Xiaomi Enters Electric Vehicle Market With US$10 Billion Commitment

HONG KONG—Chinese electronics giant Xiaomi Corp. became the latest tech company to launch a foray into China’s burgeoning electric vehicle market, pledging $10 billion over the next decade to the effort.

Xiaomi Chief Executive Lei Jun will lead the new stand-alone subsidiary focused on electric vehicles, the company said Tuesday. It will spend an initial 10 billion yuan, equivalent to about $1.5 billion, to launch the new company, expanding its investment in the coming years.

Xiaomi’s entrance into electric vehicles makes it one of China’s most high-profile tech companies to date to join the increasingly crowded market for such automobiles. Xiaomi’s status as a popular consumer brand with a rapidly expanding global footprint, could give it an edge over its many rivals, though new entrants into the car market face significant hurdles.

Mr Lei appeared late Tuesday before a cheering theatre of spectators in Beijing following the announcement. He told the audience that he had deliberated for months with the company’s board about whether Xiaomi should enter the electric vehicle market. He said he ultimately decided that the company’s deep cash cushion gave him the confidence to move forward.

“We have accumulated a lot of wisdom and experience and it’s time for us to try the waters,” Mr. Lei said.

Mr Lei offered scant details on how or when any Xiaomi vehicle would come to market, and didn’t disclose whether it had enlisted an outside manufacturer for the effort. Last week, Chinese car maker Great Wall Motor denied a report that it was working with Xiaomi on electric vehicles.

China is the world’s largest electric vehicle market, and Xiaomi joins a crowded field of companies looking to compete in the business. Sales of electric vehicles have been booming since industry champion Tesla Inc. began building its high-end cars in Shanghai in late 2019. Domestic rivals include NIO Inc.—whose soaring stock has made it one of the world’s most valuable auto makers—as well as Li Auto Inc. and Xpeng Inc.

In January, search-engine giant Baidu Inc. disclosed that it was entering the electric vehicle market with partner Geely Automobile Holdings Ltd. Apple Inc. has been seeking partners to build electric vehicles since late last year, though talks to do so with South Korea’s Hyundai Motor Group broke down in February.

Xiaomi is betting that its entry into electric vehicles will build on its resurgent success in smartphones. In the fourth quarter, the company became the world’s third-largest smartphone maker behind Apple and Samsung Electronics Co., occupying that spot for the first time ever. Booming sales in China, India and Western Europe have fueled its rise, while troubles at its Chinese rival Huawei Technologies Co. have sent customers flocking to its cut-rate devices.

The details of Xiaomi’s electric-vehicle effort came toward the close of a roughly two-hour new product launch hosted by Mr Lei in Beijing on Tuesday. In addition to smartphones, Xiaomi sells an array of consumer devices, and Mr Lei spent most of the event revealing a grab bag of new gadgets, including an internet-connected air conditioning unit, a home humidifier and a new laptop.

Only at the very end did Mr Lei discuss Xiaomi’s electric-vehicle plans. As an image of Mr Lei with his arm around Tesla CEO Elon Musk flashed behind him, the Chinese CEO said he had been a Tesla owner since 2013, and long had an interest in the technology.

“I hope that one day there will be a Xiaomi car on each and every street,” he said.

Reprinted by permission of The Wall Street Journal, Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: March 30, 2021