The European automotive market is poised for a potential new entrant, as Chinese technology giant Xiaomi aggressively pursues its expansion plans. A critical development has emerged with reports that the smartphone maker is engaged in partnership discussions with the multinational automotive corporation Stellantis. These talks, occurring just ahead of Xiaomi’s annual earnings release, could dramatically reshape the company’s path to establishing a manufacturing footprint in Europe.
Financial Crossroads Ahead of Earnings
Xiaomi’s shares have faced significant pressure this year, declining approximately 17% since January. The stock closed Friday’s session at €3.73, a level notably below its 200-day moving average of €5.06. In response, company management has initiated a multi-billion euro share buyback program to support the valuation. However, the definitive catalyst for the stock’s direction is expected next week. On March 24, the board will present the final audited results for the full 2025 fiscal year. Investors will scrutinize the report to determine if the burgeoning revenue from the electric vehicle (EV) division is sufficient to fully offset the contracting margins in the core smartphone business.
The Stellantis Opportunity: A Shortcut to European Production
According to insiders familiar with the matter, Stellantis is currently exploring collaborations with Chinese manufacturers as part of a strategic overhaul of its underperforming European operations. Among the considerations is the potential sale of stakes in legacy brands such as Maserati. For Xiaomi, these negotiations arrive at an opportune moment. Presently, the company manufactures its electric vehicles exclusively in China. A strategic agreement with the parent company of Fiat could provide immediate access to established production capacity on the European continent, substantially easing the targeted market entry planned for 2027. Sources indicate, however, that whether these discussions will culminate in a formal agreement remains uncertain.
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EVs Emerge as a Vital Growth Engine
Xiaomi’s serious commitment to the automotive sector is underscored by its recent operational milestones. The company’s EV division achieved profitability for the first time in the third quarter of 2025. Over the entire fiscal year, more than 410,000 vehicles were delivered to customers. Founder Lei Jun has since raised the delivery target for the current year to 550,000 units.
This momentum in the automotive business is strategically crucial, as the core smartphone segment shows signs of strain. Soaring memory chip prices have significantly compressed margins. Xiaomi has so far absorbed these increased costs rather than passing them on to its price-sensitive customer base, a move aimed at protecting market share. This operational dichotomy—a thriving EV unit alongside a challenged smartphone division—is clearly reflected in the company’s recent stock performance.
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