Electric Cars

Xiaomi Won The Approval To Manufacture Electric Vehicles

Written by Senoria Khursheed ·  2 min read >

Xiaomi, a Chinese electronic company, won the approval to produce electric vehicles. According to two people who possess the information, Xiaomi has won the approval from China’s state planner to manufacture electric vehicles. This shows a significant step towards the smartphone manufacturer’s objective of producing cars by the beginning of the following year. 

According to the sources, the National Development and Reform Commission (NDRC), which regulates new investments and production capacity in China’s car industry, approved Beijing-based Xiaomi’s objective to produce EVs earlier this month. However, Xiaomi is only the fourth venture since the end of 2017 among those who have received NDRC approval. Indeed, it is an outstanding achievement and will open the doors for Xiaomi to develop its market. 

In addition, this approval will bring Xiaomi closer to mass production of EVs more than almost two years after it first revealed its plans; the venture is still in the process of clearance from the Ministry of Industry and Information (MIIT), which is evaluating and accessing new models and ventures for technical and safety requirements. In addition, it would be joining the Chinese car manufacturing sector, which is already facing several issues, including a capacity glut and slowing demand that have sparked a brutal price war and hit supplier margins. 

Xiaomi promises a $10 billion investment over a decade in the automotive industry and aims to mass-produce its first cars in the first quarter of 2024. However, there are some glitches that NRDC needs to be more cautious in approving new EV manufacturing plans of companies because there are concerns about overcapacity and falling demand in the market. Therefore, there are many concerns associated with meeting the deadlines. 

According to the sources, Tesla’s plan to expand its Shanghai plant had yet to receive approval. Industry sources recently told the news channel that U.S. luxury EV maker Lucid Group is willing to produce cars in China. However, it has been advised that the market is low. However, it is still being determined why NRDC granted approval to Xiaomi. The Beijing municipal government marks its EV plant as an essential industrial government project.

Xiaomi, the largest smartphone company, waited to give a reply. In addition, NDRC and MIIT also did not give any comment. The sources declined to be named as the matter is private. According to sources, Xiaomi moved through with the project as it awaited approvals, compiling plant facilities in Beijing capable of producing 200,000 EVs annually.

On the other hand, Xiaomi plans to produce about 100,000 EVs next year. The company has also planned to hire workers for its EV platform since last week. The company is preparing a production ramp-up in December, as revealed by two Xiaomi workers.

Challenging Time

The company has to face many challenges in China’s automobile factory utilization rates. Chinese factories making combustion engine cars could also produce 43 million units in a year at the end of 2022. However, their utilization rate was only 54.5%, falling from 66.6% in 2017, data revealed by the China Passenger Car Association. Xiaomi recorded an 18.9% decline in its most recent quarterly sales in May. The company has its reasons for stepping into the EV market. 

Consultancy’s counterpart says, “It is shifting 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”.

Xiaomi is in the process of using thousands of stores it possesses to showcase its cars. Lei Jun, CEO of Xiaomi, posted pictures of people holding a banner saying “Fighting for Xiaomi Auto” on his personal Weibo social media account.

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