Xiaomi shares fall after fatal accident with SU7 electric car

Shares of Chinese tech giant Xiaomi fell after reports of a fatal accident involving one of its SU7 electric cars on a highway in China. The incident raised concerns about the safety of the car's driver assistance system, Bloomberg reported.

The company confirmed that the accident occurred on March 29 on an expressway in Anhui province. Local media reported that three people died in the accident, although Xiaomi’s official statement did not mention this. In a post on Weibo, the company said that law enforcement officers immediately arrived at the scene and an investigation is underway.

According to Xiaomi’s previous report, the Advanced Driver Assistance System (ADAS) was activated less than 20 minutes before the accident. During this time, the car gave several signals, including a warning that the driver was not keeping his hands on the steering wheel, as well as a message about obstacles on the road. A few seconds after the driver took the wheel again, the collision occurred.

After the impact, the car caught fire and, according to local media reports, was almost completely burned out - only the steel frame and some parts survived.

The crash could heighten debates about partially autonomous technologies in cars, which still require the driver's full attention despite growing confidence in the ability to drive autonomously. Similar concerns have previously been raised about Tesla's Autopilot and Full Self-Driving systems, which have been the subject of investigations after a series of fatal incidents.

Amid news of the accident, Xiaomi shares fell 6.1% in Hong Kong, extending a decline that has already reached 18% since the announcement of raising $5.5 billion through a share placement to finance the development of its automotive division.

"Investors might have concerns over Xiaomi’s competitiveness and growth outlook after reports of the car accident," said Shen Meng, director of investment bank Chanson & Co. in Beijing. "The completion of the share sale deal also added to the pressure on sentiment."

Xiaomi, which rose to prominence as a smartphone and electronics manufacturer, recently entered the electric vehicle market. The SU7 sedan was unveiled early last year, and the company quickly raised its sales forecast for 2025 to 350,000 units.

However, the accident could cast doubt on consumer and regulatory confidence in Xiaomi's smart transportation ambitions. The company has not yet said whether the accident could have been caused by a software or hardware failure.