Xiaomi Corporation has taken a significant step towards the start of its EV business by establishing a new company – Xiaomi Auto Co., Ltd. (Chinese: 小米汽车有限公司). It has invested CNY 10 billion or approx. EUR 1.3 billion in the new company and set up its headquarters in Beijing. Lei Jun, Founder, Chairman, and CEO, Xiaomi Corporation, serves as Xiaomi Auto’s legal representative.
A number of places in addition to Beijing, such as Wuhan, Hefei, and Xi’an were in talks with Xiaomi to set up their car business there. According to a report on cnevpost.com, which cited Auto Business Review’s post on Weibo, Beijing could become home to Xiaomi’s first car factory as well.
Xiaomi announced its plans to enter the car-making business on 30 March 2021. Much excitement and anticipation from EV enthusiasts from all over surrounded the announcement. The company continues to lay out its business. Jun has visited many places and OEMs, such as BYD, SGMW, Great Wall Motors, SAIC, Bosch, and others in recent months, and in July 2021, he announced a recruitment drive to hire their first 500 engineers. The official information we have now is that Xiaomi has employed some 300 people in the EV business.
Smart electric vehicles represent one of the largest business opportunities in the next decade and represent an indispensable component of smart living. Entering this business is a natural choice for us as we expand our smart AIoT ecosystem and fulfill our mission of letting everyone in the world enjoy a better life through innovative technology.Lei Jun, CEO & Founder of Xiaomi, in an internal letter, on March 30, 2021
Why a Xiaomi electric car?
With their businesses primarily dependent on mobile devices, including but not exclusive to cellphones, electronics companies are increasingly showing interest in EVs. With their existing traditional business segments reaching stagnation, these companies have been looking at other industries for growth, and the auto industry seems to be the most attractive one. Whether companies designing and launching mobile devices like Apple or their suppliers like Foxconn, many consider foraying into the auto industry now, and Xiaomi is no exception.
Many of these companies have numerous core technologies that they can use in their electric car business and extensive experience in hardware and software integration. They have a powerful brand, and large user base, and abundant cash resources that allow them to invest confidently.
Jun reportedly visited Tesla CEO and Co-Founder Elon Musk a few years ago. Jun is indirectly involved in the EV business, as he is the Co-Founder of Shunwei Capital which has invested in NIO and Tesla. Based in China, which is much faster in rolling out EVs than the USA, Xiaomi might be able to roll out its EV much earlier than Apple. Moreover, Xiaomi, unlike Apple, is a budget brand, so low-end specifications would allow developing its EV in a shorter time and with fewer complications.
Xiaomi in talks with Evergrande for purchase of car unit
Xiaomi is reportedly in talks with Chinese conglomerate Evergrande to acquire a stake in the company’s car unit. A Reuters report on August 20, 2021, citing sources, said that the real estate giant was looking to sell part of its 65 per cent stake in its electric vehicle unit. This includes the Swedish electric vehicle startup NEVS and Evergrande’s own, Hengchi brand of electric vehicles.
According to the report, Evergrande released a statement saying that preliminary talks with Xiaomi were on and weren’t in-depth discussions. With this deal, however, Xiaomi will also have potential access to the three plants in China that belong to Evergrande’s car unit and the former Saab plant in Sweden that belongs to NEVS.
Xiaomi could acquire Borgward
According to another report from cnevpost.com, Beijing is encouraging Xiaomi Auto to acquire Borgward. Such a move could allow Xiaomi Auto to launch its first EVs faster, although the company would set up a factory of its own, too, at a later stage. Borgward’s Chinese factory in Beijing has an annual capacity of 180,000 vehicles. It has been lying idle for more than a year, causing layoffs, which is probably a concern for the government.
Xiaomi approaches China FAW Group
One more report from cnevpost.com suggests that Xiaomi Auto is considering a manufacturing operation in the Jilin province, saying that Jun met the provincial officials in Changchun and also visited China FAW Group while in the province. China FAW Group is strong in auto manufacturing, having a joint venture business with auto giants like Volkswagen Group and Toyota.
Featured Image Source: NIO