In Depth: Fatal Crash Sours Xiaomi’s EV Success

Xiaomi Corporation, a company best known for smartphones and consumer electronics, has entered China's competitive electric vehicle (EV) market. On March 29, Xiaomi’s founder Lei Jun appeared at the prestigious China EV100 Forum to celebrate the success of its SU7 electric sedan, which sold over 136,000 units within nine months of its launch. The SU7 was ranked as the third most popular pure EV in China in its price category in 2024, trailing only behind Tesla’s Model Y and Model 3 and outperforming domestic rivals [para. 1][para. 5]. However, the company’s accomplishments were overshadowed by two fatal crashes involving SU7 vehicles within days of Lei’s announcement, raising concerns over battery safety and assisted driving technologies [para. 3][para. 4].

The first accident on March 29 involved a SU7 operating under Xiaomi’s Navigate on Autopilot driving assistance feature; it collided with a concrete divider and burst into flames, resulting in the death of three university students. Another crash on April 5 killed two people in Guangdong province after the SU7 collided with an electric scooter. Xiaomi attributed the fire in the second incident to the deformation of the scooter’s lithium battery [para. 3][para. 4][para. 12]. These events have dampened investor confidence, causing Xiaomi’s stock price to drop by approximately 26% by early April [para. 9].

Safety concerns surrounding Xiaomi’s assisted driving technology and vehicle batteries have come under scrutiny. Industry experts highlight that most smart EVs in China, including Xiaomi’s SU7, use Level 2 driver-assistance technology, which requires constant human oversight. Xiaomi’s system reportedly failed to identify certain road obstacles, raising questions about the limitations of such technologies [para. 22][para. 27]. While initially confident about their self-developed battery management system designed to cut power in emergencies, Xiaomi has faced challenges proving the reliability of its safety claims following these accidents [para. 21][para. 25].

The SU7’s battery systems come from two suppliers: BYD’s FinDreams Battery and CATL. However, following the March accident, CATL clarified that the involved vehicle did not use its battery. The industry is currently exploring safer technologies such as solid-state batteries to address frequent safety concerns in lithium-ion cells [para. 26][para. 27].

Despite these challenges, Xiaomi has ambitious plans to expand its EV production. The launch of its luxury SU7 Ultra sedan this year marked its entry into the premium market, priced competitively at 529,900 yuan ($72,300). Xiaomi intends to broaden its product line by introducing the YU7 electric SUV in summer, priced around 250,000 yuan ($34,200). The company aims to sell 350,000 vehicles in 2025, a significant increase from its 2024 results, where 136,854 SU7 units were delivered [para. 5][para. 8][para. 33].

Xiaomi’s venture into EVs is a strategic move that began in 2021, motivated by concerns over geopolitical risks, which threatened its core electronics business. Lei Jun has committed considerable resources, including a team of 5,000–6,000 automotive engineers, to ensure the success of this initiative. The gross profit margin of Xiaomi’s smart EV segment reached 18.5% in 2024, slightly higher than Tesla’s 17.9%, showcasing the brand's ability to compete in the market [para. 29][para. 36][para. 39].

While Xiaomi’s EV business has yet to turn a profit, it has created a notable impression by offering affordable options with advanced features. However, the recent accidents pose major tests for the company’s safety credentials and market reputation [para. 35][para. 38].