HONG KONG / BEIJING (Reuters) – China’s Xiaomi Corp plans to make electric vehicles (EVs) using Great Wall Motor Co Ltd’s factory, three people with direct knowledge of the case said, making it the latest technology company. is participating in the smart mobility race.
The tech company’s stock price was up more than 9% during Friday afternoon trading after Reuters reported the plan. Shares of Great Wall in Hong Kong were up more than 15% and shares in Shanghai won at their maximum daily limit of 10%.
Xiaomi, one of the world’s largest smartphone manufacturers, is in talks to use one of the Great Wall’s Chinese factories to make electric vehicles under its own brand, said two of the people, who refused to be identified because the information is not public.
Xiaomi will target its EVs to the mass market, in line with the broader positioning of its electronics products, the two people said.
Great Wall, which has not previously offered manufacturing services to other companies, will provide engineering advice to speed up the project, one said.
Both companies plan to announce the partnership early next week, another person said.
Xiaomi and Great Wall declined to comment.
SMARTER VEHICLES
The plan comes as Xiaomi is seeking to diversify its revenue streams from the smartphone business, which represents most of its revenue, but with razor-thin profit margins. It marked rising costs on Wednesday due to a global chip shortage and reported quarterly sales below market estimates.
The move also comes against the backdrop of automakers and technology companies working more closely together to develop smarter vehicles with technology such as smart cabs and autonomous driving.
Chinese search engine provider Baidu Inc said in January that it plans to create electric vehicles using a car factory owned by Geely – an automaker with the ambition to offer technical advice and contract manufacturing.
Reuters has also reported the respective automotive ambitions of Apple Inc and Huawei Technologies Co Ltd.
Lei Jun, Xiaomi’s founder and CEO, believes the company’s expertise in hardware manufacturing will help accelerate the design and production of its EVs, one said.
“Xiaomi wants to find a mature car maker to provide model infrastructure that will enable its own mobile internet technology advantages,” said Alan Kang, senior analyst at LMC Automotive.
“Xiaomi’s operating system and home furnishing advantages also evoke a lot of imagination for such a collaboration in the future.”
In addition to smartphones, Xiaomi makes dozens of devices with internet connection, including scooters, air purifiers and rice cookers.
The company plans to launch its first electric car around 2023, one said. It will allow its cars to connect to other devices in its product ecosystem, the people said.
Baoding-based Great Wall, the largest pickup truck manufacturer in China, launched a standalone brand for electric and smart vehicles this year. It is also building an EV plant in China with Germany’s BMW AG.
The automaker sold 1.11 million vehicles last year, aided by the popularity of models such as the P-series pickup truck and Ora EVs. It is currently building its first factory in Thailand.
Reporting by Julie Zhu and Yilei Sun; Edited by Christopher Cushing