Benzinga | Mar 26, 2021 01:21AM EDT

Xiaomi Shares Surge As Report Says Company To Make Electric Vehicles Aimed At Mass Market In China

Chinese smartphone maker Xiaomi Corp. (OTC:XIACF) plans to make electric vehicles aimed at the mass market in China using Great Wall Motor Company Limited's (OTC:GWLLF) factory, Reuters reported Thursday, citing people with direct knowledge of the matter.

What Happened: Xiaomi is in talks to use one of Great Wall's factories in China to make EVs under its own brand, as per the report. Great Wall, which has not previously offered manufacturing services to other companies, will provide engineering consultancy to expedite the project. Great Wall is China's biggest pickup truck maker.

Xiaomi plans to launch its first EV around 2023. The two companies reportedly plan to announce their partnership next week.

See Also: ByteDance Ropes In Former Xiaomi Head As Finance Chief: Report

Why It Matters: The move by Xiaomi, one of the world's biggest smartphone makers, is part of efforts to diversify its revenue streams and vie for a piece of the lucrative Chinese EV market, which is the world's largest. The company also manufactures internet-connected gadgets like air purifiers, scooters, body-weight scales, and fitness bands.

In recent years, several automakers and tech companies have forged partnerships to develop electric and autonomous vehicles.

Beijing-based internet firm Baidu Inc. (NASDAQ:BIDU) said in January it will form an EV company and forge a strategic partnership with Volvo parent Geely Automobile Holdings Limited (OTC:GELYY).

It was reported in January that Chinese e-commerce giant Alibaba Group Holding Ltd. (NYSE:BABA) launched an electric sedan with state-owned SAIC Motor, China's largest car company.

Taiwan's Hon Hai Precision Industry Co., Ltd (OTC:HNHPF), better known as Foxconn, is teaming up with Chinese electric vehicle startup Byton to produce its first vehicle -- the M-Byte -- by the first quarter of 2022.

Homebred Chinese EV markets such as Li Auto Inc. (NASDAQ:LI), Xpeng Inc. (NYSE:XPEV) and Nio Limited (NYSE:NIO) are also competing for market share in China against market leader Tesla Inc. (NASDAQ:TSLA).

Price Action: Xiaomi shares closed 7.2% lower on Thursday at $2.95. The shares traded over 8% higher at HKD 25.90 in Hogn Kong at press time.

Great Wall Motor OTC shares closed 3.7% higher at $2.50.

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