Shares in Chinese electric vehicle manufacturer Xiaomi (XIACF) were bashed today after it recalled thousands of cars following a fatal accident in China involving three college students.
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The group, which is competing hard with rivals such as Elon Musk’s Tesla (TSLA) in China, said the incident involved one of its SU7 sedans 6 months ago and was a result of flaws in its driver-assistance software.
Auto Accident
Indeed, before the crash it is reported that the vehicle was in Xiaomi’s Navigate On Autopilot assisted driving mode, traveling at 116 kilometers per hour or 72 miles per hour.
While travelling on a highway section with roadworks, the vehicle detected an obstacle ahead, issued a warning and handed control to the driver, Xiaomi said. But seconds later, the vehicle hit a barrier.
The State Administration for Market Regulation said that a total of 116,877 fully electric SU7 vehicles produced between February 6, 2024, and August 30, 2025, would be recalled.
It added that Xiaomi’s driver-assistance system had “insufficient recognition capability and may not adequately detect and warn drivers in certain scenarios”, as per the standards of Level 2 self-driving systems. That creates a risk of collision if drivers failed to properly intervene.
Fix Flaw
Xiaomi said that it would remotely fix the flaw. “Xiaomi forever places user safety as its top priority,” it said, adding that while no physical parts needed replacing, it would manage the fix according to recall procedures.
The SU7 was launched in March 2024, and by this July had notched up over 300,000 sales. It has outsold the Tesla Model 3, adding to the U.S. company’s sales slump in the country.
It has also helped its share price outpace Tesla in the last 12 months – see below:
However, this vehicle recall could be a huge blow to Xiaomi’s reputation in both China and outside. It is why legal and regulatory issues are seen as such a key risk for car manufacturers and any investors putting in their hard-earned cash.
Is XIACF a Good Stock to Buy Now?
On TipRanks, XIACF has a Strong Buy consensus based on 12 Buy and 2 Hold ratings. Its highest price target is $10.29. XIACF stock’s consensus price target is $8.62, implying a 17.60% upside.
