According to those with knowledge of the situation, Xiaomi and Beijing Automotive Group are in talks to work together to produce electric automobiles as the technology company rushes to keep its pledge to produce its own cars by 2024.
According to the persons, who asked not to be identified since the conversation was personal, the two titans are looking into many options, including Xiaomi purchasing an interest in Beijing Hyundai No. 2 facility, which is fully licensed to produce automobiles in China. According to the people, Xiaomi is considering a production partnership because it is having trouble getting a license to produce automobiles on its own.
Xiaomi in talks with BAIC to meet electric car production goal
Xiaomi Corp. is in talks with Beijing Automotive Group Co. to cooperate in producing electric cars as the technology company seeks to fulfill a promise to produce its own electric vehicles by 2024. pic.twitter.com/nvSPopHyVZ
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According to the people, the partnership may result in vehicles that are co-branded with Xiaomi and constructed by Beijing Automotive’s EV brand, BAIC BluePark New Energy Technology. They also noted that BluePark has production capacity that may be used to produce Xiaomi-BAIC vehicles, whereas the outdated No. 2 factory requires significant renovations in order to produce EVs.
Following the news, BAIC BluePark’s shares in Shanghai increased by as much as 8.8%, while Xiaomi shares in Hong Kong recovered losses of as much as 0.7% and traded as high as 3.3% higher.
The persons stated that because the discussions are still in the early stages, there is no assurance that they would result in an agreement. While a Xiaomi official declined to comment, BAIC didn’t right away answer inquiries for clarification. The assertions are unfounded, according to a Hyundai official, who declined to comment further.
By working together, Xiaomi co-founder Lei Jun might keep his promise to invest roughly US$10 billion over the next ten years in the production of Xiaomi-branded cars by 2024. China has been closely monitoring EV companies after a number of businesses entered the market due to tax cuts and government incentives. Beijing supports mergers and acquisitions in order to more efficiently allocate resources within the sector.
Aspiring EV manufacturers now have to demonstrate their financial and technological prowess, and non-traditional motor producers with headquarters outside of China or who are still in the research and development phase must achieve demanding sales targets.
As part of their joint venture, BAIC and Hyundai of South Korea opened the Beijing Hyundai No. 2 facility in 2008. According to Bloomberg Intelligence analysts Steve Man and Joanna Chen, losses at the partnership may continue to hurt BAIC’s profitability as the partnership’s sales recovery is hampered by its reputation as a manufacturer of low-end vehicles and plant utilization rates struggle to reach 50%.
Through purchases, some Chinese EV companies were able to obtain licenses to build automobiles. Huanghai Auto was purchased by WM Motor Holdings in 2017 in order to obtain its license. WM Motor Holdings is considering raising $1 billion in a Hong Kong initial public offering. By spending C$650 million to purchase Chongqing Lifan Auto in 2018, Li Auto was granted a license.