Chinese smartphone maker Xiaomi Corp is in discussions with Beijing Automotive Group Co considering collaborating on the production of electric vehicles (EV), reported Bloomberg citing sources.

According to the report, the two companies are looking into several options, including Xiaomi purchasing a stake in the Beijing Hyundai No. 2 plant, which has a licence to manufacture automobiles in China.

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Xiaomi said last year that it will enter the competitive EV industry and compete with major brands as well as emerging tech companies.

The company has committed to mass manufacturing its vehicles in the first half of 2024. The company began building its first auto factory in Beijing earlier this year.

According to Bloomberg, Xiaomi is considering a production partnership due to difficulties in obtaining a licence to manufacture automobiles on its own.

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The partnership may result in vehicles that are co-branded with Xiaomi and manufactured by Beijing Automotive’s EV brand, BAIC BluePark New Energy Technology Co., as per the report.

Beijing Hyundai, a joint venture between Hyundai Motor Co and BAIC, operates three factories in Beijing.

According to the World Economic Forum, China’s EV market was the largest in the world in terms of passenger car sales in 2020, using statistics from the European Automobile Manufacturers Association, China Association of Automobile Manufacturers, and EV Volumes. According to Mordor Intelligence, it was valued at $124.2 billion in 2021 and is predicted to grow to $799 billion by 2027.

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Four out of China’s top five car makers, with the exception of Tesla, are homegrown. According to figures published by EV Volumes, Tesla held the third-largest percentage of China’s EV market from January to May 2022.

BYD, China’s top EV manufacturer, had a 27.9% market share in China from January to May 2022, according to EV Volumes.

The joint venture of SAIC Motor, General Motors, and Liuzhou Wuling Motors Co Ltd., also known as SAIC-GM-Wuling or SGMW, held a market share of 10.1%.

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Chery, a state-owned enterprise situated in Anhui, established in 1997 held a 4.9% market share in the country, while GAC, a state-owned manufacturer, accounted for 4.2% of China’s EV market.

BAIC Motor Corp. shares rose as much as 30.5% intraday, the highest intraday rise on record. Xiaomi recovered losses of up to 0.7% in Hong Kong and traded up to 3.3% higher, while BAIC BluePark’s shares in Shanghai soared over 10%, causing a trading halt.