China's Xiaomi wins state planner nod to make EVs amid glut in autos
Send a link to a friend
[August 23, 2023] By
Julie Zhu
HONG KONG (Reuters) - Xiaomi Corp has won the approval of China's state
planner to manufacture electric vehicles (EVs), said two people with
knowledge of the matter, marking a major step towards the smartphone
maker's goal of producing cars by early next year.
The National Development and Reform Commission (NDRC), which regulates
new investments and production capacity in China's auto industry, gave
the nod for EV manufacturing to Beijing-based Xiaomi earlier this month,
said the people. Xiaomi's venture is only the fourth since end-2017 to
win NDRC approval.
While NDRC's nod brings Xiaomi closer to mass production of 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.
And it would be entering China's car manufacturing sector at a time when
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.
Xiaomi had pledged a $10 billion investment over a decade in the
automobile business and set a goal of mass producing its first cars in
the first half of 2024. But there were doubts if the timeline could be
met as the NDRC has been cautious in approving new EV production plans
of companies because of concerns on overcapacity and slowing demand in
the sector.
Tesla Inc's plan to expand its Shanghai plant had yet to win the nod to
go ahead, Reuters reported in June. And industry sources have previously
told Reuters U.S. luxury EV maker Lucid Group is keen to make cars in
China but has been advised that the possibility was low.
Reuters was not immediately able to determine why NDRC granted approval
to Xiaomi. Its EV plant has been marked by the Beijing municipal
government as an important industrial upgrade project.
Xiaomi, which owns the world's third largest smartphone brand by
shipments, did not immediately respond to a request for comment. The
NDRC and MIIT also did not immediately respond to faxed requests for
comment. The sources declined to be named as the matter is private.
[to top of second column] |
A man walks past a logo of Xiaomi, a
Chinese manufacturer of consumer electronics, outside a shop in
Mumbai, India, May 11, 2022. REUTERS/Francis Mascarenhas/File Photo
While it awaited the approvals, Xiaomi has forged ahead on the
venture, completing construction of factory facilities capable of
producing 200,000 EVs annually in Beijing, according to a report in
state-run newspaper Beijing Daily in July.
Xiaomi plans to produce about 100,000 EVs next year, said one of the
sources. It has also accelerated hiring workers for its EV plant
since last week as it prepares a production ramp-up in December, two
Xiaomi workers, who did not wish to be named because of the
sensitivity of the matter, told Reuters.
CHALLENGING TIMES
The severity of the challenges facing Xiaomi is evident in the
automobile factory utilization rates in China.
Chinese factories, including those making combustion engine cars,
were capable of producing 43 million units annually at the end of
2022, but their utilization rate was just 54.5%, down from 66.6% in
2017, China Passenger Car Association data showed.
But Xiaomi, which reported an 18.9% drop in its latest quarterly
revenue in May, has its own compulsions for foraying into EVs.
It is making the shift to diversify away from its main smartphones
business amid slumping demand for gadgets. China's smartphone sales
fell 4% year-on-year in the second quarter of 2023, reaching the
lowest Q2 sales figure since 2014, according to consultancy
Counterpoint.
Xiaomi plans to use the thousands of stores it has as showrooms for
its electric cars, Reuters previously reported.
CEO Lei Jun, who has said Xiaomi's foray into EVs will be his last
major entrepreneurial project, posted on Saturday pictures of people
holding a banner saying 'Fighting for Xiaomi Auto" on his personal
Weibo social media account.
(Reporting by Julie Zhu, Shanghai and Beijing newsrooms; Editing by
Muralikumar Anantharaman)
[© 2023 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content. |