Xiaomi is looking to the garage for its next big expansion, with the Chinese behemoth announcing it’s launching a smart electric vehicle business. The new subsidiary will get an initial investment worth around $1.46 billion, Xiaomi founder, chairman, and CEO Lei Jun announced today, also confirming that he will be the CEO of the new EV team.
“Smart electric vehicles represent one of the largest business opportunities in the next decade and represent an indispensable component of smart living,” Lei Jun said at an event today. “Entering this business is a natural choice for us as we expand our smart AIoT ecosystem and fulfill our mission of letting everyone in the world enjoy a better life through innovative technology.”
While it might seem a strange direction to go in, for anybody who knows Xiaomi best for their smartphones, the company is in fact present in a huge variety of markets. It already offers a range of connected home devices, including TVs, air purifiers, vacuum cleaners, and projectors, which have helped it build up a hefty cash reserve equal to almost $16 billion.
In total, Xiaomi expects to invest around $10 billion in total into the new electric vehicle business. In an internal letter to employees, Lei Jun argued that factors like Xiaomi’s “understanding of the hardware-based internet service business model” along with its software and hardware integration experience, and its broad existing smart ecosystem, should give it an edge in the category. He also pointed to the brand’s “numerous core technologies” which could be applicable: Xiaomi has, among other things, pushed development of high-speed battery charging and sensor tech.
Still, the automotive world is full of startups looking to follow Tesla and make a splash with an electric vehicle of their own. The history books of startups which failed at that are even bigger. There’s a huge step up in complexity from designing and making consumer electronics, like phones, tablets, and TVs, to building vehicles.
Indeed arguably the most sensible route is partnerships with other, more experienced firms. That’s believed to have been the on-again, off-again strategy that Apple was adopting with its own Project Titan car project, though it’s unclear at this stage just how involved the Cupertino firm aims to be in the mechanics of the well-rumored Apple Car.
Whether or not it’s wise, then, Xiaomi’s founder certainly seems committed. “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,” Lei Jun insisted today. “I am willing to put all my personal reputation on the line and fight for the future of our smart electric vehicle!”