Will you have a fever for Xiaomi cars?
Editor’s note: This article is from the micro-channel public number “all-weather technology” (ID: iawtmt), Author: all-weather technology.
Author | Lu Yi Editor | An Xin
After “repeatedly jumping” on the issue of building a car, Xiaomi has finally settled on building a car.
On March 30, Xiaomi Group announced that it will establish a wholly-owned subsidiary to enter the smart electric vehicle market, under the leadership of Lei Jun himself. The initial investment is RMB 10 billion, and the investment is estimated to be USD 10 billion in the next 10 years.
Lei Jun also announced the above information at the press conference that day.
Previously, Bloomberg reported that Xiaomi will outsource car assembly to contract manufacturers, and Xiaomi has no plans to choose an established car manufacturer. However, at this press conference, Xiaomi did not disclose whether the car was built by itself or outsourced.
It is reported that after several months of evaluating the potential of the electric vehicle industry, Xiaomi has now hired engineers to develop software embedded in the car.
In the two-day, nearly five-hour spring release of Xiaomi’s new products in spring, the Xiaomi car project debuted in the last half hour.
For car building, Lei Jun said that Xiaomi “is not bad and can afford to lose”; his confidence comes from the fact that Xiaomi still has a cash balance of 108 billion yuan by the end of 2020.
Lei Jun said that Xiaomi Auto will be the last gamble in his entrepreneurial career; this time he will bet on all the achievements and reputation of his life to fight for Xiaomi Auto.
As a mobile phone manufacturer, the Xiaomi brand has occupied the minds of consumers, sitting on rice noodles with strong purchasing power, and possessing the ability to integrate online and offline sales.
As a new force in new energy vehicles, Xiaomi still has a long way to go whether it is in automotive hardware or autonomous driving software.
Some people say that there are only two entrepreneurs in China who can do TV, mobile phone and car at the same time: Jia Yueting and Lei Jun. It can be seen that the difficulty is so high that only a very small number of people dare to “try by themselves.”
How long can Xiaomi have a fever for building cars?
1 2 I have been building a car for a long time Lei Jun once described himself as “extremely aggressive under extreme conservative”. In the car business, he also showed this style. Before announcing that he would end up building a car in person, he had already established a smart car ecosystem through investment; today, at the right time he thinks, he will give it a go to block all the achievements and reputation in his life and fight for Xiaomi. As early as 2013, Lei Jun visited Tesla CEO Musk twice in the United States and showed interest in Tesla and new energy vehicles. Since then, through Shunwei Capital of the “Xiaomi Series”, Lei Jun has invested to accompany new domestic car-making forces-including participating in the launch of NIO in 2014, and successively investing in Xiaopeng Motors in 2016 and 2019. It is reported that at the end of February this year, Lei Jun also met with Li Bin, the founder of Weilai, to consult about car building. Wang Chuan, the No. 2 figure of Xiaomi’s car, has also visited Ideal Car from time to time in the past year. In addition to investing in new car companies, Xiaomi has also laid out the upstream and downstream of the smart car industry chain. In 2014, Xiaomi invested in the map manufacturer Kay Rucker. In April last year, Xiaomi also strategically invested in Shanghai Pateo, a car networking company, and will cooperate with the latter in software, hardware, and voice multi-scenario interaction. Lei Jun revealed at the press conference that in the past 7-8 years, Xiaomi has invested in nearly 10 auto-related companies. In addition to investment, since 2015, Xiaomi has successively applied for invention patents in the automotive direction of fixed speed cruise, energy supplement, vehicle control, navigation, assisted driving and driving safety. As early as the middle of 2019, Xiaomi executives suggested to Lei Jun that it is the time for Xiaomi to enter the game to build cars from the end of 2019 to the beginning of 2020. However, Xiaomi, who has no experience in automobile manufacturing, chose to cooperate with car companies and use the on-board service system to test the waters. In June 2019, Xiaomi and Mercedes-Benz reached a cooperation to “move” Xiao Ai, a very mature virtual voice assistant, into the car, allowing Xiao Ai to enter the car’s human-computer interaction system. Two months later, the person in charge of Xiaomi MIUI revealed that he is considering developing a MIUI-based in-vehicle service system. From investing in smart cars to cooperating with car companiesAs the on-line in-car service, Xiaomi’s exploration of new cars is similar to Baidu. 3 The support for the next ten years is urgently needed “If you want to live on the past report card and stick to today’s results, in the extremely competitive mobile phone market, (Xiaomi) will definitely not be able to hold it.” In a public speech on the 10th anniversary of Xiaomi, Lei Jun clearly realized that Xiaomi must be prepared for danger in times of peace. At the 2019 conference, Lei Jun announced the core strategy of Xiaomi in the next five years-the “mobile phone + AIoT” dual engine. In August 2020, Lei Jun upgraded this strategy to “mobile phone × AIoT”. Now, these two businesses are facing more or less resistance. Among them, the smartphone business has encountered a “middle-aged crisis”, while AIoT has not yet “taken important responsibility.” In the mobile phone business, although Xiaomi has become the only domestic mobile phone brand to grow in 2020, this cannot conceal the decline in the growth rate of the smartphone industry. According to data from the China Academy of Information and Communications Technology, China’s mobile phone shipments have been declining year by year since reaching a high of 560 million units in 2016. Especially under the influence of the epidemic in 2020, the annual shipments of mobile phones will be 308 million, which is nearly half of that four years ago. Reflected in Xiaomi’s financial report, in the core mobile phone business, Xiaomi’s full-year smartphone revenue in 2020 is 152.2 billion yuan, which is lower than Bloomberg’s expected 154.24 billion yuan. In the AIoT business that Xiaomi values, although the AIoT platform has achieved global expansion, its revenue growth rate is “staying in situ.” As of the end of 2020, excluding smartphones and laptops, the number of IoT devices connected to the Xiaomi AIoT platform has reached 325 million, a year-on-year increase of 38%. But from the perspective of revenue, Xiaomi’s IoT and consumer goods revenue was 67.4 billion, an increase of 8.6% year-on-year. In 2019, the revenue of this segment was 62.1 billion yuan, a year-on-year increase of 41.7%. From the perspective of growth rate, the revenue growth rate of the AIoT business is declining. From the perspective of the AIoT business’s contribution to total revenue, it has also fallen from 26.8% in 2019 to 23.9% in 2020. Although Xiaomi has ranked among the top three smartphones in the world, when the global smartphone growth is slowing and AIoT business is unable to support revenue in the short term, Xiaomi is eager to seek smartphones and AIoT for growth in the new decade. The next card. At the press conference for the tenth anniversary of Xiaomi, Lei Jun formulated three strategies for the future development of Xiaomi: re-enter the business and return everything to zero; Internet + manufacturing, and stability. In the sluggish mobile phone industry and the rise of the new energy sector, electric vehicles have become the best target for Xiaomi to start a business again. In addition to Xiaomi’s internal search for change, building a car once again reflects Lei Jun’s needsBe the “pig on the wind”, the concept of taking advantage of the trend. Regardless of related policies, or from the global trend of replacing old and new energy sources, new energy and smart cars have become highly certain opportunities in the future. The Chinese market and Chinese companies will be important participants in the opportunities of this era. The HIS Market report shows that by 2025, the penetration rate of smart cars in the global automotive market will increase to 60%; among them, the penetration rate of smart cars in the Chinese market will reach 75%. From a practical point of view, the sales of smart electric vehicle brands such as Tesla and Weilai have soared, gross profits have turned positive, battery life has continued to increase, and market value has soared. As the pioneers, they ran through the business model of smart electric vehicles. This gives confidence to the latecomers. Technology companies such as Apple, Huawei, ZTE, and Baidu have all participated in building cars, setting off a second wave of car building. The ability of Internet technology companies to participate in car building is also inseparable from the rapid maturation of the automotive industry chain. Since entering the Chinese market in 2018, Tesla has not only brought a “catfish effect” to domestically produced new cars, but has also stimulated the local smart car industry chain to a certain extent. According to Tao Lin, Tesla’s global vice president, as of the end of 2020, the localization rate of domestic Tesla parts has basically reached 100%, which has also driven the maturity of the domestic automobile industry chain. 4 How long can Xiaomi have a fever for building cars? Xiaomi’s starting point is to “make the world’s best mobile phone at half the price, so that everyone can afford it.” Lei Jun, who started his own business again, still adheres to the “three iron rules”, namely, technology-oriented, cost-effectiveness as the key link, and the coolest products. Therefore, many people expect that Xiaomi will be able to beat the price of electric cars and truly become “the first electric car for young people.” Rice noodles even said, “As long as Xiaomi dares to make, we dare to buy.” However, although some people compare a smart car to “four wheels for a smart phone”, the amount of funds required to build a real car and the complexity of the industrial chain are far more difficult than the difficulty of building a mobile phone. The burning of money alone has blocked many companies out of the door. Wei Lai’s Li Bin once bluntly said that building a car burns money, saying that new ventures need at least 20 billion yuan in capital preparation. Both Weilai and Tesla almost fell due to lack of money. The reason why car building burns money is partly burned to marketing, and the other part goes to technology research and development, and this is a continuous process of burning money. After the release of the new car financial report this year, Weilai, Ideal and Xiaopeng all stated that they will increase R&D investment in 2021, and the R&D investment of Weilai and Ideal will reach 5 billion and 3 billion respectively. In terms of capital investment, Lei Jun has invested 10 billion US dollars to prove that Xiaomi is “not bad for money.” So, when there is ample food and grassNext, what opportunities and hidden worries are there for Xiaomi to build a car? An automotive industry analyst told All Weather Technology that compared with traditional car companies, Internet technology companies have more advantages in brand marketing and operations, and understand user needs. “Xiaomi is a company that understands marketing very well. It has already occupied the minds of consumers through mobile phones and IoT ecosystems, and the nurtured rice noodles are also more purchasing power. However, the disadvantage of Internet companies is that they may lack car manufacturing links. Experience.” According to Tencent’s “Deep Web” quoting people in the automotive industry, Xiaomi’s car manufacturing logic is similar to Apple and Huawei. As a consumer electronics brand that has accumulated a large number of C-end customers, Xiaomi Motors only needs to have a conversion rate of 1 in 10,000. That’s terrible. “Mobile phone manufacturers also have integrated offline and online sales capabilities (funding, logistics, agency, retail are already very mature, and even platform-oriented). These advantages are relatively long versions.” However, although Xiaomi can transfer the advantages of mobile phone manufacturing experience, it is still a layman in the field of car manufacturing. Wang Xianbin, a senior analyst at Gasgoo Automotive Research Institute, told All Weather Technology, “Unlike traditional fuel vehicles, the core competitive elements of new energy pure electric vehicles have evolved into new energy drivers and software capabilities. Therefore, the current smart electric vehicles are moving towards Hardware electrification and software intelligent evolution.” This puts forward two requirements for car manufacturers: one is hardware capabilities such as vehicle manufacturing and power batteries, and the other is software capabilities such as autonomous driving and Internet of Vehicles. At this press conference, Xiaomi did not disclose whether the car manufacturer is preparing to build its own factory or is contracted by car companies, but seeking cooperation from car companies can obviously speed up the mass production of Xiaomi cars. Take Baidu’s cooperation with Geely as an example. Baidu’s advantage lies in autonomous driving and Internet of Vehicles technology. Therefore, in the division of labor, it also pays more attention to complement each other, focusing on the software field. In general, it is easier to complement hardware capabilities when cooperating with car companies, but software competitiveness requires a long period of hard work. Currently, whether it is Tesla or new powers building cars, they have deployed autonomous driving business. Baidu’s car manufacturing is favored by the market, and it also has the advantages of autonomous driving and Internet of Vehicles. Compared with other car manufacturers, Xiaomi still has a long way to go in the fields of autonomous driving and car intelligence. Analysts pointed out that software capabilities such as autonomous driving will constitute the core competitiveness of new cars, and software can also bring new business models and valuation imaginations to them. Tesla is already corroborating this judgment. With the increase in sales, its Autonomous Driving Software Service (FSD) has been realized. Musk predicts that Tesla’s FSD software revenue may grow from 200 million US dollars to 1 billion US dollars in 2021. In addition to the hidden worries in the car manufacturing business, there are also brokerages who have raised confusion about the valuation model after Xiaomi participates in car manufacturing. <
