Will Xiaomi’s Plan of Manufacturing E-Vehicles be A Success?
Xiaomi said that it will spend $10 billion over the next decade.
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Chinese smartphone giant Xiaomi on Tuesday, 30 March, announced that it will manufacture electric vehicles.
Lei Jun, Founder, Chairman and CEO of Xiaomi, stated during the March 2021 launch event that its business will be operated under a Xiaomi wholly-owned subsidiary with an estimated investment of USD 10 billion in the next decade.
The company is reportedly looking out for an outside partner to handle the manufacturing while it focuses on the design and engineering.
“The decision was made after numerous rounds of deliberation among all our Partners, and this will be the final major entrepreneurial project of my life. I am willing to put all my personal reputation on the line and fight for the future of our smart electric vehicle! I am determined to lead my team to fight for the success of the Xiaomi electric vehicle,” said Lei Jun.
Apple & Baidu Working on EVs
Meanwhile, Chinese search engine giant Baidu has joined hands with Zhejiang Geely Holding Group, the parent of Volvo Cars, to make EVs. And global tech giant Apple Inc is also reportedly looking to manufacture EVs. The company was earlier in talks with Hyundai Motors, said a report by The Wall Street Journal.
Earlier in February, Reuters reported that Chinese smartphone giant Huawei is currently in talks with state-owned automaker Changan Automobile and other companies to manufacture EVs.
‘Won’t be Difficult For Smartphone Companies’
With mobile phone giants entering into the EV business industry expert and Founder of BattRE , Nishchal Chaudhary believes that it won’t be difficult for these companies to establish themselves in the EV sector as they already are technologically well advanced.
“What they would need to work on is their battery technology and it's thermal management to meet the climatic and range requirements,” he told The Quint.
‘Extensive Experience Within Internet Industry’
In an internal letter to employees, Lei Jun stated that Xiaomi has distinct and unique advantages in manufacturing cars.
He said that Xiaomi has the most extensive experience in software and hardware integration. “Xiaomi has a smart ecosystem which is the largest in terms of scale, the most diversified in terms of product category, and the most active in terms of user connections”.
The company has numerous core technologies that can be applied to smart electric vehicle business. “Xiaomi has abundant cash resources that allow Xiaomi to invest with confidence”, read the letter written by Lei Jun.
No Prior Experience in Manufacturing EVs
Despite heavy investment of USD 10 billion and long term goals, what the company lacks is any prior ‘experience’ in manufacturing cars.
A report by The Wall Street Journal further suggests that the company might have strong experience in manufacturing smartphones, air purifiers and rice cookers but sales and after-sale service are also very different from selling smartphones. So ‘sale’ and ‘after-sale’ might pose a challenge for the company.
Tesla: The Biggest Competitor
Billionaire and Spacex Founder Elon Musk owned Tesla is undoubtedly the biggest rival for every Electric Vehicle manufacturing company.
With the company expanding globally, it might pose a threat to the new smartphone companies such as Xiaomi and Huawei who are trying to enter in the electric vehicle business.
A report by Hindustan Times suggest that Tesla has a massive share of 18% share in the global EV sales, far ahead of its nearest rival, Volkswagen. Replacing Tesla could also certainly be a challenge for newer EV manufacturers.
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