Chinese tech giant Xiaomi announced in March that it would set up a wholly owned electric vehicle subsidiary with investment of up to US$10 billion in the next decade. Lei Jun, founder of the company, will serve as CEO of the smart vehicle business. Xiaomi’s foray into the electric vehicle (EV) business is expected to fuel competition in the auto sector after it leverages its research capacity and influence into the new area. Xiaomi’s new venture comes as a growing number of tech companies including Baidu and Huawei are staking their own claims in the auto industry, trying to build an AI-based smart vehicle ecosystem and make EVs more autonomous and interconnected. Xiaomi’s cash reserves hit 108 billion yuan (US$16.7b) by late 2020, enough to cope with potential risks. It remains unclear whether the company can afford the capital and time needed for the cash-intensive smart car business at a time when several tech companies have encountered severe financial difficulties after venturing into the industry.
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