Shares of Xiaomi jumped 12% on Tuesday after the company said it would start deliveries of its first electric vehicle (EV) this month.

Infinity Tyres

The tech giant, which is China’s fifth largest maker of smartphones, is venturing into the world’s top auto market amid a brutal price war.

In a Weibo post, it said it has 59 stores in 29 cities nationwide that will take orders. The launch event is scheduled for March 28 when the new EV’s sticker tag is expected to be announced.

Xiaomi’s shares rallied 7% during morning trade in Hong Kong and continued to rise in the afternoon.

China’s EV sales climbed 18% in January-February, not too far off 21% growth seen for all of 2023. This year has seen a round of deeper price cuts led by market leader BYD to woo consumers amid weakening domestic demand.

At the unveiling of the Speed Ultra 7 (SU7) sedan in December, chief executive Lei Jun said Xiaomi plans to become one of the world’s top five automakers.

The SU7, Lei touted, has “super electric motor” technology capable of delivering acceleration speeds faster than Tesla and Porsche’s EVs.

Analysts say the car’s shared operating system with Xiaomi’s popular phones and other electronic devices will appeal to the company’s existing customers.

Xiaomi has been seeking to diversify beyond its core business to EVs amid stagnating demand for smartphones – a plan it first flagged in 2021.

Its cars will be produced by a unit of state-owned automaker BAIC Group, in a Beijing factory with an annual capacity of 200,000 vehicles.

The smartphone giant has pledged to invest $10 billion in autos over a decade and is one of the few new players in China’s EV market to gain approval from authorities who have been reluctant to add to a supply glut.- Reuters with additional editing by Jim Pollard