An autonomous driving start-up has been acquired by the Chinese electronics giant Xiaomi which has put the company into an industry that is fast becoming extremely competitive. The company said this move is a part of its strategy to further diversify its business from making smartphones and other electronic consumer durables.

The autonomous driving startup Deepmotion was acquired by the Chinese smartphone maker in a deal worth around $77.37 million. Xiaomi said that the acquisition was made to “enhance the technological competitiveness” of its electric vehicle business.

Its plans for launching of an electric vehicle business and making an investment of $10 billion over a period of 10 years was announced by the Chinese smartphone maker earlier in March this year.

The acquisition of Deepmotion will be utilised by Xiaomi for gaining access to a number of autonomous driving features to the cars that Xiaomi eventually wants to make which is a feature that being  developed by many automakers for next-generation electric vehicles.

There are other technology giants in China that are also venturing into the electric and autonomous vehicle segment, consequently crowding it and the ambitions of Xiaomi to diversify into this segment of the auto industry will pit it against the other Chinese companies. The rivals of Xiaomi in this segment include the likes of Baidu and even Huawei, as well as car makers including Tesla, Xpeng and Nio.

Its decision of acquisition of Deepmotion was announced by Xiaomi after it reported its financial results for the second quarter. The company reported a 64 per cent year on year surge in revenue for the quarter to 87.8 billion yuan ($13.5 billion). The total revenue and adjusted net profit of the company touched record highs in the quarter, Xiaomi said.

The company said that 67.3 per cent of its total revenues were accounted for by sale of smartphones. The company however is seeking to reduce its dependence on revenues from its mobile phone business and want to diversify and find alternative revenue sources from other internet-connected devices.

Electric vehicles can be a new revenue stream, the company is hopeful.

Xiaomi shares were down almost 4 per cent in afternoon trade.

(Adapted from GizmoChina.com)