China EV war: Xiaomi boss stakes legacy on pursuit of Tesla as analysts caution latecomers to party
- Xiaomi stock has outperformed rival smartphone makers and Hang Seng Index, while its dollar bonds have returned more than twice its local peers
- Lei Jun, already a successful entrepreneur, will take the lead in the ‘last start-up of his career’, analyst says
Now, the 51-year-old billionaire is staking his legacy on what he described as his final fling with start-up – a money-sapping smart electric vehicle (EV) business. For some analysts, he is also raising the bar with the pursuit of industry leader Tesla and domestic challengers such as NIO and Xpeng.
“Lei Jun, as an entrepreneur with several successful experiences, will take the lead in the last start-up of his career, making this EV plan more ambitious,” said Willer Chen, an analyst at Forsyth Barr Asia in Hong Kong. “Financial-wise, this EV plan is doable for Xiaomi. People have high expectations from it.”
The Beijing-based firm will not be short of cash. It had 108 billion yuan in cash resources at the end of 2020, according to its latest stock exchange filing. Based on its filing, the company expects to spend 10 billion yuan in initial outlay on the EV business, with the outlay snowballing to US$10 billion over the next 10 years.