Chinese smartphone vendor Xiaomi (HKSE: 1810) has decided to manufacture electric vehicles (EVs) as part of a strategic business move, Chinese media outlet LatePost reported on Friday, citing unnamed sources familiar with the matter.
Founder and chairman Lei Jun may lead the EV team, but other details about how the company will carry out the EV strategy are unknown yet, LatePost added. Following the report, Xiaomi shares temporally jumped over 11% on Friday afternoon, closing at HKD 30.65 (USD 3.95) per share, up 6.4%.
Xiaomi didn’t immediately respond to requests for comment. On Sunday, the firm sent out an announcement saying that it “has not initiated any formal project regarding the study of electric vehicle manufacturing business.”
“Speculation that Xiaomi will make automobiles have been around for years, however, there have been no actual moves, nor a timetable by now,” Zhang Xiang, an auto analyst with a government-affiliated think tank, told KrASIA on Saturday.
He added that “it could be true that the company’s management did discuss EV production,” following the likes of other firms like Baidu, which has teamed up with automaker Geely to release an EV model within three years.
“It will be very difficult for Xiaomi to come up with vehicles that are innovative and can satisfy consumers, as EVs are much more complicated than smartphones,” Zhang said.
While Zhang is skeptical about Xiaomi’s EV-making strategy, Vision Ventures founder Cheng Hao believes it is only a matter of time for Xiaomi to enter the EV sector. The firm could be a very competitive player, he said.
Xiaomi can do well in managing the automotive hardware supply chain, building interactive software for cars, and developing autonomous driving capabilities, although it will take time for the company to do so, according to a short video he posted on WeChat’s Shipinhao platform following the report.
Cheng said in another short video that “only Lei could lead the EV team” to compete with other companies in the sector.
Lei met Elon Musk, founder of Tesla (NASDAQ: TSLA) twice in 2013. Lei’s venture capital firm Shunwei Capital invested in EV maker Nio (NYSE: NIO) in 2015 and Xpeng (NYSE: XPEV) in 2016 before they went public, taking a smaller than 5% stake in both firms, according to LatePost.
Xiaomi has applied for a series of car-related patents, such as constant speed cruising, recharging, and navigation since 2015, LatePost added, citing China National Intellectual Property Administration’s public information.
(The article has been updated with the company’s official response on Sunday.)