Xiaomi says it will invest more in EVs; auto plan seen on track

Firm's car R&D staff members number 3,000 now; Q3 revenue up 0.6% to $9.9b

Chinese smartphone maker Xiaomi Corp said it is beefing up investment in its electric vehicle business, with car-related research and development personnel reaching about 3,000.

The Hong Kong-listed company, however, did not disclose its current level of investment in EVs nor details of its planned investment expansion.

It made the comments after a government website revealed the specifications of Xiaomi cars. Those details need to be approved by the local regulator before the cars can be put up for sale.

Industry observers said Xiaomi's EV plan appears to be progressing well as per schedule, but it remains to be seen whether the company can stand out in a market rife with intense competition sparked by firms such as Nio and Li Auto.

Lu Weibing, president of Xiaomi, said in an earnings call on Monday that the company will stick to its plan of mass-producing EVs in the first half of next year.

Lu also scotched rumors that Xiaomi has a goal of selling 100,000 EVs per year, clarifying the company's founder, Lei Jun, had not made any statement to that effect.

Earlier this month, a website of the Ministry of Industry and Information Technology disclosed the specifications of Xiaomi's new model, the SU7, a smooth four-door, five-seater saloon. Nearly 5 meters long, it comes in two versions, one with lidar and the other without.

Lidar, or light detection and ranging, uses eye-safe laser beams to scan its surroundings in 3D, providing machines and computers with an accurate representation of the surveyed environment.

Lei from Xiaomi said earlier that "the company's autonomous driving technology adopts a self-developed approach, and the project has made progress beyond expectations".

Roy Lu, director of the Gasgoo Auto Research Institute, said Lei has for long been seeing automobiles as part of Xiaomi's AI-enabled internet of things or IoT ecosystem, and invested in Chinese EV startups such as Nio and Xpeng Motors via Shunwei Capital, a venture capital firm.

But Lu also warned that the change in Lei's role from an investor to a competitor will push Nio and Xpeng Motors to prepare harder for the possible impact of Xiaomi's entry into cars on their business.

Experts also said it remains to be seen whether Xiaomi can really afford the capital and time needed for the cash-intensive smart car business, given that a string of Chinese companies that had entered the segment faced severe financial difficulties, with some even going bankrupt.

Matthew Kanterman and Nathan Naidu, analysts at Bloomberg Intelligence, said earlier that Xiaomi's entry into China's EV market opens a big new growth area for the company beyond smartphones and other consumer electronics.

Xiaomi said on Monday that it posted a forecast-beating jump in third-quarter net income, while revenue also topped estimates as flat device shipments outperformed the wider market.

The company's third-quarter revenue was 70.9 billion yuan ($9.9 billion), up 0.6 percent year-on-year, which, however, helped lift net income by as much as 183 percent to 6 billion yuan, thanks to lower component costs and efficiencies across the business, Xiaomi said.

On the Hong Kong bourse, however, Xiaomi shares fell by 4.94 percent to HK$15.38 ($1.97) on Tuesday. The slump was partly due to investor sentiment that the EV business may need heavy investment, experts said.