Xiaomi electric car sales plunge after fatal accident and false advertising allegations

Sales of the Xiaomi SU7 electric car in China have fallen sharply after a fatal accident in March and accusations of false advertising. According to Bloomberg, citing a Deutsche Bank report, orders fell to about 36,000 units in April, down 55% from March. The decline continued in May. Shipments also fell: from 7,200 cars in the third week of April to 5,200 in the second week of May.

The reason for the decline was the consequences of an accident in which three people died, as well as the scandal surrounding the SU7 Ultra. More than 300 customers want to cancel orders due to misleading advertising of the hood design. Xiaomi claimed air ducts to improve aerodynamics, but they turned out to be fake.

The incidents hit not only its reputation, but also its financial performance: the company's shares in Hong Kong fell by 1.4%. Previously, in February-March, SU7 demonstrated positive sales dynamics, but in April demand fell sharply.

Analysts, including from the China Automobile Dealers Association, have also seen a steady decline in sales since mid-April. Earlier, Bloomberg reported that Xiaomi had also postponed the launch of its first crossover, the YU7, due to the problems.

After the accident, Chinese regulators have tightened their oversight of electric vehicle safety. They are paying particular attention to autopilot systems — which were on at the time of the SU7 accident — and are also reviewing requirements for battery reliability and the design of retractable door handles, which can make it difficult to evacuate a vehicle if the power goes out.