After some tittle-tattle, Xiaomi officially confirmed that it’s making a blitz in the electrical vehicle space. The Chinese smartphone and IoT giant will acknowledge a wholly-owned subsidiary to figure a wise EV business, the company said during a filing on Tuesday.
Xiaomi will inject an initial 10 billion yuan ($1.52 billion) into the venture with the whole investment amount to achieve $10 billion over subsequent ten years. Xiaomi founder and CEO Lei Jun will function as the CEO of the new EV venture.
It’s unclear from the filing whether Xiaomi will sell cars under its own household brand and contract manufacturers to need care of production, because it’s finished most of its hardware devices. the company has long billed itself as an “internet firm” with a light-asset business model. The goal is to urge a bit of its profits by selling services powering a myriad of price-friendly hardware products it sells.
A representative from Xiaomi said the company has no further detail to provide beyond the filing.
Xiaomi is the newest Chinese tech company to enter the red-hot EV industry. Chinese program giant Baidu recently announced in January that it’d be making EVs with the help of automaker Geely. In November, Alibaba and Chinese state-owned carmaker SAIC Motor said that they had joined hands to provide electric cars. Ride-share leader Didi and EV maker BYD are also co-designing a model for ride-hailing.
The internet behemoths are competing with a raft of more specialized EV startups like Xpeng, Nio and Li Auto, which have already debuted multiple models and are often compared to Tesla. They strive to differentiate from each other by investing in functions from in-car entertainment to autonomous driving.
For Xiaomi, the apparent advantage in making cars is its vast retail network and international brand recognition. A variety of its smart devices, like smart speakers and air purifiers, could be easily incorporated into its vehicles as selling points. The important challenge, of course, is in manufacturing. Compared to phone making, the automotive industry is more capital-intensive with an extended and complicated supply chain. we’ll see if Xiaomi will pull it off.