Chinese smartphone maker, Xiaomi Corp,plans to make electric vehicles (EVs) using Great Wall Motor Co Ltd’s factory, three people with direct knowledge of the matter say.
Xiaomi’s stock price was up more than 9% after the plan was reported.
Great Wall’s Hong Kong stock rose more than 15% and its Shanghai shares gained by their maximum 10% daily limit.
Xiaomi is said to be in talks to use one of Great Wall’s plants in China to make EVs under its own brand.
Xiaomi will aim its EVs at the mass market, in line with the broader positioning of its electronics products, the sources said.
Great Wall will provide engineering consultancy to speed up the project.
Xiaomi seeks to diversify its revenue streams from the smartphone business which accounts for the bulk of its income but carries razor-thin profit margins.
It flagged on Wednesday rising costs from a global chip shortage and reported quarterly revenue below market estimates.
The move also comes against the backdrop of automakers and tech firms working closer together to develop smarter vehicles with technology such as smart cabins and autonomous driving.
Xiaomi’s founder and chief executive, Lei Jun, believes the firm’s expertise in hardware manufacturing will help accelerate the design and production of its EVs.
Xiaomi plans to launch its first EV around 2023, the sources confirmed. It will enable its cars to connect with other devices in its product eco-system.
Great Wall, China’s biggest pickup truck maker, this year launched a standalone brand for electric and smart vehicles. It is also building an EV factory in China with Germany’s BMW AG.