Xiaomi Confirms It Will Spend $10 Billion On Building its Own Electric Cars

Chinese smartphone maker Xiaomi has officially announced that it will start manufacturing electric cars, as the company seeks to diversify beyond smartphones and consumer electronics.

Xiaomi “will set up a wholly-owned subsidiary to operate the smart electric vehicle business,” according to a statement filed to the Hong Kong Stock Exchange on Tuesday.

Xiaomi co-founder and CEO Lei Jun will serve as the CEO of the standalone division, the company said.

The Beijing-based smartphone and home appliances maker will invest an initial 10 billion yuan ($1.5 billion) in the project, it said, adding that total investment over the next 10 years will amount to $10 billion.

Xiaomi hopes to offer quality smart electric vehicles to let everyone in the world enjoy smart living anytime, anywhere,” the statement added.

During a press conference on Tuesday night, Lei shared that the new company will be 100% owned by Xiaomi.

“A lot of VCs expressed interest in investing in the new company, but I’ve rejected them all,” he said, adding that they started researching into car manufacturing on January 15.

Lei also mentioned that this will be his last major entrepreneurial project at Xiaomi.

Reports of Xiaomi’s foray into the electric car industry have been circulating for the past month. Last week, Reuters reported that Xiaomi is planning to use one of Great Wall Motor’s plants to make their own electric vehicles, which will be aimed at the mass market and “in line with the broader positioning of its electronics products.” Lei did not confirm or deny the report at the press event.

An earlier report by Chinese media outlet 36Kr said the project may have a brand positioning similar to Guangzhou-based XPeng, which is catered towards younger Chinese buyers in the mid-to-high-end market.

SEE ALSO: Xiaomi to Start Making Electric Vehicles at Great Wall Motor Plant: Report

Nonetheless, Xiaomi’s new venture does not come as a surprise to many — it follows in the footsteps of fellow tech giants such as Baidu, Alibaba, Tencent and Huawei in its entrance to the world’s largest auto market, the Chinese mainland. Local startups including Nio, Xipeng and Li Auto are already competing with Tesla in the crowded arena.

The company has been filing a list of patent applications including cruise control, navigation, assisted driving and other car-oriented technologies since 2015. Its Xiaoai virtual assistant system has already been implemented via a range of strategic cooperations, including in Mercedes-Benz vehicles and FAW Group’s special-edition model of the Bestune T77 crossover.