Xiaomi Auto May Acquire Borgward, Set Up Dual-Factory Model in Beijing and Wuhan

Xiaomi Auto may adopt a “dual factory” production model, cls.cn reported Monday, citing multiple sources. On the one hand, Xiaomi hopes to promptly gain production capacity and related certifications by acquiring other companies who already have them. Meanwhile, the company plans to build its own plant in a second location to ensure stable production capacity.

Sources said that the Beijing government is encouraging Xiaomi to acquire Borgward for production certification. City authorities are working with those in the industry to move the matter forward in an effort to transfer Borgward’s 180,000-unit annual production capacity to Xiaomi‘s car project. Barring any surprises, the proposal could be finalized in September.

In addition to the Borgward acquisition, Xiaomi may have already completed its site selection for a new factory in Wuhan’s Economic and Technological Development Zone, the report said, citing people familiar with the matter. The factory is reportedly no too far from XPeng Motors’ plant in Wuhan and construction on Xiaomi‘s building will start soon.

Borgward, a car brand founded in Germany in 2008, currently has its design and engineering teams located in Germany, but the vehicles are produced in China by Foton Motor. In 2014, Foton Motor acquired the brand from Borgward AG for 5 million euros. In March 2019, Ucar Inc. bought a 67 percent stake in Borgward for RMB 4.1 billion, although the final payment for the acquisition has not yet been made.

Because of recent issues with financial fraud in companies such as Luckin Coffee, Ucar Inc., whose chairman is Lu Zhengyao, the coffee brand’s former chairman, suffered a heavy blow. In June, Borgward is reportedly to go bankrupt after being acquired by Ucar Inc. two years ago.

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Borgward’s factory is located in Miyun Park in Beijing and is surrounded by the factories of other notable car companies such as Foton Motor and Wandu. Borgward’s factory has had their production lines halted for more than a year already. The factory has a designed production capacity of 180,000 vehicles in Phase I and 360,000 vehicles in Phase II. It is qualified to produce both traditional fuel and new energy vehicles in China.