Chinese smartphone maker Xiaomi Corp has taken a big step closer to its plan to build electric cars in the country’s highly competitive auto market. The National Development and Reform Commission (NDRC), which regulates investment and production capacity in China’s auto industry, granted a permit in early August, two people familiar with the process told Reuters. The world’s third largest smartphone producer had the Entry into e-car production announced more than two years ago. The green light from the Ministry of Industry and Information, which monitors technical and safety requirements, is still required for the start of series production planned for next year.
The company and authorities did not initially respond to requests for comment. Xiaomi dares the costly market entry in the middle of a tough price war for electric cars triggered by the US electric car pioneer Tesla in the world’s largest car market. Around 50 manufacturers of pure battery-electric cars are already vying for the attention of customers with weakening demand and overcapacities.
The smartphone giant from Beijing wants to invest ten billion US dollars in the automotive business within a decade. According to insiders, production is scheduled to start in December. Xiaomi is targeting a volume of 100,000 vehicles in the first year, one of the people said. Hiring has been underway for the past week, according to two Xiaomi employees who asked not to be named. The state-run newspaper Beijing Daily reported in July that the construction of a factory with an annual capacity of 200,000 electric cars in Beijing had already been completed. The city of Beijing welcomed the new electric car plant as an important industrial modernization project.
Smartphones are giving way to cars
Xiaomi is only the fourth company since 2017 to receive approval from the NDRC. The authority had become more cautious because of rapidly growing capacities. Tesla has not yet received approval for a requested expansion of its plant in Shanghai. According to information from insiders, the US luxury car maker Lucid also flashed off when it came to production in China felt. According to data from the Chinese Automobile Association CPCA, car factories in China were only used to half capacity last year with a total capacity of 43 million vehicles, compared to two-thirds five years earlier.
However, Xiaomi is also under increasing pressure in its traditional market. In the past quarter, sales collapsed by almost a fifth. According to estimates by the consultancy Counterpoint, smartphone sales in China fell by four percent in the second quarter. The company now wants to clear out smartphones in thousands of stores and sell electric cars. Xiaomi boss Lei Jun (53) posted photos of people holding a banner with the slogan “Fighting for Xiaomi cars” on the social network Weibo over the weekend.