Xiaomi is once again fighting a desperate battle.

Xiaomi has been in business for 15 years, and the only core label that has garnered attention from the outside world is:

Sell things that others sell for a high price at a lower price.

The same applies to mobile phones, televisions, and air conditioners, and even the first battle for the automotive industry was no exception. In 2024, the SU7 was launched with a price of 215,900 yuan, and Lei Jun admitted on the spot that he would lose money. Within 24 hours, 88,898 units were ordered.

For 15 years, the premise of this flywheel has never changed: Xiaomi must dictate the costs.

In 2026, this premise will have disappeared.

The price of memory for the same version of the phone has nearly quadrupled, and Xiaomi's material accounting has been rewritten by external forces. New energy vehicle purchase tax subsidies have been halved, and the range-extended vehicle market is shrinking. Smartphone shipments are declining, monthly car deliveries have stalled at 30,000 units, and the IoT sector has contracted for two consecutive quarters due to the reduction in national subsidies.

Xiaomi's adjusted net profit fell 42.8% year-on-year in the first half of the year, and its profit statement is experiencing the most severe contraction since 2022.

At 7 p.m. on September 7, Lei Jun took to the stage at Xiaomi's Autumn Flagship New Product Launch Conference.

Upon taking the stage, he spent a full 40 minutes talking about the three self-developed Xuan Ring chips, the 105.5 billion yuan R&D investment over the past five years, and the R&D plan of over 200 billion yuan for the next five years.

"As long as Xiaomi starts catching up, it's on the road to victory," he said.

Then there's the price. The Xiaomi 18 Fold starts at 10,999 yuan, making it the most expensive phone in Xiaomi's history. The official prices of the four extended-range SUVs are 209,900 yuan, 239,900 yuan, 269,900 yuan, and 299,900 yuan respectively.

In terms of sales, the Pengcheng series secured orders for over 10,000 units in just four minutes.

A single mobile phone reached a height that Xiaomi had never achieved before, while four cars employed Xiaomi's most familiar tactics.

This press conference encapsulates Xiaomi's core dilemma at this moment: it is trying to establish pricing power with one hand, while still clinging to the weapon of price with the other.

The last time a "do-or-die" approach was used for Xiaomi was with the SU7 in 2024—that time, the gamble was on whether they could actually make it, and the price of 215,900 yuan itself was the biggest product strength.

This time it's different. The product was made, but the environment has changed.

Three curves

First, check your phone.

Shipments in the second quarter reached 31.2 million units, a year-on-year decrease of 26.5%. The average selling price (ASP) rose to a record high of 1,351 yuan, but the gross profit margin dropped from 11.5% to 8.5%. Prices are rising, but costs are rising even faster.

The decline in shipments was not uniform. Nearly a year after its release, the Xiaomi 17 series has accumulated sales of approximately 6.21 million units in China, breaking the million mark in just five days after its launch, demonstrating strong performance in the flagship segment.

The real drain on demand came from entry-level and mid-range models, the price segment most severely impacted by rising storage prices. Xiaomi's strategy was to proactively shrink its low-end offerings to maintain profits, but the cost was a precipitous drop in overall shipments.

According to IDC, Xiaomi fell out of the top five in the Chinese market in the first quarter. A year ago in the same quarter, Xiaomi returned to the top spot in China after a decade with shipments of 13.3 million units.

The overall market has declined for five consecutive quarters, but the divergence among top players is more noteworthy than the overall market trend. In the second quarter, Huawei led the market with a 22.6% share, followed closely by Apple with 18.1%. Among the top ten manufacturers, only these two saw growth.

Faced with the same cost shocks, companies with pricing power are expanding their market share, while companies without pricing power are losing market share.

Now let's look at the cars.

Xiaomi Auto has delivered more than 800,000 vehicles to date.

From January to August, cumulative deliveries exceeded 240,000 vehicles, less than half of the annual target of 550,000 vehicles has been achieved. From April to August, monthly deliveries hovered around 30,000 vehicles, and the peak of over 50,000 vehicles per month in December 2025 is getting further and further away.

However, with the launch of the Pengcheng series, the annual delivery target is expected to be achieved.

The profit trend is even more glaring than the delivery pace. The automotive and AI innovation business segment suffered a combined operating loss of approximately 5.7 billion yuan in the first half of the year. Revenue per vehicle decreased from 253,700 yuan to 229,300 yuan; while the scale is increasing, the unit value is declining.

The third curve represents IoT. Second-quarter revenue declined by 19.2% year-over-year, following a 23.7% decline in the first quarter. With the reduction of trade-in subsidies, the growth driven by policy incentives over the previous two years is now being reversed.

The three curves converge on the group: adjusted net profit in the first half of the year decreased by 42.8% year-on-year, and the overall gross profit margin dropped to 20.87%.

Xiaomi is far from facing a survival crisis. It has approximately 219.3 billion yuan in cash, a gross profit margin of 76.8% for its internet services, and 767 million monthly active users globally. Its core business remains intact.

What should be truly alarming is the sustainability of growth momentum, especially when the three main business curves flatten out simultaneously.

This is the precise meaning of "do or die" in 2026: it's not about whether we can survive, but that the old tactics are no longer working.

The most expensive cost

Xiaomi's business model can be summarized in one sentence: reduce costs to a level that others cannot achieve, then use price to gain scale, and use scale to further reduce costs.

This flywheel has been spinning for 15 years. In 2026, the first gear of the flywheel jammed.

The intensity of this round of storage price increases far exceeds any cycle in the past 10 years.

Lu Weibing predicted at MWC in March that this upward trend would last until the end of 2027, nearly three years, which he said was unprecedented in history.

He calculated Xiaomi's own figures: the price of the same version of memory has increased nearly fourfold compared to the first quarter of 2025. A 12GB+256GB storage module has risen from about $30 to about $120. The proportion of storage in the material cost of mobile phones has soared from over 10% to more than 30%.

All mobile phone manufacturers have been impacted, but the impact is not evenly distributed. Huawei has its own supply chain system and brand premium, while Apple has sufficient profit margins to pass on costs.

Xiaomi's brand image is built on its cost-effectiveness, with a high proportion of mid-to-low-end products and minimal cost elasticity. Raising prices would lose customers, while not raising prices would mean absorbing the losses themselves.

Xiaomi opted for a compromise: delayed price increases, smaller increases, and a shift in product mix towards higher-end products.

Starting in April, the price of the REDMI K90 Pro Max will increase by 200 yuan. The internal strategy is to be the last company to raise prices and the company with the smallest increase. At the same time, we will cut low-end shipments and move the product structure upward.

The cost is obvious. Counterpoint data shows that Xiaomi's shipments in the Chinese market fell by 35% year-on-year in the first quarter of 2026, mainly because its flagship models did not adopt a significant price reduction promotion strategy in the face of high memory costs.

ASP hit a new high, but this new high doesn't mean that the average price will naturally rise after brands cut volume at the premium-to-low end of the market. True pricing power lies in raising prices without decreasing volume.

Xiaomi is currently in a situation where it has raised prices, decreased sales volume, and its gross profit margin is still declining.

This was the fundamental predicament Xiaomi faced before the September 7th press conference. Costs were no longer under their control, forcing them to raise prices, while the brand had yet to establish credibility at higher price points.

The technological investments of the past five years are now coming to light. The figures Lei Jun mentioned at the beginning of the press conference—105.5 billion yuan invested in R&D, 21 billion yuan invested in chips, and the simultaneous launch of three self-developed chips—are not just flexing muscles.

These are the only structural solutions Xiaomi can offer when faced with uncontrollable costs: when external costs are out of control, use internal capabilities to re-adjust pricing space.

18 Fold: Strangers at the 10,000 Yuan Threshold

The Xiaomi 18 Fold was developed over 20 months and is a new form factor that is "mid-folding"—between large-folding and small-folding.

With a 5.38-inch external screen and a 7.58-inch internal screen, it measures 5.02 mm when unfolded and 10.68 mm when folded, weighing 219 grams, which is lighter than the iPhone 17 Pro Max.

It is Xiaomi's first phone to integrate its self-developed chip, self-developed operating system, and self-developed AI model into the same device.

The Xuanjie O3 uses TSMC's 3nm process, has 24 billion transistors, and scores 5.22 million on AnTuTu. It is the industry's first mobile SoC to support LPDDR6. The Surge OS 4 reconstructs the system layer based on the self-developed MiMo model, and Super AI has been upgraded to version 2.0.

The camera system is a triple-lens system co-developed with Leica, featuring a 200-megapixel main camera with a 1/1.56-inch sensor, and a 50-megapixel periscope telephoto lens supporting 3.5x optical zoom. It also has a 6000mAh battery.

Prices range from 10,999 yuan to 15,999 yuan. The ceramic special edition is limited to 1,500 units, made of silicon nitride ceramic with a Vickers hardness of 1500 HV1, and each unit has a unique back panel texture, priced at 15,999 yuan.

Lei Jun said this is "Xiaomi's most high-end phone to date".

The number 10,999 yuan needs to be viewed in two contexts.

The first coordinate is Xiaomi itself.

The Xiaomi 17 series starts at 4499 yuan, and the price has more than doubled from 4499 to 10999 yuan.

In the second quarter, the sales share of models priced above 3,000 yuan in China reached 32.1%, a record high, but in the first quarter it was only 23.5%, indicating that the progress of high-end models has only just begun.

Consumers are willing to spend over 4,000 yuan on a Xiaomi flagship phone, but that doesn't mean they're willing to spend over 10,000 yuan on a Xiaomi foldable phone. The difference lies in the lack of established brand premium and credibility.

The second coordinate is the opponent.

China's foldable screen market shipped approximately 2.8 million units in the first quarter of 2026, representing a year-on-year increase of about 65%, making it one of the few rapidly growing sectors in the mobile phone industry.

But while the pie is getting bigger, the players vying for it are extremely concentrated. Huawei holds approximately 60% of the market share, while Xiaomi ranks fifth with only 4%.

Huawei's Pura X has shipped over 1.5 million units in its first year on the market, with the Pura X Max starting at 10,999 yuan. The starting price of the Xiaomi 18 Fold is exactly the same as Huawei's, but Huawei has maintained this price point for over a year.

At Apple's launch event three days later, the first foldable iPhone is expected to be unveiled, and the foldable screen market will soon transform from a zero-sum game among domestic manufacturers into a three-way crossfire among the world's top brands.

The technology to produce it is no longer a problem. Lei Jun promised to invest at least 50 billion yuan and last at least 10 years when he restarted the chip business in 2021, and has reiterated this commitment many times since.

With the O3 generation, the progress bar is about 2/5 complete. The Xuanjie O1 has previously shipped more than 1 million units across three terminals, completing the first step in the large-scale verification of flagship chips.

The next question that 18 Fold needs to answer is: in a market where Huawei holds 60% of the market share, what makes a brand that has never succeeded in the 10,000 yuan price range so appealing to consumers?

Peng Cheng: Betting in the receding tide

Four new extended-range SUVs from Xiaomi Pengcheng have officially launched. The starting price for the Xiaomi Pengcheng N70 Pro is 209,900 yuan, the N70 Max is 239,900 yuan, the N90 Max is 269,900 yuan, and the N90 Max Explorer Edition is 299,900 yuan.

Pengcheng series vehicles secured over 10,000 orders within four minutes.

With delivery scheduled immediately upon launch and over 10,000 vehicles in stock at the factory, Lei Jun stated that the new cars will be delivered within one to five weeks.

The N70 Max and N90 Max have seen price reductions of 20,000 and 30,000 yuan respectively compared to their pre-sale prices.

The magnitude of the price reduction itself is a message.

During the pre-sale period, the N70 Max was priced at NT$259,900 and the N90 Max at NT$299,900. The market response was that 70,000 small orders were placed within 72 hours, with the N90 accounting for 80%.

Lu Weibing stated in the August earnings call that pre-orders were better than internal expectations. At this pace, maintaining the pre-sale price wouldn't be unreasonable. However, Xiaomi chose to launch with a price reduction of 20,000 to 30,000 yuan, bringing the N70 Pro directly below 210,000 yuan.

This pricing move stands in stark contrast to the 18 Fold's price of 10,999 yuan.

In the smartphone market, Xiaomi raised prices for the first time, setting them at a level it had never reached before. In the automotive market, Xiaomi is still using price wars. Only this time, it's targeting extended-range SUVs.

However, the industry environment that Pengcheng faces is much more severe than when the SU7 was launched.

In the first half of 2026, range-extended electric vehicles (REEVs) were the only category among the three new energy vehicle technology routes to experience a decline in both wholesale and retail sales. Wholesale sales fell by 13.1% year-on-year, while retail sales fell by 19.4%, with the market share shrinking from 8.8% to 7.4%. Meanwhile, pure electric vehicles continued to grow, accounting for over 60% of the total new energy vehicle wholesale volume.

The replacement of range-extended electric vehicles by pure electric vehicles has gone from a trend to a reality.

In June 2026, in the large three-row SUV market, pure electric vehicle sales surpassed range-extended SUV sales for the fifth consecutive month; in the large five-seater SUV market, pure electric vehicles overtook range-extended SUVs for the first time in June. These two markets happen to be the two most solid strongholds of Pengcheng's target range – range-extended SUVs – which were simultaneously lost.

There are as many as 83 range-extended models with actual sales records, but only the Wenjie M7 achieved an average monthly retail sales volume of over 5,000 units in the first half of the year.

Eighty-three car models are vying for a shrinking market. Even Li Auto, which was the first to define extended-range luxury SUVs, has shifted to a pure electric i6, which delivered 24,000 units in March alone, accounting for nearly 60% of the brand's deliveries that month.

On the demand side, there is also the draining effect of policy phasing out.

In 2026, the purchase tax on new energy vehicles will be reduced by half instead of being fully exempted, with a maximum reduction of 15,000 yuan per vehicle. A car worth 260,000 yuan that was exempt from tax last year will now have to pay approximately 11,500 yuan this year. The rush to buy at the end of 2025 has already consumed some of the demand.

Xiaomi has provided a complete product logic.

Lei Jun explained that large, boxy SUVs must be equipped with ultra-large battery packs to be made into pure electric vehicles, but the added weight of the battery affects the range. Range extenders solve this physical limitation.

The Kunlun technical architecture, developed over three and a half years, features a 2.9-meter-long, completely flat floor. The N70's interior has approximately 4 square meters of usable space, with five extra-long sliding rails, the longest reaching 1.56 meters, and a 600-millimeter range of motion for the second-row seats. Lei Jun, on stage, compared it to the Rolls-Royce Cullinan, stating that the N70's second row offers even more spaciousness after being moved back to its maximum position.

The N90 Max has a wheelbase of 3080mm, a seven-seat layout, six sliding rails with a maximum length of 1938mm, and an interior depth of 2760mm. It can accommodate seven 20-inch suitcases when fully loaded with seven people.

The press conference also introduced an additional N90 Max Explorer Edition, priced at 299,900 yuan. It features a large five-seat layout and a natively designed electric lift roof cabin. When raised, the interior becomes a two-story structure with a ceiling height of 2.29 meters, which Lei Jun calls "a truly mobile house".

Negative viewpoints also need to be recorded. Cui Dongshu, Secretary-General of the China Passenger Car Association, believes that current range-extended vehicles are heavier, consume more electricity, and have higher maintenance costs and failure rates than comparable pure electric vehicles.

Pengcheng's gamble can be broken down into two layers. On the surface, it's betting on the range-extending route and its potential, but on a deeper level, it's betting on the strong demand from the "large-space family SUV" demographic.

The N90 accounts for 80% of small orders, the core buyer profile is families with children aged 30 to 43, and the user profile has very little overlap with SU7 and YU7. These signals indicate that Pengcheng is targeting new customer groups.

However, the risk lies in the fact that pure electric vehicles have already overtaken competitors in the three-row and five-seater segments. Xiaomi's window of opportunity may be shorter than it anticipates.

Two answers

Both the SU7 and YU7 were products that gained traction through initial sales. The figures of 88,898 units sold in 24 hours and 240,000 orders placed in 18 hours demonstrate Xiaomi's mobilization capabilities.

However, the initial sales bonus has an expiration date. In the early stages of the YU7's launch, the delivery cycle was scheduled for 53 to 56 weeks, but by March 2026, it had dropped to 7 to 10 weeks. After the bonus expired, monthly deliveries stopped at just over 30,000 units.

The Pengcheng is Xiaomi's first car that cannot rely on initial sales bonuses. It is aimed at family users, not tech enthusiasts looking for early adopters.

Families make car purchase decisions in a long time, compare prices thoroughly, and are sensitive to brand trust. Launching a product and immediately delivering it, having over 10,000 units in stock, and offering delivery within one to five weeks—these arrangements demonstrate that Xiaomi understands Pengcheng needs to prove itself through daily sales, not through scarcity marketing.

The 18 Fold is Xiaomi's first phone that needs to prove itself at the 10,000 yuan mark. Phones priced around 10,000 yuan are about repeat purchases and word-of-mouth, not just generating traffic.

Users who buy a 4499 yuan phone might impulsively place an order based on its cost-effectiveness, while users who buy a 10999 yuan phone will first consider why they shouldn't buy a Huawei.

Returning to the press conference itself, perhaps the most interesting thing was that Xiaomi made two opposing pricing choices for smartphones and cars.

On the smartphone front, 10,999 yuan is a price point Xiaomi has never reached before, matching the starting price of the Huawei Pura X Max. This marks the first time Xiaomi has abandoned price differences as a competitive strategy for its flagship products, instead requiring consumers to compare product capabilities at the same price point.

This event is more significant than the product itself. It signifies that Xiaomi believes its chips, operating system, and AI are now competitive in the 10,000 yuan price range.

Whether they can hold their ground depends on fourth-quarter sales figures.

In the automotive sector, Xiaomi did the exact opposite. The N70 Pro saw a price reduction of 20,000 to 30,000 yuan compared to its pre-sale price, dropping below 210,000 yuan.

This is a familiar tactic for Xiaomi, exactly the same as the SU7's price of 215,900 yuan two and a half years ago. However, this time they are not facing an expanding pure electric vehicle market, but a shrinking range-extended electric vehicle market.

One hand is pulling upwards, while the other is slamming downwards, which ironically reflects Xiaomi's true predicament in 2026.

It has no room for further price reductions in the mobile phone market, so it can only move upmarket, but its brand credibility hasn't kept pace with its product capabilities. In the automotive market, it still has room for price cuts, but the overall trend in that market is downward.

The investment of 105.5 billion yuan in R&D, 21 billion yuan in chips, and three and a half years in vehicle architecture over the past five years has been transformed into the products launched at the press conference.

The Xuanjie O3 scored 5.61 million points in benchmark tests. Its Kunlun architecture, flat floor, and 1938mm sliding rails deliver on its spatial promises in a physical sense.

It's technically possible; Xiaomi has already proven that.

Another thing that hasn't been proven yet is: once the consumer mindset that "Xiaomi products are bound to be cheap" is shattered, how many people will still be willing to pay for them?

Tonight's pricing provides the first answer; the answer to demand will only be seen in the fourth quarter's delivery figures and foldable screen sales.

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