Xiaomi is investing $10 billion to join the electric car race

London(CNN Business) A big smartphone maker is getting into electric cars. And it's not Apple.

China's Xiaomi announced Tuesday that it will invest $10 billion over the next decade in a subsidiary focused on the "smart electric vehicle business."

The company said in a stock market filing that the new unit will be led by billionaire CEO Lei Jun. The initial investment will be worth 10 billion yuan ($1.5 billion), the company said.

Xiaomi is one of the world's biggest smartphone makers but it also produces a range of gadgets including home security cameras, electric shavers and toothbrushes, light bulbs, watches and scooters. The company did not provide further details on its strategy for entering the automotive industry, and whether it will focus on manufacturing, software, or both.

No matter its plans, Xiaomi will face a crowded field of competitors who are trying to produce electric vehicles at scale including Tesla (TSLA) and traditional carmakers such as Volkswagen (VLKAF) and General Motors (GM), all of which have been working for years to develop and sell electric cars that consumers want to buy.

And earlier this year there was a flurry of speculation that Apple (AAPL) was on the verge of going public with long-rumored plans to make an electric car, possibly in partnership with an established brand.

Numerous other tech companies have established partnerships with carmakers, hoping to capitalize on the huge potential market for software application such as autonomous driving.

Dan Ives, an analyst at Wedbush Securities, wrote earlier this week that the electric vehicle "transformation is just beginning."

"This industry is on the cusp of a $5 trillion market opportunity over the next decade. With GM, Ford, and Volkswagen all jumping into the deep end of the pool on electric vehicles, it speaks to the massive pent up demand globally around electric vehicle technology on the horizon," said Ives.

— Yong Xiong contributed reporting.