Xiaomi eyes smart EV business, ready to invest $10 billion

Xiaomi is set to invest $10 billion over the next decade in a subsidiary focused on the smart electric vehicle (EV) business. In a stock market filing, the Chinese smartphone maker said the new unit will be led by CEO Lei Jun with an initial investment of $1.5 billion.

An official statement said Xiaomi hopes to offer quality electric vehicles (EVs) to let everyone in the world enjoy smart living anytime, anywhere. The EV space in China is getting more electrified and competitive, and this is attributed to favourable government policies and robust EV supply chain network. And now, the world’s third-largest smartphone maker, Xiaomi is jumping into an incredibly competitive space. CNBC highlighted that internet companies are also stepping into the smart electric vehicle arena; Baidu launched a standalone electric car company in January and last month, hired a CEO for that business.

Xiaomi will definitely face a crowded field of competitors, as per CNN Business, who are trying to produce electric vehicles at scale including Tesla and traditional carmakers such as Volkswagen and General Motors. These companies have been working for years to develop and sell electric cars that consumers want to buy. The Chinese smartphone maker joins tech giants from Apple Inc. to Huawei Technologies Co. in targeting the vehicle industry, betting future cars will grow increasingly autonomous and connected. Depending on progress, Xiaomi could end up investing a total 100 billion yuan in the project in as little as three years, taking external financing into account, a person familiar with the matter told Bloomberg News. The company will contribute about 60% of the envisioned sum and plans to raise the rest of the funds, said a source.

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“We have a deep pocket for this project,” Lei said at an event in Beijing. “I am fully aware of the risks of the car making industry. I am also aware the project will take at least three to five years with tens of billions of investment.” Lei highlighted that the decision was made after numerous rounds of deliberation among the Partners. “I am willing to put all my personal reputation on the line and fight for the future of our smart electric vehicle. I am determined to lead my team to fight for the success of the Xiaomi electric vehicle.”