Xiaomi plans to sell electric cars in Europe from 2027, choosing Germany as the first market

Chinese technology company Xiaomi will start selling electric cars in Europe from 2027, initially in a number of markets, of which Germany is an important destination. This plan brings Xiaomi into the growing group of Chinese auto brands seeking to expand operations in Europe, despite trade barriers that the European Union (EU) imposes on electric vehicles made in China.

Xiaomi announced its plans at the IFA consumer electronics show in Berlin on September 3. Before opening sales, Xiaomi Auto signed an agreement with eight dealer groups in Germany to build a sales and service network, and it is operating a research and development (R&D) center in Munich.

Xiaomi Auto Vice President Yu Liguo, who is in charge of international business operations, said the company is committed to long-term investment in Europe, in which the dealer network and R&D center in Germany will play an important role in the expansion plan.

However, Xiaomi will have to consider the cost problem when entering this market. The EU currently applies additional taxes on electric cars produced in China after an anti-subsidy investigation launched in 2023. Because Xiaomi does not participate in the investigation, its vehicles may be subject to the highest countervailing tax of 35.3%, in addition to the standard 10% import tax when entering the EU market, making selling prices in Europe a significant challenge.

Xiaomi has not said whether it will negotiate with the European Commission to make a price commitment, thereby seeking to be exempt from additional taxes. However, the preparation of a dealer network and R&D center shows that the company is building a foundation for long-term business operations instead of just testing car sales in Europe.

Xiaomi entered Europe while many Chinese car manufacturers also promoted exports and sought to build their position in this market. However, in addition to high tariffs, Chinese brands also have to compete with long-standing car manufacturers in Europe and face consumer caution towards electric vehicles made in China.

Xiaomi's growth momentum in the domestic market is slowing down. According to the China Passenger Car Association (CPCA), Xiaomi delivered 31,267 vehicles in July, up 2.7% over the same period last year but down 10% compared to June. The company said the number of vehicles delivered in August was over 30,000 units, significantly lower than the 36,396 vehicles in the same period last year. Xiaomi's electric vehicle and artificial intelligence business also recorded an operating loss of 2.6 billion yuan ($387 million) in the second quarter, marking the second consecutive quarter of losses.

Germany, where Xiaomi chose to announce its plans to enter Europe, is also a market that is not easy to compete in when Chinese competitors such as BYD, Xpeng, Leapmotor and Nio are already present. Some companies go one step further by building production capacity right in Europe. BYD is building a factory in Hungary, Leapmotor produces vehicles at partner Stellantis' factory in Spain, while Xpeng cooperates with Magna to assemble vehicles in Austria.