The move marks the first overseas foray for Xiaomi's cars, which have proved enormously popular in China and wowed Western auto executives.

Xiaomi plans to enter Europe’s EV market by 2027 and compete with Tesla and BYD. The company expects its car division to become profitable by the end of this year. BMW and F1 veterans have joined Xiaomi to develop its new European R&D center.

Xiaomi's second-quarter global smartphone shipments rose 0.6% from a year earlier to 42.4 million handsets. However, its smartphone revenue decreased 2.1% to 45.5 billion yuan due to a lower average selling price.

Xiaomi (pronounced shau-mi) is expected to launch electric vehicle sales in Europe by 2027 following the launch its its YU7 luxury SUV. The Beijing-based business is better known as the third largest smartphone maker in the world and it sold 61 million handsets last year.

A rise in shipments of smartphones, especially in Southeast Asia, helped to boost Xiaomi's second-quarter revenue by 30.5%, the smartphone and EV company said on Tuesday, against the backdrop of a sluggish global market.