Xiaomi Puts 1.7 Billion Yuan Into Sunwoda Power, Becoming Third-Largest Shareholder

Xiaomi is paying 1.7 billion yuan (roughly $256 million) for a 5.34% stake in Sunwoda Power, making the smartphone and EV maker the battery unit's third-largest shareholder. The deal, disclosed by Shenzhen-listed Sunwoda (300207.SZ) on the evening of October 29, is the second time in two months an automaker has bought equity in the Guangdong battery maker. Li Auto put in 2.65 billion yuan (about $399 million) in September.

Xiaomi made the investment through Hanxing Venture Capital, its wholly-owned subsidiary. The capital increase reshuffles Sunwoda Power's shareholder table. Sunwoda Huizhou New Energy, the parent's holding vehicle, saw its stake dilute from 24.06% to 22.78%. Li Auto slipped from 8.79% to 8.32%, falling to second place. Hanxing now sits third at 5.34%.

What does the deal change for the companies involved?

For Xiaomi and Li Auto, the answer is leverage. Both are trying to build a diversified battery supply system in a market where CATL alone holds 42.81% of domestic installations — 32.51GWh in September, per the China Automotive Battery Innovation Alliance. Equity ties buy them bargaining power and capacity guarantees that a plain supply contract doesn't.

The Xiaomi relationship predates the check. Sunwoda is a core strategic supplier of Xiaomi's "Dragon Armor Battery," building customized cells and dedicated production lines for Xiaomi's Pengcheng series models. The stake converts a supplier contract into a capital tie.

Li Auto took a parallel path. On September 4, Sunwoda's board approved Li Auto's 2.65 billion yuan contribution, subscribing to 1.4 billion yuan (about $210.8 million) of newly registered capital. The two companies had already set up Shandong Li Auto Battery Co., Ltd. as a 50-50 joint venture to produce Li Auto's self-developed batteries.

Sunwoda framed the Xiaomi investment as a way to "deepen collaboration in technology R&D, production capacity support and market expansion," consolidate Sunwoda Power's competitive position and grow its share of the new energy vehicle market.

Control shifts, consolidation ends

The transaction triggers an accounting change with real substance. Once the capital increase closes and Sunwoda Power elects its new board, Sunwoda will hold no more than half the board seats and will lose control. Sunwoda Power becomes an associate company and drops out of Sunwoda's consolidated financial statements.

That matters because Sunwoda Power is bleeding cash. For full-year 2025, the unit posted revenue above 20 billion yuan (about $3.0 billion) with a net loss of roughly 3.169 billion yuan (about $477 million). In the first half of 2026, revenue hit approximately 15.529 billion yuan (about $2.3 billion), the net loss narrowed to around 324 million yuan (about $48.8 million), and total liabilities exceeded 57.2 billion yuan (about $8.6 billion). Sunwoda said the fresh capital will strengthen the unit's financial position, lower its debt-to-asset ratio and improve overall profitability.

The parent needs the relief. In the first three quarters of 2026, Sunwoda's revenue reached approximately 63.462 billion yuan (about $9.6 billion), up 45.78% year on year, but net profit attributable to shareholders fell 56.37% to roughly 613 million yuan (about $92.3 million). The third quarter alone tells the sharper story: revenue of 25.284 billion yuan (about $3.8 billion), up 52.78%, but quarterly net profit of just 10.57 million yuan (about $1.6 million) — down 98.08% year on year.

On an October 29 conference call with institutional investors, Sunwoda executives blamed the profit decline on weak downstream consumer electronics demand, rising material costs, yuan appreciation, lower export tax rebate rates and consumption tax erosion.

The same day, Sunwoda said it was terminating its plan to issue H-shares and list on the Hong Kong Stock Exchange main board, citing market conditions, internal changes and development plans. The company said the termination won't materially affect operations. Investors weren't reassured: on October 30, Sunwoda shares closed down 4% at 16.06 yuan, valuing the company at roughly 29.67 billion yuan (about $4.5 billion).

A thin slice of a big market

Sunwoda ranks sixth in China's domestic power battery installations with a 3.6% market share in September — down 0.33 percentage points from August. CATL leads, followed by BYD, CALB, Gotion High-tech and EVE Energy.

The combined 4.3-plus billion yuan (about $647.4 million) from Xiaomi and Li Auto gives Sunwoda Power a balance-sheet cushion. Whether it narrows those losses, though, now depends on capacity ramp-up and order fulfillment — the parts no capital increase can guarantee.