Baidu is another dotcom firm that will produce electric vehicles. It made public its plan in January, two months earlier than Xiaomi.

The Beijing-based internet giant will build a joint venture with Volvo owner Geely, and the first vehicle will hit the market in three years, followed by new vehicles every 12 to 18 months, said the joint venture's CEO Xia Yiping.

Baidu's decision to build cars was partly because it wants to demonstrate its autonomous driving technology, which it started to develop back in 2013, believing its own vehicles will help convince carmakers to buy its solutions as well as its maps and infotainment content.

"The core value of cars in the future will be how intelligent they are," Xia said. "The earlier a company plans, the more control on self-developed technologies it gains, the more advanced technology it has, the more power it will own in the market."

At this year's Shanghai auto show, held in late April, Baidu was among the 100-plus technology companies that stole the limelight of the biennial event for vehicle makers and car aficionados.

The company said its autonomous driving Apollo system will come preinstalled with at least one mass-produced car model each month in the second half of this year. It expects Apollo's solutions will be preinstalled on 1 million vehicles over the next three to five years.

"Apollo will continue to increase its investment in fields such as autonomous driving and automobile intelligence," said Li Zhenyu, Baidu's senior corporate vice-president.

Also at the Shanghai auto show, the first-ever vehicle featuring Huawei's operating system and autonomous driving solution made its premiere.

A video clip showed that the vehicle can navigate itself through busy urban traffic without a driver. The company said that its vehicles can drive themselves for 1,000 kilometers without human intervention.

"Our goal is to bring digital technology into every car in the world," said Wang Jun, head of Huawei's smart car business unit.

While Huawei vows to become the Bosch of the smart vehicle era, German suppliers including Bosch and Continental are keenly aware of the changes that are reshaping the auto industry and have taken action.

As early as 2015, Continental acquired the automotive business of Finnish software company Elektrobit Corporation and later bought Israeli cybersecurity company Argus in a 2017 deal to improve its software capabilities.