Chinese tech giant Xiaomi is throwing its hat into the red-hot electric vehicle market with a RMB 10 billion ($1.52 billion) investment to set up a fully owned subsidiary for its auto business, to be led by chief executive Lei Jun.
Founder and CEO Lei at a press event in Beijing on Tuesday said Xiaomi had decided to strike out on its own on EVs in an effort to operate an ecosystem that will provide seamless user experience, and will not consider outside funding. Lei said he was aware of the complexities of making cars with extreme capital intensity, saying that the company is now ready to pour money into the project and face losses over a long-term period.
“We look forward to the day when Xiaomi cars will run on roads across the globe… This would be the last startup project in my career and I shall stake all I have to work this out,” the 52-year-old serial entrepreneur said (our translation). In an announcement published Tuesday, Xiaomi said the company plans to invest a total of $10 billion in the project over the next 10 years.
Following in Apple’s footsteps, Xiaomi has pledged to develop high-quality EVs with a “best-in-class” connected device ecosystem for global customers, according to Lei. The world’s fourth-biggest smartphone maker recorded shipments of nearly 150 million units in 2020 with an annual growth rate of 19%. Sales for competitors Samsung and Huawei shrank a respective 14% and 22%, according to figures from Canalys.
Xiaomi also boasted of having one of the world’s biggest Internet-of-Things (IoT) platforms, connecting 325 million smart home appliances as of last year, excluding handsets and laptops. It has also remained the top-selling television set maker in China since 2019, accounting for around 20% of market share, according to data compiled by Beijing-based consultancy All View Cloud (AVC).
However, the Chinese consumer electronics giant is seeking new sources of growth amid a slowing market. Its IoT and consumer products segment slowed sharply to 8.6% annually last year from 41.7% in 2019. The company also missed analyst revenue estimates for the fourth quarter, according to Bloomberg.
In the meantime, the global automotive industry is undergoing a landmark transition, and the shift to battery-electric, self-driving cars from traditional, internal-combustion vehicles has reached a major inflection point. China is expected to maintain its global leadership in EV production and adoption. IHS Markit forecasted that China will regain growth momentum at double-digit rates in 2021 and beyond, as the government continues to push the EV industry forward and consumer demand recovers.
Xiaomi has long been rumored to be plotting a move into the booming, crowded EV market. Last week it denied a Reuters report that it was in discussions with Chinese automaker Great Wall Motors for contract manufacturing. Shunwei Capital, a venture capital firm formed by Lei, invested in Nio in its Series A back in 2015 and became an early investor in Xpeng Motors two years later.
Baidu is also accelerating the push into the market. In January it set up a joint venture with automaker Geely. The Chinese search company has set a goal to launch its first own-brand EV within three years, chief executive Robin Li said during an earnings call last month.