Since Xiaomi announced the establishment of its car making business at the end of March, the location of the new venture’s headquarters and factories has attracted much attention. It was reported earlier that Xiaomi Auto would be located in Shanghai, carrying out vehicle research and development there. In addition to Beijing and Shanghai, other cities including Wuhan, Hefei, and Xi’an have also been reported to be “actively striving for Xiaomi‘s car building project.”
Besides the question of host city, how exactly the leading electronics firm plans to build cars has also attracted much attention. Pandaily reported that Lei Jun, founder and CEO of Xiaomi, had frequently visited car makers such as Changan Automobile, GAC Motor, SAIC-GM-Wuling and Great Wall Motor since April, and has released a large quantity of recruitment information.
However, Lei Jun himself has not disclosed any further news, except from posting a “Job Advertisement for Xiaomi Auto Department” on Weibo, the Chinese equivalent of Twitter. During Xiaomi‘s 11th anniversary annual speech held on August 10, Lei Jun also made no mention of any car building business.
Some analysts believe that Lei Jun’s “confidence” in entering the automobile industry is inseparable from Xiaomi‘s strong performance in the mobile phone market.
According to a financial report released by Xiaomi, the company’s annual revenue in 2020 was 245.9 billion yuan ($37.9 billion), a significant increase of 19.4% compared with 2019. In the first quarter of 2021, Xiaomi‘s total revenue reached 76.9 billion yuan, a year-on-year increase of 54.7%. The adjusted net profits was 6.1 billion yuan, representing a year-on-year increase of 163.8%.
IDC, an international research company, reported in the second quarter of 2021 that Xiaomi‘s mobile phone sales had surpassed Apple’s, making it the second largest smartphone manufacturer in the world for the first time.
However, in contrast with this excellent financial report, Xiaomi‘s share price performance has been mediocre. On March 31, influenced by the news of Xiaomi‘s future car building business, the share price of Xiaomi opened 2.54% higher, and once rose nearly 6% in intraday trading, but then decreased significantly. The closing price on the day was HK$25.75 ($3.31), up only 0.59%.
At the close of trading on August 16, Xiaomi was selling at HK$24.85 per share in the HKEX, with a market value of about HK$623.377 billion.