Announced Chinese smartphone maker Xiaomi has officially entered the auto industry with a new business for smart electric cars, the company announced today, Tuesday, in a deposit.
The company initially invests 10 billion yuan ($ 1.52 billion) in a wholly owned subsidiary, with a total investment target of $ 10 billion over the next 10 years.
The company is embarking on its largest ever reform to enter the booming electric vehicle market in China, and said: Xiaomi CEO Lei Jun is also serving as CEO of the smart electric vehicle unit.
The Chinese smartphone maker is joining the tech giants, from Apple to Huawei, in targeting the auto industry and betting that future cars will become increasingly independent and interconnected.
A report by Bloomberg Agency said before the announcement: Xiaomi may invest a total of 100 billion yuan in the project over the next three years, including external financing, and the company contributes about 60 percent of the projected amount and plans to collect the rest of the funds.
Xiaomi has become the latest company to enter the crowded arena, as a group of automakers from Tesla to local startups such as Nio and Xpeng are competing for a slice of the world’s largest electric vehicle market.
Electric vehicle sales in China could rise by more than 50 percent this year alone as consumers adopt cleaner cars and costs drop, according to estimates by research firm Canalys.
The Beijing-based company is outsourcing to assemble cars, a model it uses for its smartphones, as Xiaomi relies on manufacturers such as Taiwan’s Foxconn to manufacture its mobile devices.
However, the company has no plans to choose established automakers as their manufacturing partners, and John led a review of the electric car industry’s potential several months ago and a final decision was made to enter the arena in recent weeks.
John founded the company more than a decade ago, and it became the fastest-growing smartphone maker in China in the fourth quarter of last year after Huawei found it difficult to obtain major chipsets due to US sanctions.
Beyond phones, the company is known for operating internet services and making a range of inexpensive household items from rice cookers to robotic vacuums.