Xiaomi's Costly Miscalculation: Aesthetic Flaw Sparks Legal and Financial Headwinds

Xiaomi's costly retrofit for non-functional vents on its SU7 Ultra EV follows a court ruling and dismal sales, hitting stock price and brand trust.

Chinese technology giant Xiaomi is facing significant operational and reputational challenges in the competitive electric vehicle sector, stemming from a controversial design element on its premium SU7 Ultra model. The company is now undertaking a costly retrofit program following customer complaints and legal action over allegedly functional air intakes that were, in reality, purely decorative.

Legal Repercussions and a Reputational Hit

The issue centers on an optional carbon fiber hood, priced at approximately $5,810, which was marketed as featuring an innovative cooling system for the battery and brakes. Upon delivery, owners discovered the vents were non-functional, serving only an aesthetic purpose. In October 2025, a court in Suzhou ruled against Xiaomi for misleading advertising, ordering the firm to pay damages. Although a subsequent court later viewed the marketing language as technically permissible, the damage to consumer trust had already been inflicted.

This controversy emerges during a disappointing sales period for the luxury EV. Despite a price adjustment to around $73,400, the SU7 Ultra found only 45 buyers in December of last year, raising serious questions about Xiaomi's ability to gain a lasting foothold in the high-margin premium segment.

Extensive Retrofit Program Launched

In response to the legal and image crisis, Xiaomi yesterday initiated a free hardware upgrade for affected vehicles. Owners must now book a multi-hour appointment at official service centers, where technicians will install actual functional guide elements. According to the manufacturer, these new components are intended to enhance aerodynamic stability at high speeds, albeit with a slight potential trade-off against the vehicle's maximum range.

Mounting Pressure on Share Performance

The financial markets have reflected these ongoing difficulties. Xiaomi's stock, closing yesterday at €3.72, is deep in negative territory. On a year-to-date basis, the share price has plummeted 42%, trading nearly 27% below its critical 200-day moving average—a key technical indicator often watched by analysts.

For Xiaomi, swiftly addressing these equipment shortcomings is now an essential operational imperative to secure further trust within its domestic Chinese market. However, as long as sales figures for the SU7 Ultra remain at their current depressed levels, the equity lacks a fundamental catalyst for a sustained recovery in its trend.