Chinese tech giant Xiaomi has officially received the National Development and Reform Commission’s (NDRC) approval to produce 100,000 electric vehicles per year, two people familiar with the matter reportedly stated.
This significant advancement would enable the smartphone maker to pursue its plans to start EV production by early 2024.
In hindsight, Xiaomi founder Lei Jun initially disclosed the company’s intent to invest $10 billion over the next decade to penetrate the rapidly growing EV market in 2021.
Finally, the soon-to-be automaker secured the necessary approval from the state planner for its planned EV business. However, it must be noted that it still needs to ensure clearance from the Ministry of Industry and Information (MIIT).
Potential challenges
Xiaomi’s imminent entry into China’s electric vehicle market is not in good timing. As of now, the domestic industry is struggling with various challenges, such as overproduction and weak demand.
In effect, automakers have been implementing significant price cuts to empty their inventories.
That said, it has been hard for companies to get the NDRC’s approval. Leading American automaker Tesla apparently struggled to get the state planner’s approval for Giga Shanghai’s expansion. Likewise, Lucid Group faced the same roadblock in its plans to establish domestic production in China.
Surprisingly, Xiaomi succeeds in getting the necessary approval for its business proposal. It is worth noting that the Beijing municipal government recently recognized the company’s EV factory as a key industrial upgrade project.
Xiaomi’s progress
As mentioned, Xiaomi has yet to get the approval of the MIIT. Nonetheless, it has already finished the development of its Beijing factory’s manufacturing lines to produce 2000 EVs per year.
Moreover, the company has also boosted factory worker recruitment since last week. Two unnamed Xiaomi employees claim that the move is part of preparing for its planned production ramp-up.
Xiaomi also aims to leverage thousands of its existing stores as showrooms for its future EV models.
See Also:
- Xiaomi CEO announces plans to begin its EV production in 2024
- Xiaomi registers multiple “Modena” trademarks, EV mass production expected in 2024
- Xiaomi to penetrate the EV industry, MS11 EV photos leaked ahead of launch
- Xiaomi CEO spotted testing first EV offering in China
- Xiaomi EV to have 800V fast charging capability
Xiaomi’s strategy to shift its business from making smartphones to electric vehicles is unsurprising, given its waning profitability in its current business. In May, Xiaomi reportedly suffered an 18.9% decline in revenue. However, its entry into the highly competitive EV market would also pose a major challenge, especially during the ongoing crisis in the domestic industry.
