Smartphone company Xiaomi forays into EV business and plans to invest $1.5bn

The Beijing-based company will inject $10bn in EV business over the next 10 years

Xiaomi reported a 36.7 per cent surge in net profit in the fourth quarter of last year. Reuters

Xiaomi, the world's third-largest smartphone manufacturer, has entered the electric vehicle industry and said it plans to invest 10 billion Chinese yuan ($1.5bn) in building the business.

The Beijing-based company will form a separate subsidiary to manage its EV business and will invest $10bn over the next 10 years, it said in a filing on Tuesday.

“Xiaomi hopes to offer quality smart electric vehicle to let everyone in the world enjoy smart living, anytime, anywhere,” Xiaomi, which is the world’s third-largest smartphone manufacturer, said.

Lei Jun, the billionaire co-founder and chief executive of Xiaomi, will concurrently serve as the chief executive of the smart EV business.

Xiaomi, which went public on the Hong Kong Stock Exchange in July 2018 at a $54bn valuation, joins other Chinese tech companies from Baidu to Alibaba that are tapping into the EV boom.

Internet company Baidu is reportedly working with Geely Automobile to make EVs for the Chinese market while Alibaba has teamed up with state-owned SAIC Motor to explore production of smart vehicles.

Global sales of EVs accelerated last year, rising 43 per cent to more than 3.2 million, according to Sweden-based consultancy EV-volumes.com. Tesla sold the most electric cars, delivering nearly 500,000 vehicles, followed by Volkswagen.

The overall EV market is projected to grow at an annual rate of almost 23 per cent to reach $802.8bn by 2027, up from $162.3bn in 2019, according to a report published by India-based Allied Market Research.

Xiaomi reported a 36.7 per cent surge in net profit on the back of strong smartphone sales in the fourth quarter of last year. Its adjusted net profit rose to more than $490.8 million, beating analysts' expectations.

Revenue during the period increased 24.8 per cent to $10.7bn.