HONG KONG / BEIJING (Reuters) – China’s Xiaomi Corp. plans to manufacture electric vehicles (EVs) through the factory of Great Wall Motor Co. Ltd., according to three people with direct knowledge of the issue, making it the latest technology company to join the smart mobility race.
The stock price of the tech company rose more than 9% in trading on Friday afternoon after Reuters reported the plan. Hong Kong shares of the Great Wall rose more than 15% and its Shanghai shares gained the daily high of 10%.
Xiaomi, one of the world’s largest smartphone makers, is in talks to use one of the Great Wall’s plants in China to make electric vehicles under its own brand, according to two of the people, who they refused to identify themselves because the information was not public.
The two people said Xiaomi will direct its electric vehicles to the mass market, in line with the broader positioning of its electronic products.
Great Wall, which previously did not offer manufacturing services to other companies, will provide engineering advice to speed up the project, one person said.
Both companies plan to announce the partnership as soon as early next week, another person said.
Xiaomi and Great Wall declined to comment.
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The plan comes as Xiaomi tries to diversify its revenue streams from the smartphone business, which accounts for most of its revenue but has profit margins up to the razor. Wednesday noted rising costs due to global chip shortages and reported quarterly revenue below market estimates.
The measure also reaches the backdrop of car manufacturers and technology companies working more together to develop smarter vehicles with technology such as smart cabs and autonomous driving.
Chinese search engine provider Baidu Inc. said in January that it plans to manufacture electric vehicles through a car plant owned by Geely, an automaker with aspirations of offering engineering and contract manufacturing consulting.
Reuters has also reported on the respective car ambitions of Apple Inc. and Huawei Technologies Co. Ltd.
Xiaomi founder and CEO Lei Jun believes the firm’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 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 furnishings also bring a lot of imagination to this cooperation in the future.”
In addition to smartphones, Xiaomi manufactures dozens of devices connected to the Internet, such as scooters, air purifiers and rice cookers.
One person said the firm plans to launch its first EV by 2023. It will allow its cars to connect with other devices in its product ecosystem, according to people.
The Great Wall based in Baoding, China’s largest truck maker, launched an independent brand for electric and smart vehicles this year. It is also building an electric vehicle factory in China with the German BMW AG.
The automaker sold 1.11 million vehicles last year thanks to the popularity of models such as the P-Series pickup truck and EV EVOs. It is currently building its first factory in Thailand.
Reports by Julie Zhu and Yilei Sun; Edited by Christopher Cushing