The Chinese electronics manufacturer Xiaomi has been given the green light to begin production of electric automobiles. Two sources claim to have confirmed that Xiaomi has received permission from a Chinese government agency to produce electric automobiles. This is a big step forward for the smartphone maker’s plan to start making cars at the start of next year.
Beijing-based Xiaomi reportedly received approval from China’s auto industry regulator, the National Development and Reform Commission (NDRC), earlier this month to begin manufacture of electric vehicles. Xiaomi is the fourth company to get NDRC approval since the year ended in 2017, though. This is a huge step forward for Xiaomi and its ability to expand into new markets.
In addition, the clearance from the Ministry of Industry and Information (MIIT), which evaluates and accesses new models and ventures for technical and safety requirements, will get Xiaomi closer to mass manufacturing of electric vehicles, about two years after the company first announced its intentions. Furthermore, it would be entering the already troubled Chinese automobile manufacturing sector, where factors such as a capacity glut and falling demand have created a severe price war and damaged supplier margins.
Xiaomi plans to begin mass production of its first cars in the first quarter of 2024 after pledging to invest $10 billion over the next decade into the automotive industry. Because of worries about overcapacity and diminishing demand in the market, the NRDC will need to be more selective in approving new EV manufacturing plans of companies. Consequently, there are significant worries about making the deadlines.
Tesla’s intention to expand its Shanghai facility reportedly hadn’t been approved as of yet. The news outlet recently reported that Lucid Group, a luxury electric vehicle manufacturer in the United States, is open to manufacturing in China. On the other hand, word on the street is that demand is weak. The reason NRDC gave Xiaomi the green light is unknown at this time. The electric vehicle assembly plant in Beijing is considered a priority government industrial initiative.
The largest smartphone manufacturer waited to respond, and it was Xiaomi. Furthermore, neither the NDRC nor the MIIT provided any feedback. Due to the sensitive nature of the situation, the sources requested anonymity. According to reports, Xiaomi continued working on the project while waiting for permissions, and is now reportedly setting up a factory in Beijing that can produce 200,000 EVs each year.
However, Xiaomi expects to manufacture around 100,000 EVs in 2019. Since last week, the corporation has also intended to hire people for its EV platform. Two Xiaomi employees have spilled the beans about the company’s plans to increase production this December.
China’s low auto manufacturing utilization rates provide significant hurdles for the company. By the end of 2022, Chinese companies building internal combustion engine vehicles may be able to produce 43 million units annually. The China Passenger Car Association disclosed that their usage rate was only 54.5%, down from 66.6% in 2017. The most recent quarter ended in May, and sales for Xiaomi were down 18.9% from the previous quarter. The firm’s entry into the EV sector is driven by strategic considerations.
In response to waning demand for electronics, the company is reportedly refocusing on areas other than cellphones, as reported by the rival consultancy. The second quarter of 2023 was the worst Q2 for smartphone sales in China since 2014. Sales were down 4% year-over-year.
Xiaomi is currently putting its cars on display at the thousands of stores it owns. Pictures of people holding a banner reading “Fighting for Xiaomi Auto” were uploaded to the personal Weibo account of Xiaomi CEO Lei Jun.