Beijing (PingWest)—Chinese smartphone manufacturer Xiaomi plans to tap into the car manufacturing business, Chinese tech media LatePost reported, citing people familiar with the matter. "It's a strategic decision and the business is likely to be led by Lei Jun, founder and CEO of Xiaomi," said the sources.

But the sources also claimed that the specific details and path it aims to take has yet to be determined, adding that there are many variables and nothing is set in stone. 

As the smartphone market faces stagnation in China, mobile phone manufacturers like Xiaomi are seeking business diversification. Meanwhile, the popularity of the electric vehicle market is rising. Therefore, if Xiaomi intends to expand its business into an untapped market, it will not be entirely surprising, especially in regards with its considerable R&D team and expertise in electronic hardware, said the report.

China is already the world's largest automotive market and a frontrunner in electric vehicle technology. The Chinese government provides support to the industry through subsidies, looser restrictions and the construction of charging infrastructure.

From January to November 2020, sales of pure electric vehicles increased by 4.4% year-on-year, while overall passenger vehicles sales fell by 7.6% in China, government data shows.

Local electric vehicle manufacturers including Nio, Li Auto and Xpeng said that their deliveries surged last year. Still, their delivery numbers came short of Tesla’s.