The collaboration could see vehicles built by Beijing Automotive’s EV brand BAIC BluePark New Energy Technology Co. and co-branded with Xiaomi, the people say. While the aging No. 2 plant needs substantial upgrades to manufacture electric vehicles, BluePark has production capacity that could be used to manufacture Xiaomi-BAIC vehicles, they added.
Shares of Xiaomi in Hong Kong erased losses of up to 0.7% and traded up 3.3%, while shares of BAIC BluePark in Shanghai jumped 8.8%, at the following the Bloomberg News report.
The deliberations are preliminary and there is no guarantee that the negotiation will result in an agreement, the people said. A Xiaomi representative declined to comment, while BAIC did not immediately respond to requests for comment. A Hyundai representative said the allegations were baseless and declined to comment further.
The collaboration would see Xiaomi co-founder Lei Jun save a pledge to invest around $10 billion over a decade to manufacture Xiaomi-branded cars in 2024, lured by tax breaks and government subsidies. Beijing encourages mergers and acquisitions to better deploy resources within the industry.
Future electric vehicle makers must now prove their financial and technological capabilities, and non-traditional automakers headquartered outside China or in the research and development phase must meet strict sales criteria.
BAIC and South Korean automaker Hyundai Motor Co. opened Beijing Hyundai Plant No. 2 in 2008 as part of their joint venture, according to a press release. Business losses could continue to weigh on BAIC’s profits as the partnership’s sales recovery is crippled by its budget car brand image while plant utilization rates struggle to exceed 50% , Bloomberg Intelligence analysts Steve Man and Joanna Chen wrote in March.
Several companies in China’s electric vehicle sector have obtained car manufacturing licenses through acquisitions. WM Motor Holdings Ltd., which plans to raise $1 billion in a Hong Kong IPO, bought Huanghai Auto in 2017 to secure its license. Li Auto Inc. secured a license by acquiring Chongqing Lifan Auto Co. for 650 million yuan ($95 million) in 2018.