A Chinese Smartphone Giant Has Picked Tesla And Xpeng's Battery Suppliers To Power Its EVs

Xiaomi Corp‘s (OTC:XIACY) foray into the electric vehicle market has taken an intriguing turn as it has reportedly selected battery suppliers for its EV division. 

What Happened: According to sources within the Chinese smartphone giant, Xiaomi has chosen China Aviation Lithium Battery Co. Ltd. (CALB) and Contemporary Amperex Technology Co. Limited (CATL) as its tier-1 and tier-2 battery suppliers, respectively, as reported by local media outlet Jiemian.

EV news portal CnEVPost reported on the development earlier.

Patent Tussle: This strategic decision comes after a series of developments. Initially, Xiaomi had positioned CATL as its tier-1 battery supplier, owing to a lawsuit faced by CALB from CATL. This legal battle prompted Xiaomi’s earlier supplier selection. 

However, the patent dispute between CALB and CATL was recently resolved, with CALB announcing the invalidation of two of CATL’s patents by Chinese intellectual property authorities earlier this month. 

The report also hints at the possibility of other battery makers, like Warren Buffett-backed BYD Co. (OTC:BYDDY) (OTC:BYDDF), joining the fold in the future to optimize battery costs further.

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Why It Matters: CALB, a rival to companies like Tesla Inc (NASDAQ:TSLA) supplier CATL and BYD, became Xpeng‘s (NYSE:XPEV) largest battery supplier last month. 

CATL showcased its innovative progress last week by launching a fast-charging lithium iron phosphate battery capable of traveling 400 km on a 10-minute charge.

Xiaomi, which announced its venture into the EV market in March 2021, plans substantial investment in its automotive business.

The company’s first EV model, a LiDAR-equipped sedan, is poised to enter the market with a premium version commanding a price tag exceeding 300,000 yuan ($41,000).

Xiaomi’s $10 billion electric vehicle initiative encountered regulatory challenges in China last year. Despite protracted talks with regulators, the smartphone giant struggled to obtain licensing.

Read Next: US Mirrors China As Electric-Vehicle Bubble Starts To Deflate: WSJ

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