Xiaomi’s CEO Lei Jun shows an interest of joining the other players in the crowded industry of electric vehicle market. On Tuesday 30th March 2021, shares of Lei Jun’s Xiaomi reached a gain of 0.6% share late evening, after which the company broke the news. The news mentioned that the company plans to invest USD 10 Billion in the manufacturing of electric cars over the next 10 years.
Lei Jun (CEO – Xiaomi) said, ‘’ I will personally oversee this [EV business], and I look forward to the future where there is a Xiaomi car running on every road globally.” With this news also is a confirmation on the rumour that has surfaced earlier this year. The rumour makes mentions of the possible EV venture by Xiaomi.
However, Xiaomi’s core revenue (more than 60%) is generated from smartphones and its phone unit. Having said this, with increasing competition and changes in user preference is shrinking the phone market. It is also observed that due to the pandemic, shipments for smartphones having dropped by 7% in 2020 at only 1.26 billion units globally.
Analysts believe that the electric car market will bring new growth opportunities. Sleek designed car models attract Chinese consumers. Increased attraction is from the autonomous drive features along with remote control access. China’s electric car market is forecasted to grow at 1.9Million units, which is a 51% jump from the past year.
(Sources – Canalys Data)
The announcement by Lei Jun mentioned that he is making decisions after careful considerations and research by experts. Lei also mentioned about his awareness on the risks involved along with high investments which will require at least 3 – 5 years before they see the returns.
An official from Xiaomi also clarified on additional questions stated below which would be answered eventually:
- Process of manufacturing the cars
- Launch of the first EV car model
- Production capacity