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.

Wedding planner Sterling Boulet has some advice for brides-to-be regarding lab-grown diamonds, which cost a fraction of the natural ones.

“If you’re trying to get your man to propose, they’ll propose faster if you offer this as an option,” says Boulet, of Raleigh, N.C. Recently, she adds, a friend’s fiancé “thanked me the next three times I saw him” for telling him about the cheaper lab-made option.

Man-made diamonds are catching on, despite some lingering stigma. This year was the first time that sales of lab-made and natural mined loose diamonds, primarily used as center stones in engagement rings, were split evenly, according to data from Tenoris, a jewellery and diamond trend-analytics company.

The rise of lab-made stones, however, is bringing up quirks alongside the perks. Now that blingier engagement rings—above two or three carats—are more affordable, more people are dealing with the peculiarities of wearing rather large rocks.

An engagement ring made with a lab-grown diamond at Ada Diamonds in New York City. PHOTO: CAM POLLACK/THE WALL STREET JOURNAL

Esther Hare, a 5-foot-11-inch former triathlete, sought out a 4.5-carat lab-made oval-shaped diamond to fit her larger hands as a part of her vow renewal in Hawaii last year. It was a far cry from the half-carat ring her husband proposed with more than 25 years ago and the 1.5-carat upgrade they purchased 10 years ago. Hare, 50, who lives in San Jose, Calif., and works in high tech, chose a $40,000 lab-made diamond because “it’s nuts” to have to spend $100,000 on a natural stone. “It had to be big—that was my vision,” she says.

But the size of the ring has made it less practical at times. She doesn’t wear it for athletic training and swaps in her wedding band instead. And she is careful to leave it at home when traveling. “A lot of times I won’t take it on vacation because it’s just a monster,” she says.

The average retail price for a one-carat lab-made loose diamond decreased to $1,426 this year from $3,039 in 2020, according to the Tenoris data. Similar-sized loose natural diamonds cost $5,426 this year, compared with $4,943 in 2020.

Lab-made diamonds have essentially the same chemical makeup as natural ones, and look the same, unless viewed through sophisticated equipment that gauges the characteristics of emitted light.

At Ritani, an online jewellery retailer, lab-made diamond sales make up about 70% of the diamonds sold, up from roughly 30% two years ago, says Juliet Gomes, head of customer service at the company, based in White Plains, N.Y.

Ritani sometimes records videos of the lab-diamonds pinging when exposed to a “diamond tester,” a tool that judges authenticity, to show customers that the man-made rocks behave the same as natural ones. “We definitely have some deep conversations with them,” Gomes says.

Not all gem dealers are rolling with these stones.

Philadelphia jeweller Steven Singer only stocks the natural stuff in his store and is planning a February campaign to give about 1,000 one-carat lab-made diamonds away free to prove they are “worthless.” Anyone can sign up online and get one in the mail; even shipping is free. “I’m not selling Frankensteins that were built in a lab,” Singer says.

Some brides are turned off by the larger bling now allowed by the lower prices.When her now-husband proposed with a two-carat lab-grown engagement ring, Tiffany Buchert, 40, was excited about the prospect of marriage—but not about the size of the diamond, which she says struck her as “costume jewellery-ish.”

“I said yes in the moment, of course, I didn’t want it to be weird,” says the physician assistant from West Chester, Pa.

But within weeks, she says, she fessed up, telling her fiancé: “I think I hate this ring.”

The couple returned it and then bought a one-carat natural diamond for more than double the price.

Couples find that lab-grown diamonds have made it more affordable to get engaged. PHOTO: CAM POLLACK/THE WALL STREET JOURNAL

When Boulet, the wedding planner in Raleigh, got engaged herself, she was over the moon when her fiancé proposed with a 2.3 carat lab-made diamond ring. “It’s very shiny, we were almost worried it was too shiny and was going to look fake,” she says.

It doesn’t, which presents another issue—looking like someone who really shelled out for jewellery. Boulet will occasionally volunteer that her diamond ring came from a lab.

“I don’t want people to think I’m putting on airs, or trying to be flashier than I am,” she says.

For Daniel Teoh, a 36-year-old software engineer outside of Detroit, buying a cheaper lab-made diamond for his fiancée meant extra room in his $30,000 ring budget.

Instead of a bigger ring, he got her something they could both enjoy. During a walk while on an annual ski trip to South Lake Tahoe, Calif., Teoh popped the question and handed his now-wife a handmade wooden box that included a 2.5-carat lab-made diamond ring—and a car key.

She put on the ring, celebrated with both of their sisters and a friend, who was the unofficial photographer of the happy event, and then they drove back to the house. There, she saw a 1965 Mustang GT coupe in Wimbledon white with red stripes and a bow on top.

Looking back, Teoh says, it was still the diamond that made the big first impression.

“It wasn’t until like 15 minutes later she was like ‘so, what’s with this key?’” he adds.

Xiaomi Enters Electric Vehicle Market With US$10 Billion Commitment

Chinese smartphone giant joins crowded but burgeoning automobile market.

Couples find that lab-grown diamonds make it cheaper to get engaged or upgrade to a bigger ring. But there are rocky moments.