BEIJING (Reuters) - A decision by the Trump administration to sanction China’s Xiaomi (OTC:XIACF) Corp in early 2021 was the catalyst for the company’s decision to build its first electric car, CEO Lei Jun said on Friday. Best known for its smartphones and home appliances, Xiaomi entered China’s crowded EV market this year, part of its strategy to diversify its product portfolio.
Speaking at an annual event in Beijing on Friday, Lei said Xiaomi began to consider making an EV after what he called "an accident," an announcement in the final days of the Trump administration that put the Chinese company on a U.S. sanction list.
"I received a phone call from a friend saying that we had been sanctioned. It was like a bolt from the blue," said Lei, who added that Xiaomi convened an emergency board meeting that day that kicked off its scramble to develop an electric car. "If it weren't for the huge impact of the unexpected U.S. sanctions, we would not have rashly entered the complex automotive industry," said Lei, who has developed a celebrity following in China for splashy, live-streamed product reveals.
Friday's event, where Lei detailed Xiaomi's attempt to launch an EV that would lure buyers from Tesla (NASDAQ:TSLA) and established luxury brands like BMW (ETR:BMWG), Audi and Mercedes, was streamed by more than 1.5 million people on WeChat.
Xiaomi challenged the 2021 sanctions in federal court and won a reversal of the action that would have restricted U.S. investment in May that year. By that time, Lei said he had launched the development of what became the SU7, a sporty, Porsche look-alike EV that starts below $30,000.
Lei said Xiaomi had turned down an offer from venture capital to fund its early-stage EV operations that would have valued the operation at $10 billion.
Xiaomi plans to deliver at least 100,000 SU7 EVs this year, with a target of 120,000 sales. This represents a significant increase from earlier this year, when the company initially set its first-year sales target at 76,000 vehicles while determining its production capacity.
Lei said the company had delivered over 25,000 EVs by the end of June and expected to reach the 100,000-unit target by November.
"I have to thank the accident three years ago,” he said of the sanctions, which spurred the company's drive to diversify due to concerns they would harm its smartphone business.
The SU7 is only available in China. Lei said his target was for Xiaomi to become one of the top five global automakers.
Donald Trump devoted a portion of his speech accepting the Republican party’s nomination for president on Thursday to the EV industry, saying he would roll back stringent vehicle emissions regulations driving a shift to electric cars.
Trump also said, if elected in November, he would slap import tariffs of up to 200% on Chinese EVs built in Mexico, although he has said he would support Chinese investment in plants in the United States.