The company said in a stock market filing that the new unit will 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.
Numerous other tech companies have established partnerships with carmakers, hoping to capitalize 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.
— Yong Xiong contributed reporting.