Ti Gong
Xiaomi founder and CEO Lei Jun said the Beijing-based maker of smartphones and other consumer electronics is investing about $ 10 billion over the next decade to join the somewhat overcrowded ranks of electric car manufacturers.
Xiaomi, the Beijing-based maker of smartphones and other consumer electronics, is investing around $ 10 billion over the next decade to join the somewhat overcrowded ranks of electric car manufacturers.
Xiaomi will face stiff competition from US Tesla, Shanghai-based electric car makers NIO and Xpeng, and multinational Chinese tech companies. Search engine giant Baidu and Geely Automobile Holdings Ltd are set to join forces to build electric cars. Other smartphone companies, including Apple and Huawei, are reportedly taking a serious look at the electric car market.
China’s determination to be the world leader in green vehicles and the development of “intelligent” automotive systems are fueling the number of stakeholders who are thinking of engaging in the sector.
“The key to future vehicles,” said independent market analyst Zhang Xiaofeng, “will be intelligent software and systems, similar to the brain of the human body.” Internet and technology giants are becoming increasingly involved in the industry. Nobody wants to be left behind in the race. “
Moving is a bit of a gamble for Xiaomi. Company founder and managing director Lei Jun said the decision to enter the electric car market only took 75 days of research and discussion. He announced that he had passed the idea to friends in January, and some of them warned him it was too risky. Lei wasn’t deterred. The market is too tempting.
China’s electric car market is in full swing. The government’s goal of building green cars will account for 20 percent of all vehicle sales by 2025.
Last year, sales of environmentally friendly vehicles accounted for around 6.3 percent of the Chinese market. Sales rose by almost 11 percent from 2019 to 1.8 million vehicles, supported by government support and the growing interest of consumers in environmentally friendly transport. Electric car sales are said to have been brisk in the first quarter of this year.
Electric vehicle pioneers like Tesla and the Chinese manufacturer BYD, which is supported by US billionaire Warren Buffett, are already firmly established in the market. Foreign automakers like Volkswagen, Ford, BMW, Hyundai and Toyota are accelerating the development of their electric vehicles.
Xiaomi’s competitors also include companies that develop and manufacture software and connectivity systems for “intelligent” vehicles.
Ti Gong
Xiaomi was founded in 2010. The deal started in cell phones for 1,999 yuan ($ 305) and targeted the tricky end of the market. This success allowed the company to expand into new areas, including home appliances and smart hardware connected through the Internet of Things.
Xiaomi was founded in 2010. The deal started in cell phones for 1,999 yuan ($ 305) and targeted the tricky end of the market. The phones were only sold online and were an instant hit. This made Xiaomi the third largest provider of smartphones worldwide.
This success allowed the company to expand into new areas, including home appliances and smart hardware connected through the Internet of Things. More recently, the company has reportedly partnered with Chinese phone maker Oppo to manufacture its own chips for fifth generation smartphones.
Lei said the new standalone Xiaomi electric vehicle division will be his last major entrepreneurial venture. He also noted that Xiaomi has 108 billion yuan in cash on hand to cushion the new company.
Unlike the cheaper cell phones that catapulted the company to success, the first Xiaomi electric cars won’t be budget vehicles thanks to a survey Lei conducted on the Weibo social media platform. More than 10,000 internet users answered the question about their model preferences and price ranges for the electric vehicle of a Xiaomi.
The current market for electric cars in China ranges from premium Teslas, which sell for around 370,000 yuan, to budget vehicles like the 28,800 yuan Wuling Hongguang Mini EV manufactured by SAIC Motor of Shanghai.
Two-thirds of Weibo respondents said they wanted a car that cost at least 100,000 yuan. Only 8 percent of respondents said they could afford a vehicle over 300,000 yuan.
Current government subsidies for the purchase of electric vehicles are only available for passenger cars priced at 300,000 yuan or less.
During a video session on the Douyin live streaming platform, Lei said: “The first car will definitely not be a sports car or a motorhome. It will either be a sedan or an SUV. “
This decision was in line with the results of the online survey. Around 45 percent of the participants voted for Xiaomi to produce a sedan. 40 percent opted for an SUV.
In 2013, Lei visited Elon Musk, Chief Executive Officer of Tesla, twice in California’s Silicon Valley. At that time he ordered two Tesla Model S vehicles.
In 2015 and 2016, Lei personally invested in two Chinese electric vehicle startups: NIO and Xpeng, which have become two major players in the industry in China.
Details on whether Xiaomi will make its own cars from scratch or use some already established technologies have not been released. It is also not clear whether the company will build a new facility to produce the cars or look for an existing factory line.
In his live streaming comments, Lei said the vehicles would incorporate the company’s core technologies, including in-car air purifiers.
Industry experts see challenges ahead. Starting such a large company in a new sector requires a large and long investment cycle.
Lei indicated that he started his smartphone business from scratch and grew it into a global company with years of hard work. He said he would build Xiaomi’s electric vehicle business with the same dedication and determination.
“I am ready to risk my entire personal reputation and fight for the future of our intelligent electric vehicle,” he said.
On the other hand, entrepreneurs always show an optimistic face.