Beijing (PingWest)—Xiaomi, the Chinese smartphone brand, announced on Tuesday that it plans to launch an electric vehicle business and invest $10 billion over the next 10 years.

The company will set up a wholly-owned subsidiary and the initial phase of investment will total 10 billion yuan ($1.52 billion), and CEO Lei Jun will lead the car unit.

Last week, citing sources closed to the matter, Reuters reported that Xiaomi is talking with Chinese carmaker Great Wall to produce its own EVs brand. But Xiaomi denied it.

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.