HONG KONG / BEIJING (Reuters) – Chinese company Xiaomi Corp plans to make electric vehicles (EVs) using Great Wall Motor Co Ltd’s factory, said three people with direct knowledge of the matter, making it the latest technology company in join the race for smart mobility.
The tech company’s share price rose more than 9% in trading on Friday afternoon after Reuters reported the plan. Great Wall’s shares in Hong Kong rose more than 15% and its Shanghai shares gained at their daily maximum limit of 10%.
Xiaomi, one of the world’s largest smartphone makers, is in talks to use one of the Great Wall plants in China to make electric vehicles under its own brand, said two of the people, who declined to be identified because the information is not public.
Xiaomi will target its electric vehicles to the mass market, in line with the broader positioning of its electronic products, the two people said.
Great Wall, which has not previously offered manufacturing services to other companies, will provide engineering consulting to accelerate the project, one of the people said.
Both companies plan to announce the partnership early next week, another person said.
Xiaomi and Great Wall declined to comment.
The plan comes as Xiaomi seeks to diversify its revenue streams from the smartphone business, which accounts for the bulk of its revenue, but has very slim profit margins. It pointed to rising costs on Wednesday due to a global chip shortage and reported quarterly revenue below market estimates.
The move also comes in the context of automakers and tech companies working more together to develop smarter vehicles with technology like smart cabs and autonomous driving.
Chinese search engine provider Baidu Inc said in January that it plans to build electric vehicles using a car plant owned by Geely, an automaker with aspirations to offer engineering consulting and contract manufacturing.
Reuters has also reported on the respective automotive ambitions of Apple Inc and Huawei Technologies Co Ltd.
Xiaomi’s founder and CEO Lei Jun believes the company’s experience in hardware manufacturing will help accelerate the design and production of its electric vehicles, one of the people said.
“Xiaomi wants to find a mature automaker that provides a model infrastructure, which enables its own advantages in mobile internet technology,” said Alan Kang, senior analyst at LMC Automotive.
“Xiaomi’s advantages in operating systems and home furnishings also bring a lot of imagination for such cooperation in the future.”
In addition to smartphones, Xiaomi makes dozens of internet-connected devices, including scooters, air purifiers, and rice cookers.
The firm plans to launch its first electric vehicle around 2023, one of the people said. It will allow your cars to connect with other devices in your product ecosystem, the people said.
Baoding-based Great Wall, China’s largest pickup truck maker, launched a separate brand for electric and smart vehicles this year. It is also building an electric vehicle factory in China with Germany’s BMW AG.
The automaker sold 1.11 million vehicles last year thanks to the popularity of models like the P-series pickup truck and Ora electric vehicles. It is currently building its first factory in Thailand.
Reporting by Julie Zhu and Yilei Sun; Edited by Christopher Cushing