Xiaomi's Safety Scandal Intensifies as Investor Confidence Wavers

Xiaomi faces a severe safety crisis as electronic door handles on its SU7 EV fail in a fatal fire, prompting share buybacks and intense scrutiny over its corporate response.

A nightmare scenario of electronic door handles failing to open has thrust Chinese tech giant Xiaomi into a severe corporate crisis. Following a fatal incident where a driver was trapped inside a burning SU7 electric vehicle, pressure is mounting from influential financial media in China, with calls for a recall of 370,000 units. The company's response has been to establish a dedicated safety advisory panel, a move scrutinized by markets and consumers alike.

A Fatal Flaw in Vehicle Design

Central to the controversy is the first-generation SU7 model. Its sleek, electronically retractable door handles, initially a hallmark of modern design, have proven catastrophic in emergency situations. Forensic analysis of a specific collision confirmed that a power failure prevented the doors from being opened from the outside, directly contributing to the driver's death as rescue personnel were unable to gain access. This has sparked significant public outcry and led the financial publication Yicai to publicly demand a full recall of all affected vehicles.

In a bid to shore up market confidence, Xiaomi executed a share buyback of 2.86 million of its own shares this past Friday, according to a filing with the Hong Kong stock exchange. The timing of this repurchase is widely viewed as a direct attempt to stabilize investor sentiment amidst the escalating safety concerns.

Corporate Strategy Under the Microscope

While the vehicle safety debate rages, Xiaomi continues to advance other segments of its business. The company recently launched six new monitor models in Japan and is preparing for a global unveiling event in Barcelona for its Xiaomi 17 smartphone series. However, these developments are overshadowed by the critical challenges facing its electric vehicle division.

Xiaomi has already halted production of the problematic first-generation SU7, opting to introduce a revised version rather than issue a formal recall. The newly formed safety board represents a clear acknowledgment of the criticism, though its effectiveness remains untested. The Chinese EV market is among the most competitive globally, where safety issues can rapidly determine a brand's fate. The central question for Xiaomi is whether this new committee will enact substantive change or serve merely as a public relations gesture, indicating that the company's automotive ambitions still face a steep learning curve.