Xiaomi close to getting regulatory green light to produce electric vehicles

Xiaomi took control of the defunct German company Borgward which went bankrupt in November last year

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When it came to its electric car initiative, Xiaomi faced some significant challenges. It had previously been publicly publicized that the business was having difficulties securing the production license. After several recent failures of startup businesses, the Chinese government tightened regulations on producers of electric vehicles.

Any company intending to begin a car manufacturing business in China must receive a very specialized license, and with the introduction of EVs, obtaining that license became much simpler. It got to the point where the government in China was providing financial assistance to dozens of new businesses, only for those businesses to fail and vanish.

For instance, Nio contracts with JAC, which holds the production license, rather than producing its own automobiles. Lifang Technology was acquired by Li Auto only because it already held the production license. For the same reason, XPeng acquired Guangdong Foday in 2020, but it has since received authorization for its own factory in Guangzhou.

Xiaomi made the decision to adopt a similar strategy and, rather than waiting and running the danger of further delays, acquired control of the defunct German business Borgward, which filed for bankruptcy in November of last year. Through this transaction, Xiaomi should no longer experience licensing concerns since Borgward is still licensed to manufacture vehicles.

Xiaomi intends to construct its facility in two stages, the first of which will be finished in 2024 and have a 150,000-unit production capacity. By 2026, the second phase will have added another 150.000.

It hasn’t been an easy start for Xiaomi, and that simply goes to demonstrate how difficult it can be to create an electric car firm from scratch, even for a tech giant with almost limitless resources. Although the corporation is still far from sailing in smooth waters, it can now focus its energy into manufacturing.

Sourced from Cnevpost.

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