Xiaomi $10 billion car project hits regulatory speed bump

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Xiaomi $10 billion car project hits regulatory speed bump

Xiaomi encountered an unexpected hurdle in its quest to get into the automobile market. Xiaomi is currently in the final stage of its first car’s design, and the vehicle itself will be revealed within just a couple of weeks however, it could be forced to put the brakes for a bit.

China has seen an incredible increase in the EV sector, however there’s a negative side to this. A lot of new companies fail, which is the norm however, the Chinese automobile sector has been severely impacted by recent waves of prominent bankruptcies, and authorities are ramping up the approval process for any new automobile venture.

The company has been requested to submit additional documents to show not only its financial strength and technological capabilities, but also its technological knowledge as well. The additional documentation requires to be reviewed, which likely will take months , and may result in further inquiries for additional details. If the application to manufacture vehicles by Xiaomi is rejected and the company is unable to proceed, it will need to begin the process over.

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For Xiaomi it seems that its EV world isn’t awaited and the competition is advancing in a rapid pace and the longer that the company waits longer, the more ground must cover in order to catch with the competition. Xiaomi recently saw the first drop in smartphone sales in the past year, and the EV initiative is expected to attract new customers into the fold, but delays could hurt the company.

The R&D phase has been completed for the very first car produced by Xiaomi The absence of a license won’t hinder the design process nor the manufacturing process. Xiaomi currently employs more than 1,000 people and has bought land where it intends to build its factory. It has a plan to begin selling the vehicle in 2024. Without a license, there is there will be no production.

The entire process could take months or even a whole year in addition to the schedule that was planned and may require more money.

Mr. Lei Jun has pledged to put aside $10 billion for the next 10 years in order to help get the project going but he may need to invest some of the funds earlier than he anticipated. Markets immediately responded to the announcement, with shares falling 5.4 percent to 5.4% in Hong Kong.

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