Tech company Xiaomi launches electric vehicle division

Chinese tech company Xiaomi has registered its electric vehicle (EV) business with a registered capital of CNY10 billion. Xiaomi’s EV division, with about 300 employees, has entered a “substantial development phase”, the Beijing-based company said. In late August, Xiaomi said it had acquired autonomous driving firm Deepmotion for around USD77.37 million to enhance the technological competitiveness of its EV business. Xiaomi announced its foray into the electric car business in late March when several tech giants like Baidu and Huawei were already looking at the vehicle industry as the next big-ticket sector, hoping that in the future cars will become increasingly autonomous and connected. Lei Jun, CEO of Xiaomi and CEO of its new smart electric car unit, said earlier that the company’s cash reserves totaled CNY108 billion by the end of 2020, which allows the company to afford the risks involved in the car business.

Xiaomi said its EV team has done a massive amount of user research in the last five months, and also visited industry partners while defining its EV products and setting up its EV team. Xiaomi currently has 16,000 engineers, and its research and development spending hit CNY10 billion last year. The company said it has sufficient confidence in its talents and has technological advantages in artificial intelligence, new materials and other fields to support its automotive business. Roy Lu, Director of the Gasgoo Auto Research Institute, said Lei considers automobiles to be part of Xiaomi’s AI-enabled Internet of Things (IoT) ecosystem, and has invested in Chinese electric car startups Nio and Xpeng Motors via Shunwei Capital, a venture capital firm. But Lu also warned that the change in Lei’s role from an investor to a competitor will push Nio and Xpeng Motors to prepare for the impact of Xiaomi’s entry into cars on their business. Experts also said it remains to be seen whether Xiaomi can really afford the capital and time needed for the cash-intensive smart car business, given that many Chinese companies that had entered the segment faced severe financial difficulties, with some even going bankrupt.

Matthew Kanterman and Nathan Naidu, Analysts at Bloomberg Intelligence, said Xiaomi’s entry into China’s EV market opens a big new growth area for the company beyond smartphones and other consumer electronics. In the second quarter of this year, Xiaomi posted record revenue of CNY87.8 billion, up 64% year-on-year, beating analysts' expectations. Xiaomi was the world’s No 2 smartphone maker by shipments from April to June, selling 52.8 million units, a year-on-year growth of 83%, according to market research company Canalys, the China Daily reports.