Η Xiaomi is suddenly faced with an unexpected obstacle on its way to quickly enter the car market
Η company is already at an advanced stage in the development of its first electric vehicle, and while the prototype car itself is going to be presented in a few weeks from today, unexpected developments may force the company to press the "brake" for a while.
China has experienced an unprecedented growth in the industry of EV (electric vehicles), but there is also a big downside to this development, as many new companies in this space, then fail to cope in this highly competitive environment. But this has resulted in the Chinese auto industry being hit hard by one of a tsunami of bankruptcies by high-profile companies, with authorities in China tightening licensing requirements for every new carmaker entering the space.
So, the Xiaomi has reportedly fallen victim to this situation, and the company has been summoned by the relevant Chinese authorities, to provide additional documents, in order to prove not only its financial capabilities, but also its know-how, before obtaining the necessary licenses and certifications needed.
These additional bureaucratic procedures needed to review its request to enter the automotive industry as a certified company, will likely take several months and may cause an additional delay, especially if other documents are subsequently required to complete the new process that states the new law in China.
If for any reason Xiaomi's application to manufacture vehicles is rejected by the relevant ministry, then things get even more complicated, as the company will be forced to start all the necessary procedures from the beginning again, meaning it will lose additional valuable time and will fall outside the plan it has set for the official release and presentation of its vehicles.
Unfortunately for Xiaomi, the world of EV vehicles is highly competitive and cannot afford to have long delays, as the company's competitors are already moving at a breakneck pace and even a small delay will force it to fill a large gap to catch up. .
Xiaomi already recorded a loss in revenue in the first quarter of the year from the first drop in smartphone sales, and any further delays will probably hurt the company further financially.
Already the company has completed the section Research and Development to build its first electric car, and the lack of the relevant license should not stop the design process or manufacturing preparations. The company already employs over 1.000 people and has acquired the land it needs to build its factory, with the hope that it will be able to start selling its first vehicles in China from 2024.
However, if it does not receive the necessary permission in time from the relevant ministry in China, this means that it will not be allowed to proceed with the production of its vehicles.
The entire licensing process could add months or even a year to Xiaomi's announced timeline, and will require additional investment to quickly fill the gap it will create.
Ο Mr. Lei Jun committed to invest $10 billion over the next 10 years to begin the work of building the company's vehicles, but he may have to invest some of that money a little sooner than he expected.
The downside to all of the above is that the market in China reacted immediately to this news, resulting in Xiaomi shares fell -5,4% on the Hong Kong stock market.
Do not forget to follow it Xiaomi-miui.gr on Google News to be informed immediately about all our new articles! You can also if you use RSS reader, add our page to your list by simply following this link >> https://news.xiaomi-miui.gr/feed/gn
