(Yicai Global) June 15 -- BYD is in negotiations with Xiaomi about cooperating in the smartphone maker’s electric vehicle project, according to Wang Chuanfu, founder and chairman of the Chinese automaker. BYD’s shares rose.

BYD supports the development of Xiaomi’s car business, Wang said at the China Auto Chongqing Summit 2021 on June 13, adding that the two companies are already strategic partners, as BYD makes large numbers of handsets for Xiaomi.

Shares of Shenzhen-based BYD [HKG:2594] closed 2.3 percent higher today at HKD232.32 (USD36.28), after earlier jumping as much as 4.8 percent. The broader Hang Seng Index fell 0.7 percent.

The media have previously misinterpreted Wang’s comments as an attempt to dissuade Xiaomi founder Lei Jun from entering the automotive field, he said.

Wang told the Yabuli China Entrepreneurs Forum on June 9 that “the three years Lei plans to invest in building cars cannot be bought by money. Losing CNY5 billion (USD781 million) may not be a big deal if the strategy is going in the wrong direction, but losing three years of time is significant.” That was interpreted as Wang pouring cold water on the project.

On June 13, Wang said he had been misunderstood. Wang said he was simply advising Lei to focus on the project’s strategic direction, so as not to waste years of time and precious opportunities that are much more important than the money invested.

Beijing-based Xiaomi announced in March that it will set up a wholly owned subsidiary, led by Lei himself, to move into the smart electric vehicle business, investing CNY10 billion (USD1.52 billion) in the project’s first phase, and USD10 billion over the next 10 years.

Xiaomi’s stock [HKG:1810] closed unchanged at HKD28.15.

Editor: Futura Costaglione