After announcing in April plans to expand into manufacturing electric vehicles, Xiaomi, the world's second biggest manufacturer of smartphones, on September 1 established the new car division Xiaomi EV with a committed investment of 10 billion yuan (approximately $1.55 billion) over ten years.
Xiaomi EV is headed by Lei Jun, CEO and founder of Xiaomi, and already has a team of 300 staff. Many of those staff are in the area of self-driving technology, which Xiaomi also plans to develop. To help accelerate its efforts in this area, the company in August acquired a Chinese self-driving technology startup by the name of Deepmotion Tech, in a deal worth $77 million.
Transitioning from smartphones and other small devices to cars is no walk in the park, as Apple has experienced. To ease the transition, Xiaomi may initially acquire production capacity from an existing EV startup.
Bloomberg reported last week that the Chinese government is looking to reduce overcapacity in the EV space by encouraging some of the struggling or smaller players to merge or be bought out. One possibility for Xiaomi EV is a deal with the car division of cash-strapped property development giant Evergrande.
Another possibility according to recent reports out of China is a deal with BAIC for the purchase of the Borgward plant near Beijing, which has been idle the past year. BAIC's Foton unit controls the Borgward plant. Xiaomi has also previously been linked with Great Wall Motor.
It's currently thought Xiaomi's first EV will arrive on the market around 2024. Stay tuned.