Xiaomi confirms it is getting into the EV business

Xiaomi has confirmed an earlier report that it will start an electric car business, with an initial investment of 10 billion RMB ($1.5 billion) and $10 billion over the next 10 years. "The company will set up a wholly-owned subsidiary to operate [a] smart electric vehicle business," it wrote in an investor filing. It has yet to say where it plans to sell the car.

In addition to Xiaomi, other Chinese tech companies including Huawei and Baidu are rumored to be developing smart EVs as well. The Chinese market is already fairly crowded, led by domestic companies Nio and Xpeng, along with established foreign-based manufacturers like Tesla. EV sales in China are expected to increase by 50 percent or more this year, according to a recent Canalys report.

The company only started exploring the idea several months ago and made the decision in recent weeks, Bloomberg reported. As it does with smartphones, Xiaomi will reportedly outsource EV production to contract manufacturers, but won't tap any traditional automakers.

With Huawei having difficulty sourcing parts because of US sanctions, Xiaomi has become the fastest-growing smartphone brand in China. The company recently unveiled the Mi 11 Ultra smartphone with a huge camera sensor and rear selfie screen and is expected to launch more mobile devices today.

Update 3/29/21 10:51AM ET: This article has been updated to reflect that Huawei and Baidu have not yet announced plans to develop EVs.