Xiaomi has come across a significant hurdle in its car project. The company has already entered into the advanced stages of the development of the car and it was expected to be unveiled in a couple of weeks but it now seems that the timeline could change. China’s EV growth has surpassed the expectations of everyone but despite its massive success, there is a big downside to it, a lot of new businesses fail in the normal course of it.
Xiaomi is facing regulatory hurdles due to the increasing insolvencies amongst auto companies in China:
Most of these companies go bankrupt and due to this authorities are now concerned and want to make the regulations for the auto sector more stringent. The company has been instructed to provide additional documents to show that it is financially solvent in addition to its technological prowess as well.
The paperwork needs a review which is likely to take months and will generate more requests for more information. If their application gets rejected then that will be a major setback to the company as it will have to make the necessary changes and it has to start the process all over from scratch.
The EV world is progressing at the speed of light, every day one or the other competitor is coming out with an amazing electric offering which means Xiaomi could be left behind due to this delay. The brand has just recently recorded its first decline in terms of phone sales in a while and its entry into the EV sector is meant to bring in new customers but any more delays would be bad.
The R&D phase is completed for this car and the lack of license does not prevent the design process or the manufacturing preparations. The company has over 1,000 employees working on this project and it has also acquired land over which it has built this factory. The timeline for the car to enter the market is 2024 but without any license, the brand cannot produce cars either.
This process could take up to months or even a year and it also needs additional investment. CEO Lei Jun has vowed to invest over $10 billion in the next decade to get the project off the ground but he may have to invest more in the short term. This news did not help Xiaomi’s share either as it fell by 5.4% in the early hours of trading in Hong Kong.
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