For local governments, attracting a car company to their area would certainly give a significant boost to the local economy, especially if the company is also China's largest smartphone maker.

Wuhan, the capital of Hubei province where CEO Lei Jun was from, is trying to get the company's car project to settle there, local media outlet said on April 2.

Wuhan Economic Development Zone said it has set up a special task force to "proactively and enthusiastically" approach Xiaomi to showcase its high-quality automotive ecosystem and business environment for possible cooperation, according to the report.

The Wuhan Economic Development Zone has a nearly 30-year history of development and is currently focusing on the automotive industry as a pillar industry.

The region is promoting the transformation and upgrading of traditional cars to next-generation vehicles, with the development trends of intelligence, networking, electrification, lightweight, and sharing.

Lei was born in Xiantao, Hubei, and enrolled in Wuhan University in 1987. In December 2018, Xiaomi established its Wuhan headquarters.

China's new carmakers are generally close to one local government or another.

China is headquartered in Hefei, the hometown of founder William Li, the city that saved the company from a funding crisis last year and a 30-fold return on investment six months later.

In early February, NIO announced an agreement with the Hefei city government to jointly build a "world-class" smart electric vehicle industrial park.

Motors is located in Guangzhou, and the local government is supporting it given its huge potential to contribute to the local economy. Half a month ago, XPeng announced an RMB 500 million ($76 million) strategic investment from state-owned investors in Guangdong.

XPeng announces RMB 500 million strategic investment from Guangdong govt-backed fund

Xiaomi announced on March 30 its entry into the smart electric vehicle market with an expected investment of $10 billion over 10 years, with an initial tranche of RMB 10 billion, and Lei will also serve as CEO of the smart electric vehicle business.

The company has become the No. 1 smartphone maker in China and the No. 3 in the world with a global market share of 13 percent in February, while sits fourth in China with a 4 percent global market share, according to a new report from Counterpoint Research.

(Xiaomi CEO Lei Jun)