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(Bloomberg) — Xiaomi Corp. shares rebounded from a selloff Wednesday, as investors continued to assess the company’s prospects amid a Chinese police probe into a deadly accident that involved one of its electric vehicles.
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The Hong Kong-listed stock gained 0.3% in mid morning trade after losing as much as 4.1%. Still, the shares remain down about 20% from a record high in March.
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The price swings came after Xiaomi confirmed Tuesday that one of its SU7 electric vehicles was involved in an accident on an expressway in China, with local media reporting that three people died in the incident. Xiaomi’s Chief Executive Officer Lei Jun promised to keep working with the police in the investigation.
The incident marks a key test of confidence in Xiaomi, which had recently become an investor darling after it duplicated its smartphone success in China’s crowded EV market. The accident is also set to spark broader scrutiny of the smart driving software deployed in many of the modern new-energy cars.
“Investors will wait for the conclusions from the probe before showing more determination in buying Xiaomi dips,” said Li Weiqing, fund manager at JH Investment Management. “If they were actually to find fault in Xiaomi’s car, then it might be a short- to mid-term negative for the company and it will need to undergo thorough rectification.”
Hong Kong-listed shares of Xiaomi’s EV rivals BYD Co. and XPeng Inc. that are known for smart-driving features also declined more than 1% at one point before paring losses.
Xiaomi’s entry into the EV market has been a big success, with its first model, the Xiaomi SU7, seeing overwhelming demand. Within the first 24 hours of pre-orders, the company reportedly received over 50,000 firm orders, putting pressure on production capacity.
Xiaomi last month raised its 2025 delivery target for EVs to 350,000 units after posting its fastest revenue growth since 2021.
—With assistance from April Ma and Katrina Nicholas.
(Updates with chart, price moves and quotes)
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