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BEIJING, August 26 (TMTPOST)— Beijing Automotive Group Co. (BAIC), one of leading state-owned automobile manufacturers in China, dismissed a report that triggered speculation about its partnership with the country’s leading smartphone maker Xiaomi Corp.

Source: Visual China

Xiaomi is discussing with BAIC about possible partnership on producing electric vehicles (EV), and the pair considered various means of cooperation, such as Xiaomi’s acquisition of a stake in Beijing Hyundai No. 2 plant, which is fully licensed to make cars in China, Bloomberg reported Friday, citing people familiar with the matter. According to the report, Xiaomi may work with BAIC through vehicles co-branded with BAIC’s unit BAIC BluePark New Energy Technology Co., (BluePark), which could also take the role of making vehicles as it has production capacity. It is said that Xiaomi has to find a partner because of lagging of obtaining license to make automobiles by itself.

While Xiaomi and BAIC didn’t immediately comment on the report, investors at the stock market showed their bullish on the partnership. Hong Kong-listed shares of BAIC-controlled BAIC Motor Corp surged as much as 30.5%, the largest intraday rally on the record. Xiaomi shares closed more than 3% higher after paring losses of as much as 0.7% in the morning session.

BAIC didn’t hear about the collaboration that recent report mentioned, the company responded to the query of Securities Daily, one of major state-backed national securities newspapers in China, in late Friday. Official at BluePark told the paper that the company hasn’t received any relevant specific news. Xiaomi didn’t make response to the report till end of the day.

Xiaomi announced in March, 2021 to set up a wholly owned subsidiary to produce EVs, with the initial investment of RMB10 billion and the total input in the coming decade expected amount to US$10 billion. The subsidiary Xiaomi Auto decided in November to settle in Yizhuang, a town in the southeast suburbs of Beijing, with the aim for an annual production capacity of 300,000 vehicles, with two-phase construction that each phase has a capacity of 150,000 units per year. The unit also set a target to first make the complete vehicle in 2024 and begin the mass production the same year.

Earlier this month, Xiaomi founder and CEO Lei Jun disclosed his company has established an R&D team of more than 500 talents since it announced to foray into the EV sector last year. Lei said Xiaomi plans to create a fleet of 140 test vehicles in the first phase of the technology development and aims to become an industry leader in the smart EV industry in 2024.