17 September 2019
Xiaomi's Lei Jun visited a Tesla factory last November and posed for a picture with the US firm's founder Elon Musk. Photo:
Xiaomi's Lei Jun visited a Tesla factory last November and posed for a picture with the US firm's founder Elon Musk. Photo:

Is Xiaomi riding into the car business?

Rumors have it that smartphone maker Xiaomi is interested in making a foray into the auto industry, and that the group plans to produce an electric car called ‘lu dou’, which literally means green bean.

Speculation has been swirling since April, but the rumors gained new life in recent days following reports that the State Council is looking at granting two or three electric car manufacturing licenses to non-automobile producers in order to invigorate the market. The licenses could be offered before the year-end, according to the reports.

Xiaomi founder Lei Jun is, in fact, a huge fan of Tesla. He ordered two vehicles from the US electric carmaker when it launched its products in China. He is also said to have paid regular visits to the Tesla factories.

That said, Lei was prompt in issuing a denial — through a Weibo post — after the latest rumors. He stressed that developing an electric car is not on the table.

Meanwhile, tech news portal Lie Yun Wang reported Tuesday, citing sources, that Xiaomi is developing an in-vehicle infotainment system in collaboration with Chinese electric carmaker BYD Co.

At first glance, developing a vehicle infotainment system seems make sense for Xiaomi. Software and operating system (OS) — key strengths of Xiaomi — are the soul of in-vehicle infotainment systems.
The MIUI OS that drives Xiaomi handsets is said to be the firm’s most valuable asset.

But a system for cars will demand a lot more resources than a system for smartphones. Voice search, for example, is the basic technology needed for auto navigation, something which Xiaomi does not possess. The group, of course, can choose to cooperate with other companies which have advantages in these areas, but the cost will go up accordingly.

The other problem is that the company has already got many hardware projects on hand, including Xiaomi TV box and Xiaomi router, in addition to the planned launch of new handset models.

Lei has more than once expressed his positive view on the future of the electric car industry. So it’s only natural that many observers believe that he will enter the market at some point. But if he chooses to do it now, won’t it put the group under heavy financial strain? Automobile projects, as everyone knows, are very capital intensive and require long-term planning.

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EJ Insight writer