Xiaomi enters the EV business
The Chinese technology company Xiaomi has now officially announced its entry into the electric car business. Only a month ago, Xiaomi had denied that a decision had been made. However, there are not many details yet.
Now the decision has been made: Xiaomi will establish a subsidiary that will operate the “Smart Electric Vehicle Business”. Xiaomi plans to invest a total of ten billion US dollars (about 8.5 billion euros) in the electric car business over the next ten years. The initial investment in the car segment will be around 1.5 billion US dollars (1.3 billion euros). The project is to be financed primarily from the company’s own funds: According to the annual report for 2020, the group has cash of 100 billion yuan, around 13 billion euros.
Rumours to this effect had already surfaced in February, but the company denied them at the time. It was said that the electric car project was the direct responsibility of company founder and CEO Lei Jun. Xiaomi had already launched a project called ‘Micar’ in 2018 to investigate the production of electric cars.
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Say hello to #XiaomiSmartElectricVehicles.
Get all the information at our #XiaomiMegaLaunch Part II tonight! 19:30 (GMT+8), 2021! pic.twitter.com/gq3Kue2pF1
— Xiaomi (@Xiaomi) March 30, 2021
Now, during a product presentation of smartphones, vacuum robots, air conditioners and finally the car project that lasted several hours, Lei Jun said he had “wrestled with the decision for a long time”. After building Xiaomi into the third most important smartphone brand globally, he said it was time for a strategic realignment. “In the e-car market, we are a latecomer with little experience. But we are learning fast and have excellent professionals,” Lei Jun said. He confirmed that he would head the automotive subsidiary himself.
He stated that it was not him alone, but the board that made the decision. This year, the board had listened to more than 200 industry experts and then decided to set up the automotive subsidiary. However, Xiaomi did not give a timetable or a concrete strategy yet.
The smartphone manufacturer’s electric cars are likely to be produced by one or more contract manufacturers. According to a Reuters report, Xiaomi is planning a corresponding deal with Great Wall Motor: Great Wall has not yet been active as a contract manufacturer, but has offered its services in this case. However, there is no official information on this yet. In the smartphone sector, Xiaomi also works closely with iPhone producer Foxconn, which has itself unveiled an electric car platform called MIH and has also set up an eMobility contract manufacturer with Geely.
Xiaomi has made a name for itself as a smartphone manufacturer and is one of China’s most popular smartphone brands. Over the years, the company has also successfully established products in the field of household electronics, such as battery hoovers or air purifiers.
With the eMobility project, Xiaomi wants to diversify its sources of income; the majority of sales still come from the smartphone business. Profit margins there are extremely low. However, the car market is also highly competitive. Cooperating with a contract manufacturer and not investing in capital-intensive production of its own seems to be the way Xiaomi will go: According to Reuters, the production partnership could be announced in the coming week.
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