Beijing (ZXZC)- Xiaomi will set up a subsidiary for smart electric vehicle business, which its board of directors has approved, the smartphone maker announced on Tuesday.

Mr. Lei Jun; photo credit: Xiaomi Group

The initial investment of the new company will be RMB10 billion while the total investment in the next 10 years will be around $10 billion. Lei Jun, CEO of the group, will serve as the CEO of the electric vehicle business. The smartphone maker said in the announcement that it is committed to making living smart anytime and anywhere for global consumers with high-quality intelligent electric vehicles. 

At the Xiaomi 2021 New Product Launch held on Tuesday, Mr. Lei revealed that its team started to explore the possibility of  its own electric vehicle business on January 15 of this year. After 75 days of deep communication within the company and with industry experts, the company decided to commence its electric vehicle business, which the company thinks is a segment with great potential.

The CEO said at the launch event that his company is well aware of risks in auto industry, which needs billions of investment, and Xiaomi can afford it. By the end of 2020, the group's cash reserves totaled RMB108 billion.

Apart from the financial support, the group has a R&D team of over 10,000 members, 5,000 more to be added this year. Another support for its vehicle business is its relatively rich and mature ecosystem.

Last week, Reuters reported that Xiaomi plans to make electric vehicles using Great Wall Motor’s factory, citing people familiar with the matter. But the automaker said that they had not talked about partnership. Currently, there is no more information about its production plan and product timeline. 

In February, local media Latepost reported that Xiaomi had decided to make electric cars after years of consideration. As a response to the report, Xiaomi said it has been paying close attention to the development of electric vehicle segment, and studying the trend of relevant industry trends, but the company hadn't started any project for electric vehicle formally.