(Yicai) Sept. 4 -- Chinese tech giant Xiaomi has completed building its auto factory in the Beijing Economic-Technological Development Area, and employees are on site ahead of the planned start of mass production in the first half of next year.

Yicai recently visited the periphery of Xiaomi's plant and interviewed one of its workers, who said operations began some time ago. Xiaomi Automobile also filed to reserve the domain name 'xiaomiev.com' on Aug. 2, Yicai found.

But there was no sign of large-scale activities at the plant, no loud noises could be heard at the gates, and some 'cosmetic' works were still to be completed, including an unfinished section of a wall in the southeastern corner.

Xiaomi has invested heavily in its electric vehicle business, building a production plant and setting up a long-term auto business layout aimed at ranking in the global top five, President Lu Weibing said on Aug. 30. Xiaomi Auto finished its summer vehicle tests with better-than-expected progress, he noted.

In March 2021, Xiaomi announced it would invest USD10 billion in the auto sector over the next 10 years, with an initial injection of CNY10 billion (USD1.4 billion). In the November of that same year, it inked a deal with the Beijing Economic-Technological Development Area to develop a project there.

According to Xiaomi’s plan, construction of the car plant was to start in April last year, with the first phase completed this June. The second phase is due to begin next year and finish in 2025.

To maintain the cost-effective advantage of the company's products, Xiaomi Auto’s main source of profit will be software and ecological services instead of hardware, while the profit margin on parts will be about just 1 percent, according to an insider at the Beijing-based firm.

The timing of Xiaomi’s entry into the competitive smart EV market at this time will not be the decisive factor for its long-term success or failure because the market is big enough, even though early movers have already shaped the competitive landscape, an auto industry investor told Yicai.

Xiaomi Auto can mimic its parent company’s advantages in the smartphone supply chain and focus on models that are competitively priced and have technological benefits by controlling vehicle production costs and developing innovative technologies, the investor added.

The price of a Xiaomi EV is expected to be around CNY250,000 (USD34,389), according to Sui Rui, a professional in the auto sector. Zhang Xiang, a visiting professor at Huanghe Science and Technology University, also estimates the cost at over CNY200,000 partly because if it is lower, it would damage Xiaomi's market value as a tech company.

A price of about CNY250,000 would be highly competitive, so Xiaomi needs to fully use its advantages in human-computer interaction technologies and its ability to meet users' needs to turn its first model into an innovative smart vehicle, Zhang pointed out. It can then beat rivals by improving software development and its ability to control the vehicle ecosystem and supply chain, Zhang added.

Editors: Tang Shihua, Martin Kadiev