2022 wasn’t a vintage year for former smartphone highflyer Xiaomi Corp. (1810.HK). With revenue from its core smartphone business dropping steadily and little relief on the horizon, the Chinese company is stepping on the accelerator for its recent drive into electric vehicles (EVs). But that decision, which will burn tens of billions of investment dollars, looks increasingly dubious as China’s once-vibrant EV sales show growing signs of braking sharply.

Xiaomi’s fourth quarter results released late last month show its revenue fell 23% year-on-year to 66 billion yuan ($9.6 billion) in last year’s fourth quarter, led by an even larger 27% drop in smartphone revenue to 36.7 billion yuan. Its adjusted net profit fell 67% to 1.46 billion yuan, marking the company’s weakest quarter last year. For the full year, Xiaomi's adjusted profit plunged 61% to 8.5 billion yuan, while its revenue fell 15% to 280 billion yuan.

Xiaomi's shares fell 3.5% the day after the announcement and hovered around HK$12, indicating the outlook for one of China’s best-known homegrown smartphone brands remain a mystery to many investors.