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Xiaomi Is Diversifying From Smartphones to Electric Cars

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Xiaomi, the Chinese electronics company, has taken over an autonomous driving start-up company. Thereby diversifying from smartphones into the highly competitive electric cars industry. 

The deal to acquire Deepmotion is worth $77.37 million, and it aims to improve Xiaomi’s technological competitiveness.

The company wants to invest $10 billion over the next decade in its electric automobile enterprise. 

Xiaomi wants to produce cars, and by acquiring Deepmotion, they can integrate autonomous driving functionality into these cars. Other leading automakers are developing this feature in their electric car models.

Xiaomi would be taking on other rivals in China like Baidu and Huawei, including automakers Tesla, Xpeng, and Nio. The industry is fast becoming a crowded competition space.

Xiaomi’s quarter two earnings were solid. And they reported revenue for the second quarter of 87.8 billion yuan ($13.5 billion). This is an increase of 64% from last year. Their net profit and revenue reached new highs in the previous quarter. 

The acquisition of Deepmotion was announced after releasing their earnings report. 

Of the total income, 67.3% came from smartphones sales. However, Xiaomi would want to increase revenue streams of other internet-connected devices by not solely relying on mobile phones at the same time they hope that the electric car business will bring in an additional source of revenue.

The company has not indicated if it will be manufacturing budget models or target the top end market. 

Xiaomi shares were down nearly 4% in afternoon trade.

Other companies are venturing into electric cars

Chinese tech companies are also expanding into the electric car market. They either want to start manufacturing themselves or partner with existing automakers.

Baidu, the search engine company, announced in January that they plan to expand into the electric car business. Alibaba has partnered with SAIC to start a joint venture in electric vehicles. 

Didi Chuxing, the ride-hailing app, has also joined forces with BYD to begin producing electric cars. These vehicles’ designs will match their services. 

According to S&P Global Platts, a data provider, they estimate ‘new energy vehicles’ in China will make up 20% of new vehicle sales by 2025.

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Justin N. Richards

Justin N. Richards is a Florida-based technical analyst, market researcher, educator, and trader. Justin began his career in Chicago in 2001 performing futures market analysis for floor traders at the Chicago Board of Trade and the Chicago Mercantile Exchange. He also worked for numerous brokerage firms during that time, all of which hold him in high regard, and he has been providing outstanding analysis services for traders worldwide ever since. Mr. Richards is an expert in the area of market patterns, price and time analysis as it applies to futures, Forex, and stocks. In addition to these talents, he provides educational services for investors looking to improve their analysis and trade skills. Justin has a B.A. in Business Administration from UCLA and an M.S. in Financial Markets and Trading from the Illinois Institute of Technology. Justin’s professional experience, education, and discipline, not only make him an exceptional analyst, they point him out as a reliable, hard working and intelligent business strategist who is dedicated to his craft.
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