On 30 March 2021, Xiaomi (小米 ), Chinese smartphone giant, announced its decision to enter the Electric Vehicle (EV) market. The Chinese technology firm will invest 10 billion dollars into electric cars over the next 10 years.
Although Xiaomi is forecasted to emerge as the third-largest smartphone vendor in 2021, the company is attempting to diversify its revenue sources away from the smartphone market. Indeed, this sector generates the majority of its revenue but has razor-thin profit margins due to its premium but cheaper brand identity.
The company will set up a wholly owned subsidiary which will be run by Xiaomi Chief Executive Lei Jun himself. He affirmed at an event in Beijing that this will be his last start-up project. Moreover, he added that they are not planning to have any outside investor to have full control over the project.
After the announcement of Xiaomi joining the electric vehicle market, the company’s stock rose as much as 6.1% in Hong Kong.
Electric vehicles have taken off in China as a result of Beijing’s strong policy support, which includes subsidies. Despite the fact that some of these policies have been relaxed, the prospects for China’s EV market in 2021 are very promising. In China, there is already an excellent network of standard public EV chargers, strong government support, and now a return to strong market demand. Canalys, a global technology market analyst, estimates that 1.9 million electric vehicles will be sold in China in 2021, reflecting a 51% increase year over year.
The number of electric vehicles will also continue to rise on the road all over the world as emissions regulations tighten, battery prices decrease, and the number of models available increases Three out of every 100 cars sold in 2021 will be pure electric or plug-in hybrid. By 2030, the share could grow to 20-25 percent, resulting in the creation of 20 million new electric vehicles per year.
Xiaomi is up against existing automakers like Geely, Warren Buffet-backed BYD and Tesla, as well as start-up companies like Nio and Xpeng Motors in China. In addition, internet companies are making inroads into the smart electric vehicle market. Baidu, the Chinese search engine, founded its own electric car venture in January and employed a CEO for it in February.
During 2021, the electric-car ecosystem’s companies, Tesla, existing automakers, and tech giants will compete for place in the race to an electrified future.
Credits to: Silvia Gramegna