electric sedans priced above $29,616 (~AUD 41,663) in the Chinese mainland during the first half of 2026.
Product Expansion and Outlook
In July, Xiaomi introduced the Kunlun Technical Architecture and its first extended-range SUV series, the Sky Nomad. The Sky Nomad series offers a CLTC combined range of up to 1,705 km (~1,060 miles). Pre-sales prices for the Sky Nomad N90 Max and N70 Max are set at $44,409 (~AUD 62,473) and $38,486 (~AUD 54,141), respectively, with the official launch expected in September.
Despite earlier momentum, Xiaomi’s July deliveries reached 31,267 vehicles, up 2.68% year-on-year but down 9.99% from June. For the January-July period, deliveries totaled 216,322 units, up 14.83% year-on-year. To meet its full-year target of 550,000 units for 2026, Xiaomi will need to average about 66,700 deliveries per month for the remainder of the year.
Why this matters
Xiaomi’s results highlight the challenges of scaling up new technology businesses in a competitive market. While the company continues to grow its EV deliveries and expand its product lineup, profitability remains under pressure due to rising costs and a shift in product mix.
The performance of Xiaomi’s EV and AI segment will be closely watched as the company seeks to balance growth with sustainable margins in the rapidly evolving Chinese automotive and technology sectors.
What this means for buyers
Buyers considering Xiaomi’s EVs should be aware of the company’s ongoing expansion and the introduction of new models like the Sky Nomad SUV. The recent decline in average selling price may present more accessible options, but future product offerings and pricing could be influenced by Xiaomi’s focus on volume and cost management.
Monitoring Xiaomi’s delivery performance and upcoming launches will help buyers make informed decisions as the company works to achieve its ambitious sales targets for 2026.
Key Specs
- Operating Loss (Q2 2026): $385M (~AUD 541.6M)
- Segment Revenue (Q2 2026): $3.7B (~AUD 5.2B)
- EV Revenue (Q2 2026): $3.5B (~AUD 5B)
- Gross Margin (Q2 2026): 19.2%
- Vehicles Delivered (Q2 2026): 104,199
- Average Selling Price (Q2 2026): $33,956 (~AUD 47,769)
- Cumulative SU7 Deliveries (as of Aug 17, 2026): 500,000+
- Sky Nomad Pre-Sale Price (N90 Max): $44,409 (~AUD 62,473)
