Chinese Xiaomi Invests $10 billion in Electric Vehicles

TechChinese Xiaomi Invests $10 billion in Electric Vehicles

Chinese Xiaomi Invests $10 billion in Electric Vehicles

Xiaomi, the world’s third largest smartphone manufacturer has decided to shift towards the electric car market. Rivals Apple and Huawei have already joined the race. 
The Chinese smartphone manufacturer has announced that it will want to “offer quality smart electric vehicles”, it said last Tuesday.
At the moment, the company has not confirmed whether it will produce its own models, however, hundreds of companies in China are already jostling to take the leadership within this new niche of the car industry.

Xiaomi Follows Baidu’s aspirations

Xiaomi, the world’s third biggest smartphone manufacturer, has publicly announced it will invest in $10 billion within the next few years to join the electric vehicle industry..
Few details have been shared, however it is likely that the company “will look for an outside partner to handle the manufacturing, while it focuses on design and engineering”, writes the BBC.

This came right after the announcements that Baidu, China’s leading search-engine has joined the race by investing in Volvo Cars through the Zhejiang Geely Holding Group to make electric vehicles.
It is probably not a surprise if Xiaomi has decided to follow the same path: earlier this year, Baidu’s shares went up when it announced its EV project. “The company’s advertising revenue was flat year-over-year compared with double-digit growth a few years ago.”, described The Wall Street Journal

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EVs are the future in China

With more than two billion residents and a growing middle class seeking for moden comfort, China represents one of the biggest potential markets for electric vehicles. 
According to a data provider published by S&P Global Platts, ““new energy vehicles” will account for 20% of total new car sales in China by 2025”, reports the BBC.

Electric vehicles are affordable in China, and the starting price starts at $4,500 for the Hong Guang Mini EV, while Tesla is delivering its Model Y from its Shanghai factory. Ford has also set up a manufacturing plant in order to build electric Mustangs.

Will Xiaomi’s popularity be enough?

Since the burgeoning – but very competitive – automobile market in China, many manufacturers have tried taking the lead on the EV industry.
Last week, Xiaomi’s shared its results, reporting a +57% jump in phone shipments to Western Europe and a 52% increase to mainland China. “Revenue for the year rose by more than one fifth”, confirmed the company. 
Xiaomi is optimistic that it will lead the market since its reputation is taking off internationally – although the 5G and AI ready company has caught the scrutiny from U.S officials – and was blacklisted from investments by the Department of Defense.  
“We still have a lot of room to develop”, Wang Xiang, Xiaomi’s president, told journalists.
The above content is considered to be market commentary information and shall not be perceived as independent investment research or investment advice.