Smartphone maker Xiaomi to invest $10bn in electric vehicles

A big smartphone maker is getting into electric cars to expand the industry; coming to join Apple and others in the business.

China’s Xiaomi announced on Tuesday that it will invest $10 billion over the next decade in a subsidiary focused on the “smart electric vehicle business.”

The company said in a stock market filing that the new unit would be led by billionaire CEO Lei Jun. The initial investment will be worth 10 billion yuan ($1.5 billion), the company said.

Xiaomi is one of the world’s biggest smartphone makers but it also produces a range of gadgets including home security cameras, electric shavers and toothbrushes, light bulbs, watches and scooters.

The company did not provide further details on its strategy for entering the automotive industry, and whether it will focus on manufacturing, software, or both.

According a CNN Business report, no matter its plans, Xiaomi is expected to face a crowded field of competitors who are trying to produce electric vehicles at scale including Tesla and traditional automakers such as Volkswagen and General Motors, all of which have been working for years to develop and sell electric cars that consumers want to buy.

Earlier this year, there was a speculation that Apple was on the verge of going public with long-rumoured plans to make an electric car, possibly in partnership with an established brand.

Numerous other tech companies have established partnerships with automakers, hoping to capitalise on the huge potential market for software application such as autonomous driving.

Dan Ives, an analyst at Wedbush Securities, wrote earlier this week that the electric vehicle “transformation is just beginning.”

“This industry is on the cusp of a $5 trillion market opportunity over the next decade. With GM, Ford, and Volkswagen all jumping into the deep end of the pool on electric vehicles, it speaks to the massive pent up demand globally around electric vehicle technology on the horizon,” said Ives.