Xiaomi has been working on a car project for years. After nearly $11 billion of investment, the company was on the verge of deploying its first prototype. According to reports, Xiaomi is in the advanced stages of development, and the car will be showcased in a few weeks. The company was expecting to go into full mass manufacturing in 2024. However, it turns out that the Xiaomi Car saw an unexpected barrier all of a sudden.
The market for Electric Vehicles, the so-called EVs, has been trending recently. China is one of the countries seeing the highest increase in this particular category. However, as a new business, there are many new companies trying, and failing in the process. However, the Chinese automotive industry has been heavily hit by a recent spate of high-profile bankruptcies and the authorities are stepping up approval requirements for any new automotive venture. Therefore, the company has been asking to provide additional documents to prove not only its financial capabilities but its technological know-how as well.
Xiaomi Car needs additional reviews to enter production
Of course, the additional paperwork needs a review, which most likely will take months. It can also generate further requests for additional information. If the application for vehicle manufacturing from Xiaomi Car gets rejected, the company will need to start the process all over again.
Unfortunately for Xiaomi, the Electric Vehicle segment will not wait. The competitors keep advancing at a breakneck pace and the longer the company has to wait, then the more it will need to run after the competitors. This is not coming in easy times for sure. After all, Xiaomi has been recording its first decline in phone sales. The EV segment may bring more customers, but the company will need to invest a lot more in that. So possible delays may even hurt the company and the Xiaomi Car project.
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The research and development phase for the first Xiaomi Car is complete. Also, the lack of a license will not stop the design process or manufacturing preparations. The company already employs over 1,000 personnel and it has acquired the land where it wants to build its factory. There is a hope of starting selling the car in 2024. However, no license is a barrier between the end production. The whole process may add up months and possibly even a year to the planned schedule. It will require additional investment.
According to Lei Jun, the company has been investing $10 billion over the next 10 years to get the project off the ground. However, he will need to invest some of that money a bit earlier than he thought. Of course, the market is not digesting this easily. After the declaration, the market seems to be reluctant about Xiaomi Car’s success in the industry. The shares are dropping by 5.4% in Hong Kong.