Sunwoda plans to bring Xiaomi in as an investor in its electric vehicle battery business while abandoning its proposed Hong Kong listing, a restructuring that will result in the battery maker losing control of its subsidiary, Sunwoda Electric Vehicle Battery Co Ltd (Sunwoda EVB).
Xiaomi will invest 1.7 billion yuan ($253 million) for a 5.34% stake in Sunwoda EVB, making it the subsidiary’s third-largest shareholder, according to a filing released by Sunwoda on Thursday evening. The investment will be made through Xiaomi’s wholly owned subsidiary, Hanxing Venture Capital Co Ltd.
The companies have signed a capital increase agreement, although the transaction remains subject to approval by Sunwoda’s shareholders.
In a separate announcement the same evening, Sunwoda said it had decided to terminate plans to issue H shares and list on the main board of the Hong Kong Stock Exchange. The company cited market conditions, internal changes and its development plans as reasons for withdrawing the proposal.
The proposed listing had received approval from Sunwoda’s board and shareholders in July 2025. The company said cancelling the plan would not have a material impact on its operations or ongoing development.
Sunwoda to Lose Control of Battery Subsidiary
Following Xiaomi’s investment, Sunwoda’s stake in Sunwoda EVB, held through its wholly owned subsidiary Sunwoda Huizhou New Energy Co Ltd, will decline to 22.78% from 24.06%. It will nevertheless remain the unit’s largest shareholder.
The transaction will also involve changes to Sunwoda EVB’s board. After the capital increase and board restructuring, Sunwoda will hold no more than half of the board seats and will no longer have control over the subsidiary.
As a result, Sunwoda will stop consolidating Sunwoda EVB’s financial statements.
The company preliminarily estimates that the accounting treatment associated with losing control will increase its 2026 net profit by between 3.2 billion and 4.5 billion yuan. The final financial impact will be determined following an audit.
The accounting change involves remeasuring Sunwoda’s remaining stake in the subsidiary at fair value on the date control is lost. Afterward, the parent company will recognize investment income based on its share of Sunwoda EVB’s earnings rather than include the subsidiary’s full financial results in its consolidated accounts.
Sunwoda said the restructuring would allow it to allocate more resources to other business areas, including consumer batteries and energy storage systems. It also expects the move to reduce financing requirements and lower its liabilities-to-assets ratio. The deconsolidation remains subject to shareholder approval.
Financial Pressure and Xiaomi Partnership
The restructuring comes as Sunwoda faces pressure on profitability despite strong revenue growth.
For the first three quarters of 2026, the company reported revenue of 63.46 billion yuan, up 45.78% year on year. However, net profit attributable to shareholders declined 56.37% to 613 million yuan.
Sunwoda’s shares closed down 4% in Shenzhen on October 30.
Sunwoda EVB reported revenue of 15.53 billion yuan and a net loss of 324 million yuan in the first half of 2026. Sunwoda said Xiaomi’s investment would strengthen the subsidiary’s financial position and support cooperation in research and development, production capacity and market expansion.
The investment builds on an existing commercial relationship between the companies. Sunwoda EVB and Xiaomi announced a strategic partnership on September 4, while their jointly developed Dragon Armour battery technology is already used in Xiaomi’s Sky Nomad series.
Li Auto’s Stake to Decline Following New Investment
Xiaomi’s planned investment follows another capital injection into Sunwoda EVB by Li Auto, announced less than two months earlier.
On September 4, Sunwoda disclosed that Li Auto planned to invest 2.65 billion yuan for a direct 8.79% stake in the battery subsidiary. The two companies had also established a 50-50 joint venture in 2025 to manufacture batteries developed in-house by Li Auto.
Following Xiaomi’s investment, Li Auto’s stake in Sunwoda EVB will decline to 8.32%, leaving it as the subsidiary’s second-largest shareholder.
The transactions will expand the involvement of major automakers in Sunwoda EVB’s ownership structure while changing the parent’s financial and governance relationship with its battery business.