The Chinese company Xiaomi Auto has found itself at the center of a double scandal — legal and reputational. A court in Suzhou City (Jiangsu Province) rejected the manufacturer’s appeal in a case concerning false advertising of the SU7 Ultra model, while at the same time, a tragedy struck in China — a fatal accident involving an electric car of the same model.
Court Ruled the Advertising Misleading
The lawsuit concerned an optional carbon fiber hood with dual air ducts, which Xiaomi advertised as an element that promotes cooling of the wheel hubs. In reality, however, it turned out that there were no actual channels inside the hood — only a decorative structure that reduced the weight by 1.3 kg.
The Court Obliged Xiaomi Auto to:
- return 20,000 yuan of the deposit to the buyer,
- pay 126,000 yuan in compensation (three times the cost of the option),
- cover 10,000 yuan in court costs.
This decision became the first precedent where a Chinese court recognized consumer deception in the field of electric vehicle advertising. Lawyers predict that other SU7 Ultra owners with similar claims may join the case against the company.
Fatal Accident and New Safety Questions
Another blow to the brand’s reputation was dealt by a tragedy in Chengdu, where a Xiaomi SU7 Ultra electric car was involved in a fatal accident.
According to Chinese media reports, the car was traveling at high speed when it crashed into a barrier and caught fire. Eyewitnesses tried to rescue the driver, but the electronic door locking system malfunctioned after the impact — it was impossible to open the doors manually. The driver died in the fire.
Following the tragedy, Xiaomi Group’s shares fell by more than 5.7%, and questions about the safety of electronic locking systems became the subject of an investigation.
Loss of Investor Confidence
Both incidents — the court defeat and the accident — have seriously damaged the image of Xiaomi Auto, which until recently was considered one of the most successful newcomers in the electric vehicle market. The company recently exceeded sales forecasts, tripling analysts’ expectations, but now faces the most serious crisis of confidence since its debut.