Xiaomi’s EV Arm Makes a Profit for the First Time

Xiaomi Corp.’s shares sank to their lowest level in six months after it warned that rising chip costs and reduced tax breaks for electric vehicles will cut into next year’s margins.

The Beijing-based company said on Tuesday it expects a shortfall of memory chips to push up mobile device prices next year, joining a growing list of firms warning of a potential supply crunch of the critical component in 2026. Xiaomi President Lu Weibing also said on a post-earnings call that he expects a drop in the gross margin of the EV business next year, due to scaled back Chinese tax breaks for car purchases and fierce competition. Shares fell as much as 6.3% in Hong Kong on Wednesday to their lowest level since April.