Xiaomi Corp (小米) is facing difficulties getting regulatory approval for its electric vehicle (EV) project in China, an unexpected hurdle for the smartphone giant’s US$10 billion endeavor.
The Beijing-based company has been talking to officials at the Chinese National Development and Reform Commission about the licensing for months without success, people familiar with the matter said.
Xiaomi is one of the later would-be entrants to a Chinese EV sector already teeming with rivals, including longer-established names BYD Co (比亞迪) and Nio Inc (蔚來).
Photo: Reuters
Billionaire Xiaomi cofounder Lei Jun (雷軍), who has said that EVs would be his final start-up endeavor, hopes the firm’s expertise in connected technologies and building loyal user communities can translate in the world’s biggest EV market.
However, the longer the delay in securing a license, the bigger the head start its rivals will gain.
The smartphone and electronics maker is pursuing new growth areas after logging its first sales decline on record in the first quarter of this year.
While some Xiaomi executives are hopeful the regulator will eventually approve the EV project, others worry the process will delay the company’s plans, said one of the people, who asked not to be named discussing internal matters.
Xiaomi incorporated its EV subsidiary in September last year, allowing the company to begin the application process.
Shares of Xiaomi yesterday fell as much as 5.4 percent in Hong Kong.
A company representative declined to comment.
The commission did not immediately respond to a fax seeking comment.
Xiaomi’s difficulty in securing a license in China could hinder its EV development and postpone the debut planned for 2024.
The delay could prolong the drag from hefty research-and-development expenses, as well as fixed asset investments, and might weigh on its market share as China’s EV segment is getting increasingly crowded with fast-growing rivals Nio, Xpeng Inc (小鵬) and Li Auto Inc (理想汽車).
China has been stepping up scrutiny of the EV sector, after a rush into the industry led to a spate of high-profile bankruptcies.
New EV applicants are asked to submit a series of documents to prove their financial and technological capabilities, and the review process can take months.
The Chinese government sometimes also rejects applications, with companies then back at square one when it comes to the regulatory process.
The absence of a automaking license has had limited impact on Xiaomi’s EV development efforts for now, one of the people said.
The EV division has more than 1,000 employees, and Xiaomi has said that it is planning to mass produce its first vehicle in 2024.
It has acquired land in a southeastern suburbs of Beijing for an assembly plant and bought EV start-ups to add technology.
Lei early last year pledged to invest about US$10 billion over 10 years to make Xiaomi-branded vehicles.
The 52-year-old has largely retreated from the public eye to spend time on the EV project.
A growing number of tech companies from Baidu Inc (百度) to Huawei Technologies Co (華為) are exploring business opportunities in autonomous driving, smart cockpit and power management technologies.
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