Despite its late arrival to the race, Xiaomi Corp.’s (1810.HK) drive into China’s crowded electric vehicle (EV) market is showing no signs of slowing and may even be gaining momentum.
That journey logged another milestone earlier this month when the company better known for its smartphones won a regulatory greenlight to manufacture cars independently instead of relying on third-party production lines. That moved Xiaomi into a fast lane by making it only one of about a dozen Chinese EV makers with that self-production privilege, paving the way for it to ramp up production and speed up its deliveries.
Many of China’s EV makers rely on third-party manufacturers, partly to save costs associated with building facilities that typically cost billions of dollars, and partly to avoid regulatory hurdles for obtaining manufacturing licenses. While use of third-party manufacturing avoids heavy capital spending and the need for hard-to-get licenses, it can also lead to delays and quality issues due to lack of control over production facilities.