Xiaomi just announced that it is getting into the electric car business. The company will invest an initial 10 billion yuan ($1.5 billion) on smart vehicle manufacturing before ramping that up rapidly in subsequent years.
The Chinese smartphone maker joins tech giants from Apple Inc. to Huawei Technologies Co. in targeting the vehicle industry, betting future cars will grow increasingly autonomous and connected.
Depending on progress, Xiaomi could end up investing a total 100 billion yuan in the project in as little as three years, taking external financing into account, a person familiar with the matter told Bloomberg News before Tuesday’s announcement.
The company will contribute about 60% of the envisioned sum and plans to raise the rest of the funds, said the person, who asked not be identified because the plans are private.
“We have a deep pocket for this project,” Lei, also Xiaomi’s chief executive officer, said at an event in Beijing. “I’m fully aware of the risks of the car-making industry. I’m also aware the project will take at least three to five years with tens of billions of investment.”
Xiaomi doesn’t plan to invite outside investors to the project as the company wants full control of the car making business, he added. “This will be the last startup project in my career.”
Xiaomi becomes the latest to pile into an already crowded arena, where an array of automakers from Tesla Inc. to local upstarts Nio Inc. and Xpeng Inc. are battling for a slice of the world’s biggest EV market.