U.S.-listed shares of Xiaomi (OTC: XIACY; HKEX: 01810) surged as high as 9% by midday Friday on a report that it is planning to join the hot electric vehicle space.
The Chinese smartphone giant is determined to make EVs but an exact path to it has yet to be finalized, Chinese online media group Late Post reported, as cited by Yicai Global today. Also, Xiaomi founder Lei Jun might lead the potential electric car project in person, the report added.
While Xiaomi has not confirmed or denied the report it was quoted as saying "please wait for a follow-up announcement” by Chinese financial media Cailian Press.
Assuming it makes the move, Xiaomi would join fellow Chinese tech giant Baidu (NYSE: BIDU) in announcing plans to enter the electric vehicle space.
Jun’s interest in electric cars dates back to 2013 when he met with Elon Musk, the chief executive officer of Tesla (Nasdaq: TSLA), twice in the United States. He is also an investor in Chinese EV giants Nio (NYSE: NIO) and XPeng (NYSE: XPEV).
In Hong Kong, Xiaomi’s stock leaped as high as $HK32.30 per share on the news, up 12% from Thursday’s close.
Before today’s gains, Xiaomi shares have been volatile since the middle of January when Donald Trump’s administration added the smartphone maker to a blacklist along with 10 other Chinese firms for alleged links to the Chinese military.
If the blacklisting goes into effect, American investors will no longer be able to purchase securities and will be forced to divest their holdings in Xiaomi by November. Xiaomi has warned that its growth could be stunt if American investors are no longer able to buy its stock.
Earlier this month, Xiaomi filed a lawsuit against the U.S. and claimed that the Chinese military label is “unconstitutional.”
While it’s unclear what type of approach the new administration will take on China, President Joe Biden could potentially reverse the ban on Xiaomi. Currently, the Biden administration is conducting due diligence of possible intrusions to U.S. data privacy and security by foreign governments.
U.S. shares of Xiaomi are down 14%year-to-date.