Xiaomi's car business lost 2.6 billion yuan (about $386 million) in the second quarter of 2026, the second consecutive quarterly loss for the operation that made the SU7 sedan a hit and now anchors the Chinese giant's push into premium electric vehicles.
The loss narrowed from the 3.1 billion yuan deficit in the first quarter, but operating expenses kept climbing. The auto segment spent 7.4 billion yuan in the quarter, up 25.7% from a year earlier, as Xiaomi poured money into production, channels, and the AI systems that sit inside its cars.
Revenue from the EV business reached 23.9 billion yuan ($3.5 billion) in the April-to-June period, up 15.9% from a year ago and 25.8% from the first quarter.
Average selling price slides as the SU7 Ultra's share shrinks
Xiaomi's average selling price per vehicle fell to 229,312 yuan (about $34,000) in the quarter, down 9.6% from 253,700 yuan a year earlier and 2.5% below the first quarter's figure.
Company executives point to mix rather than a move downmarket. The high-priced SU7 Ultra, the performance variant that lifted the average in 2025, took a smaller share of deliveries this time. The second-generation SU7, launched in March at a starting price of 219,900 yuan ($32,600), also sits below the previous generation's Ultra trim.
Gross margin at the EV segment fell to 19.2% from 26.4% a year earlier and 20.1% in the first quarter. Xiaomi blamed higher prices for core components and rising costs tied to its AI business.
Deliveries climb while the market shrinks
Xiaomi delivered 104,199 vehicles in the second quarter, up 28.2% year on year and 28.9% from the 80,856 units it handed over in the first three months of the year.
That growth stood out in a weak market. Retail sales of passenger vehicles across China fell 22% over the same period, according to industry data, which makes Xiaomi's volume gains something of an outlier.
The first quarter had been disrupted by the switchover to the second-generation SU7, which cut January and February deliveries to 1,133 and 218 units respectively. The rebound in the second quarter masked a slowdown in the sedan's monthly pace: through the first seven months of 2026, the SU7 accumulated 101,540 deliveries, a 43.6% drop from the same period in 2025.
The YU7 SUV has become the volume leader, accounting for 114,782 deliveries in the first seven months, or 53.1% of total output. Cumulative deliveries of the SU7 series passed 500,000 units on August 17, about 28.5 months after the sedan went on sale.
Sky Nomad lineup carries the full-year target
Xiaomi's answer to the margin squeeze is a new family of extended-range vehicles. The Sky Nomad series, unveiled in July, is the company's first departure from fully electric powertrains since it entered the auto industry in 2024.
Pre-sales prices for the seven-seat N90 Max and the five-seat N70 Max stand at 299,900 yuan ($44,500) and 259,900 yuan ($38,600) respectively. Both are top-specification trims, with standard and Pro versions expected later at lower price points. Deliveries are scheduled to begin in September.
Chinese outlet Cailian reported in early August that pre-orders may have exceeded 100,000 units, though the estimate was not based on official data.
Xiaomi needs to average roughly 66,700 vehicles per month over the remaining five months to meet its full-year target of 550,000 units. That is more than double July's figure of 31,267 deliveries and well above the all-time monthly peak of 50,212 set in December 2025. Reaching the number hinges on how fast the Beijing plant can ramp extended-range production, after receiving regulatory clearance to build those vehicles only in June.
Margins stay under pressure as the price war drags on
The margin compression at Xiaomi's car unit is part of a wider pattern across China's EV industry, where automakers have spent two years cutting prices to hold market share. Xiaomi has kept its lineup at 200,000 to 550,000 yuan ($29,700 to $74,200), and chief executive Lei Jun has ruled out entry-level models below 100,000 yuan for at least five years, citing hardware costs above 20,000 yuan per vehicle for intelligent cockpit and driver-assistance systems alone.
The SU7 still ranked first in sales among pure electric models priced above 200,000 yuan on the mainland in the first half of 2026. But the sedan's monthly pace has slowed sharply, and the revenue mix has turned toward the cheaper YU7. Xiaomi reported that 53.1% of its output in the first seven months came from the SUV, a balance the company expects to shift again once the Sky Nomad hybrids start landing in showrooms.
The segment operating loss of 2.6 billion yuan contrasts sharply with 2025, when Xiaomi's EV business posted its first quarterly profit in the third quarter and its first full-year operating profit. The reversal tracks a delivery mix that now leans on the cheaper YU7 and a component-cost environment that shows few signs of easing.
At group level, Xiaomi reported revenue of 108.9 billion yuan ($16.2 billion) for the quarter, down 6.1% from a year earlier, with adjusted net profit of 6.2 billion yuan ($920 million), down 42.6%. Memory-chip price inflation, which Xiaomi president Lu Weibing described as still near historic highs, squeezed the smartphone business, and smartphone shipments fell 26.5% to 31.2 million units. Group research and development spending rose 18.9% to 9.2 billion yuan, with much of the increase going to AI infrastructure rather than car hardware.
For the EV division, the second half of 2026 is a test of whether the Sky Nomad series can convert strong order interest into deliveries fast enough to close the gap to the annual target. Overseas sales, meanwhile, are not expected to start until the second half of 2027, with Europe the first market on the list.
Xiaomi's car business has more company-level gross margin to lose, and the third quarter will show whether it can hold the 19% line while the new hybrids ramp. The company is also spending on the EV charging infrastructure race in Indonesia, where several Chinese brands are competing to set up the networks that make electric ownership practical.
Sources: Xiaomi EV unit posts second straight quarterly loss and Xiaomi Q2 results analysis.