EV Partnership to Be Announced Next Week
According to Reuters, Xiaomi and Great Wall are expected to announce their EV partnership as early as next week. The tech business will produce EV units under its own brand but will use one of the Great Wall’s facilities to manufacture electric vehicles.
Moreover, Xiaomi will receive technical expertise from Great Wall to accelerate the EV production process. Earlier this month, Startup Savant reported that Honda became the latest car company to accelerate its EV production plans.
Xiaomi, which rivals Huawei in China, is producing smartphones for the mass market. Its devices are relatively cheap and affordable, and the current plan is to base its EV production using the same business model.
Shares of Xiaomi soared around 9%, while the Great Wall share price gained nearly 15% in today’s Hong Kong trading session.
The tech company is seeking ways to diversify its business as the vast majority of revenues comes from smartphones. The company is able to generate high revenues, but its business model offers minimal profit margins.
“Xiaomi wants to find a mature automobile manufacturer to provide model infrastructure, enabling its own advantages in mobile internet technology,” said Alan Kang, senior analyst at LMC Automotive.
“Xiaomi’s advantages in operating systems and home furnishing also bring a lot of imagination for such cooperation in the future.”
The company hopes to use its technical expertise in making EV hardware and Great Wall’s car competencies in the EV production process. Xiaomi has already entered other business areas, such as the production of scooters, air purifiers, and rice cookers.
Yesterday, the company warned about rising costs from a global chip shortage. Xiaomi saw its business revenue rise by 25% to ¥70.46 billion ($10.77 billion) in a quarter to end-December, but still lower than the expected ¥75.23 billion ($11.50 billion).
“To be honest, we will do our best to offer the best price we can to consumers. But sometimes, we may have to pass part of the cost increase to the consumer in different cases. We are feeling pressure, but we are looking okay,” Xiaomi President Wang Xiang said on a call with analysts.
The tech company reported earnings of ¥3.2 billion ($490 million), in this case beating the ¥2.94 billion ($450 million) expected from the surveyed market analysts.
The company’s internet services unit, which runs the fintech business as well, saw its sales surge by 8%. On the other hand, the company’s largest business unit that is tasked to produce and sell smartphones witnessed its business sales erupt 38% to ¥42.6 billion ($6.51 billion).
Xiaomi also warned that the ongoing crackdown on Chinese tech companies is likely to hit business profit margins in 2021.
Xiaomi and Great Wall Motor Co. announced an EV partnership that will see the former become the latest tech company to enter the global EV race.
About the Author
Mariliana has an MSC in consumer analytics and business strategy. She has a special interest in fast-moving industries and big data.