Chinese smartphone maker Xiaomi is to become the latest tech firm to start producing electric vehicles (EVs), according to sources reported by Reuters.

Founded in 2010, Xiaomi is the largest smartphone producer by market share in China, and has interests in mobile apps, laptops, home appliances, bags, shoes, and consumer electronics.

In November 2020, the Xiaomi overtook Apple as the world's third-biggest smartphone maker.

The manufacturer joins Huawei and Apple, who have been reported to be eying to an entry the EV market in recent months.

Similarly, Chinese search giant Baidu finalised a contract with manufacturer Geely to start producing EVs in January.

Sources said the vehicles will be produced out of automobile manufacturer Great Wall Motor’s factory in Baoding, Hebei province.

The automaker sold 1.11 million vehicles last year and is currently in the process of building new plants in Berlin and Thailand.

The sources said the EVs will target a mass market demographic, echoing the low-cost approach of Xiaomi’s consumer electronics offerings.

In addition, sources said Xiaomi’s founder and chief executive Lei Jun thinks his firm’s experience in hardware manufacturing will help accelerate the production of its EVs.

The news comes after Xiaomi reported earlier in the week that profit margins in its core smartphone business had been affected by the global chip shortage.

Xiaomi and Great Wall declined to comment on the news, but Xiaomi stocks rose 9 per cent in afternoon trading after the story was originally reported.

Alan Kang, senior analyst at LMC Automotive, said: “Xiaomi wants to find a mature automobile manufacturer to provide model infrastructure, enabling its own advantages in mobile internet technology.”

He added: “Xiaomi’s advantages in operating systems and home furnishing also bring a lot of imagination for such cooperation in the future.”

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