Xiaomi, a prominent technology company, has recently made a strategic move by securing a 50-year lease for a large plot of land in Beijing, China. The 485,134m² plot will be utilized for smart connected car and components projects, as reported by Reuters. This acquisition, valued at 635m yuan ($88m), demonstrates Xiaomi’s commitment to expanding its presence in the Chinese auto sector.
Interestingly, Xiaomi’s expansion comes at a time when the Chinese auto market is facing overcapacity challenges. By investing in new projects and increasing its manufacturing capacity, Xiaomi is positioning itself as one of the few automakers in China to defy the prevailing overcapacity issue.
One of Xiaomi’s recent successes in the auto sector is the launch of the YU7 sports utility vehicle, which has garnered significant interest from customers. In fact, demand for the YU7 has led to a wait time of up to 51 weeks on Xiaomi’s app. Additionally, Xiaomi’s SU7 sedan, launched last year, has surpassed Tesla’s Model 3 in monthly sales since December.
The success of the SU7 sedan has accelerated Xiaomi’s entry into the competitive electric vehicle (EV) market. The company has set a new EV delivery target of 350,000 vehicles for the year, up from the previous goal of 300,000. Xiaomi’s EV factory, initially planned to produce 300,000 vehicles annually, will be constructed in two phases to meet the growing demand for its electric vehicles.
In a strategic financial move, Xiaomi entered into a placement and subscription agreement in March to raise $5.5bn. This deal, involving the sale and issuance of 800 million shares, aims to accelerate Xiaomi’s EV manufacturing initiatives. The success of this deal, priced at 53.25 yuan ($7.34) per share, will further strengthen Xiaomi’s position in the rapidly evolving EV market.
Overall, Xiaomi’s expansion in the Chinese auto sector highlights the company’s commitment to innovation and growth. With a focus on smart connected cars and electric vehicles, Xiaomi is poised to make a significant impact in the evolving automotive industry.
