Xiaomi invest $10 billion to implement green cars strategy over a decade
Lu Weibing President of Chinese Xiaomi Corp.، smart phone maker، announced that the company has pledged a $10 billion investment over a decade in the green cars business and its automobile's strategy to start mass production of its first electric vehicles (EVs) in China during the first half of 2024 remains unchanged as well as the current progress in manufacturing plans is ahead of the company expectations and of the original production schedule.
Chinese Xiaomi، the world’s third largest smart phone، has forged ahead on the green cars venture
Chinese Xiaomi، which owns the world’s third largest smart phone brand by shipments، has forged ahead on the green cars venture، completing construction of factory facilities capable of producing 200 thousand EVs annually in Beijing in 2025 increasing from about 100 thousand green cars next year in China and has also accelerated hiring workers for its EV plant since last week as it prepares a production ramp-up in next December
US News Magazine reported that Lu Weibing President of Chinese Xiaomi Corp.، smart phone maker، wins state planner in China nod to make green cars amid glut in autos and its company moving into making electric cars، EV، was running ahead of schedule.
Usage of thousands of smart phone stores as showrooms for green cars
Lu Weibing President of Chinese Xiaomi Corp has won the approval of China’s state planner to manufacture green cars، marking a major step towards the smart phone maker’s goal of producing electric vehicles (EVs) by early next year.
Lu Weibing President of Xiaomi Corp.، indicated that the company plans to use the thousands of stores it has as showrooms for its green cars in China، while CEO Lei Jun، who has said Xiaomi's foray into electric cars، EV، will be his last major entrepreneurial project، as he posted pictures of people holding a banner saying 'Fighting for Xiaomi Auto" on his personal Weibo social media account.
Lu Weibing has won the approval of manufacturing green cars
Lu Weibing President of Chinese Xiaomi Corp.، smart phone maker، affirmed that he has won the approval of manufacturing green cars from the National Development and Reform Commission (NDRC)، which regulates new investments and production capacity in China’s auto industry.
Lu Weibing President of Chinese Xiaomi Corp.، has been granted the nod for manufacturing green cars that Beijing-based Xiaomi’s venture is only the fourth since end-2017 to win NDRC approval of making electric cars، EVs، jn China earlier this month.
NDRC’s nod brings Chinese Xiaomi closer to mass production of green cars
While NDRC’s nod brings Chinese Xiaomi closer to mass production of green cars، EVs، more than two years after it first announced the plans، the venture still needs clearance from the Ministry of Industry and Information (MIIT)، which assesses new automakers and models for technical and safety requirements.
Lu Weibing President of Xiaomi Corp.، revealed that his company would be entering China’s car manufacturing sector، particularly manufacturing green cars، at a time when China which is the world’s largest auto market is wrestling with a series of issues، including a capacity glut and slowing demand that have stoked a bruising price war and hit supplier margins.
Doubts if the timeline of producing green cars could be met
However، Lu Weibing President of Chinese Xiaomi Corp.، stated that there were doubts if the timeline of producing green cars could be met as the NDRC has been cautious in approving new electric cars، EVs، production plans of companies because of concerns on overcapacity and slowing demand in the sector.
Lu Weibing President of Xiaomi Corp.، expexted that the implementation of the strategy to prepare for the introduction of green cars or electric vehicles is ahead of schedule، although the Chinese consumer electronics maker Xiaomi saw second-quarter sales fall 4% year over year to $9.2 billion as demand for smart phones in China continued to fall.
Chinese Xiaomi green cars will be implemented as Net income rose 147%
But Chinese Xiaomi revenue last quarter turned out Net income beat analysts’ expectations and also rose 147% to a level ($705 million) that beat market expectations and advances in this direction have been made through cost reductions، particularly at the corporate branch level.
Lu Weibing President of Chinese Xiaomi Corp.، warned that green cars face severe competition from famous global companies such as the American Tesla Inc that planned to expand its Shanghai plant had yet to win the nod to go ahead، and U.S. luxury EV maker Lucid Group is keen to make electric cars in China but has been advised that the possibility was low.
Many challenges facing Xiaomi in China
The severity of the challenges facing Xiaomi in China is evident in the automobile factory utilisation rates in China as Chinese factories، including those making combustion engine cars، were capable of producing 43 million units annually at the end of 2022، but their utilisation rate was just 54.5%، down from 66.6% in 2017، China Passenger Car Association data showed.
But Chinese Xiaomi، which reported an 18.9% drop in its latest quarterly revenue in May، has its own compulsions for foraying into green cars as it is making the shift to diversify away from its main smart phones business amid slumping demand for gadgets that China’s smart phone sales fell 4% year-on-year in the second quarter of 2023، reaching the lowest Q2 sales figure since 2014.