BEIJING, July 19 Reuters A decision by the Trump administration to sanction Chinas Xiaomi Corp in early 2021 was the catalyst for the companys decision to build its first electric car, CEO Lei Jun said on Friday.

Best known for its smartphones and home appliances, Xiaomi entered Chinas crowded EV market this year, part of its strategy to diversify its product portfolio.

Speaking at an annual event in Beijing on Friday, Lei said Xiaomi began to consider making an EV after what he called an accident, an announcement in the final days of the Trump administration that put the Chinese company on a U.S. sanction list.

I received a phone call from a friend saying that we had been sanctioned. It was like a bolt from the blue, said Lei, who added that Xiaomi convened an emergency board meeting that day that kicked off its scramble to develop an electric car.

If it weren39;t for the huge impact of the unexpected U.S. sanctions, we would not have rashly entered the complex automotive industry, said Lei, who has developed a celebrity following in China for splashy, livestreamed product reveals.

Friday39;s event, where Lei detailed Xiaomi39;s attempt to launch an EV that would lure buyers from Tesla and established luxury brands like BMW, Audi and Mercedes, was streamed by more than 1.5 million people on WeChat.

Xiaomi challenged the 2021 sanctions in federal court and won a reversal of the action that would have restricted U.S. investment in May that year. By that time, Lei…