China’s tech giant Xiaomi Corp has achieved a significant milestone in its ambitions to manufacture electric vehicles (EVs) by winning the approval of China’s National Development and Reform Commission (NDRC). This brings Xiaomi a step closer to realizing its goal of entering the automobile market by producing cars as early as next year.
Regulatory Green Light
The NDRC, responsible for overseeing investments and production capacity in China’s auto industry, granted approval to Beijing-based Xiaomi’s EV manufacturing plans earlier this month. This marks only the fourth such approval since 2017.
Next Steps and Challenges
While NDRC’s approval is a significant advancement, Xiaomi’s EV venture still requires clearance from the Ministry of Industry and Information (MIIT). The MIIT evaluates new automakers and models for technical and safety compliance. Entering the Chinese auto manufacturing sector poses challenges amid the market’s capacity surplus, slowing demand, and competitive price wars.
Xiaomi’s Ambitious Plans
Xiaomi has committed a substantial USD 10 billion investment over ten years to its automotive venture, with a goal of commencing mass production of its first vehicles in the first half of 2024. However, uncertainties about meeting this timeline existed due to concerns about overcapacity and demand slowdowns in the EV sector.
Construction Progress
Amid awaiting approvals, Xiaomi has made significant progress, constructing factory facilities in Beijing capable of producing 200,000 EVs annually. The company plans to produce around 100,000 EVs in the coming year and has ramped up recruitment efforts for its EV plant.
Strategic Shift for Xiaomi
As Xiaomi seeks to diversify its business away from smartphones amidst a declining market, its entry into the EV sector is a strategic move. China’s smartphone sales fell by 4% YoY in Q2 2023, prompting Xiaomi to utilize its vast network of stores as showrooms for its electric cars.
CEO’s Commitment
CEO Lei Jun, who views the EV venture as his final major entrepreneurial undertaking, expressed his commitment to the endeavor by sharing images of supporters holding a “Fighting for Xiaomi Auto” banner on his personal social media account.
Navigating Uncertain Terrain
Xiaomi’s entry into the EV market amid regulatory approvals, capacity challenges, and shifting consumer demands underscores the complex landscape facing the tech giant. As the global automobile industry continues to evolve, Xiaomi’s foray into electric vehicles is poised to reshape its future business trajectory.