Credibility test as customers challenge Xiaomi

Xiaomi Corp's breakneck entry into China's competitive and fast-growing electric vehicle market is hitting a reputational speed bump.

The smartphone maker-turned-EV upstart is drawing a backlash from buyers over aggressive payment demands and misleading product claims, threatening to dent momentum after a record-setting launch year.

Since late July, Xiaomi has been demanding full payment for its SU7 Ultra sedan and YU7 SUV weeks or even months ahead of delivery, breaking sharply with industry norms, which typically require the balance only upon handover.

Customers are complaining on social platforms such as Xiaohongshu (RedNote) that they have been warned their "orders will be suspended or canceled from production" unless payment is made within a week of the notice, even when delivery is five to six months away, and their deposits of 20,000 yuan ($2,785) will not be refunded.

Many accuse Xiaomi of lacking contractual integrity, noting that in 2024 public Q&As for its first model, the SU7, the company explicitly stated buyers could settle the balance after inspecting the vehicle at delivery centers.

The payment row comes on the heels of a backlash over false promotional claims about the SU7 Ultra's dual-duct hood.

In May, an owner of the SU7 Ultra's 42,000-yuan carbon-fiber "dual-duct" hood discovered by accident that it lacked functional ventilation, which Xiaomi claimed it did. This soon resulted in widespread complaints.

Xiaomi offered partial compensation — 20,000 loyalty points or an aluminum replacement — but declined full refunds, stoking anger.

One buyer, surnamed Gao, posted a snapshot last week on the Sina Weibo micro-blogging platform of a WeChat exchange with Xiaomi Auto Vice-President Li Xiaoshuang. It showed Li's May promise of a "satisfactory solution" had gone unanswered.

"When you said you wanted to solve the issue," Gao wrote, "did you mean solving our problem, or solving your company's problem?"

Criticism has also focused on founder Lei Jun, whose warm, user-focused stage persona contrasts with what some see as silence on contentious issues.

While Lei remains active on Weibo, his car-related updates have centered on soliciting advice about renaming the YU7 Standard trim to "Pro" or "Max" to sound more appealing, rather than addressing consumer complaints.

"Our Standard trim is not an entry trim. It is more powerful than rivals' Pro or Max. Should we call it Pro or Max as well?" he wrote in one post.

Analysts note that Xiaomi's automotive milestones remain formidable; over 300,000 EVs delivered within 15 months, and the YU7 racking up more than 200,000 orders within three minutes of launch.

But they warn that sustaining momentum will hinge on restoring trust. Without that, they say, the flood of buyers could just as quickly turn into an exodus.