Chinese phone maker Xiaomi is planning to invest $10 billion in smart electric vehicles over the next ten years. The company is setting up a wholly owned subsidiary with $1.5 billion initial investment. The subsidiary will be led by Xiaomi founder and chief executive Lei Jun.

“The decision was made after numerous rounds of deliberation among all our partners, and this will be the final major entrepreneurial project of my life,” Lei Jun said in a statement.

At the end of 2020, the Xiaomi Group held a cash reserve of RMB 108 billion (US$ 16.5 billion).

In an internal letter to employees, Lei Jun stated that Xiaomi has distinct and unique advantages in manufacturing cars: 

• Smart electric vehicles have transformed the business model of the traditional automotive industry, and Xiaomi has a deep  understanding of the hardware-based internet service business model;
• Xiaomi has extensive experience in software and hardware integration, and the deepest knowledge of manufacturing among internet industry leaders;
• Xiaomi has a smart ecosystem which is largest in terms of scale, the most diversified in terms of product category, and the most active in terms of user connections;
• Xiaomi has numerous core technologies that can be applied to smart electric vehicle business;
• Xiaomi has a powerful brand and strong user base, with trust and support from Mi Fans across the globe;
• Xiaomi has abundant cash resources that allow Xiaomi to invest with confidence.