Author: Car Journal
Introduction
Li Bin said, “Don’t make a car without 20 billion yuan ($3.1 billion).” He XPeng said, “I used to think that 10 billion yuan was too exaggerated when I watched others make cars. Now that I have jumped in, I know 20 billion yuan is not enough to spend.” Xiaomi said that it will invest 10 billion yuan ($1.52 billion) in the initial stage of Xiaomi’s automotive business, and is expected to invest a total of about $10 billion in the next 10 years.
On the evening of March 30, 2021, Xiaomi Group announced in a statement released on the Hong Kong Stock Exchange that its smart electric vehicle business had been formally established. The announcement shows that the Board of Directors has approved the establishment of a wholly-owned subsidiary for the intelligent electric vehicle business. Lei Jun will personally serve as the CEO of the car-making company to build Xiaomi cars.
The speculation and rumors surrounding Xiaomi’s car-making business have been circulating for months. The moment the announcement was officially released, it attracted a lot of attention. Is Xiaomi really ready for car-making? Where does Xiaomi’s confidence come from?
Fast: Xiaomi vs Apple, is Xiaomi really ready?
In recent months, the rumors of Apple’s car-making have been louder than that of Xiaomi’s. The “Apple Car” has been a mystery for the past few years. Since the media broke the news about Apple secretly establishing “Project Titan” car project plan in 2014, there have been news reports about Apple’s car-making every year, but they have all remained on speculation and rumors. Apple has almost never officially responded to any news about car-making. Until the end of 2020, news about Apple’s car-making came out one after another, just like the news about Xiaomi’s car-making, but the final outcome was different.
Rumors of Apple’s car-making:
| On December 8, 2020, John Giannandrea, Apple’s AI and machine learning lead, took over the position of responsible person for the car project from Bob Mansfied.
| On January 7, 2021, a South Korean media reported that Apple had contacted Hyundai Motor Group and planned to produce self-driving electric vehicles at a Georgia factory or invest in a new factory in the United States in partnership with Hyundai.
| On February 2, 2021, a Taiwan-based analyst at TF International Securities predicted that Apple might use the Hyundai E-GMP electric platform or cooperate with General Motors.
| On February 3, 2021, according to the South Korean newspaper, The Dong-a Ilbo, Apple will invest 4 trillion won (about $3.6 billion) in Kia Motors to produce electric vehicles at a factory in Georgia in the United States, and plans to sell more than 100,000 units in 2024, or even up to 400,000 units. Apple Car’s chassis will adopt the E-GMP platform; Hyundai Mobis will provide most of the component design and production; Kia will provide the car assembly line to produce Apple Car.
Rumors of Xiaomi’s car-making:
| On February 19, 2021, LatePost reported that Xiaomi had made a strategic decision to produce cars.| On February 21, 2021, Xiaomi responded to the rumors about car manufacturing, stating that it has not yet reached the formal project approval stage.
| On March 19, 2021, it was reported by 36Kr that Xiaomi’s car manufacturing project is expected to be approved in April, led by Wang Chuan, who is currently investigating the automotive industry.
| On March 26, 2021, Reuters reported that Xiaomi was in talks with Great Wall Motors to use their factories for producing electric vehicles. Soon after, Xiaomi issued an official statement refuting the rumor.
| On March 30, 2021, Bloomberg reported that Xiaomi plans to invest $15 billion to enter the electric vehicle market. Subsequently, Xiaomi officially announced its car manufacturing project.
Apple has always been Xiaomi’s biggest competitor. Prior to this, due to admiration for Steve Jobs, Xiaomi and Apple even ran on the same track, with Lei Jun being referred to as “Lei Busi”. This time, Xiaomi is ahead of Apple, but based on the details disclosed about Apple’s car manufacturing and its previous accumulation, Xiaomi will still face significant challenges.
In terms of human resources, Xiaomi still faces significant challenges compared to Apple’s car manufacturing project, which has assembled a formidable team:
| In 2016, the “Project Titan” leadership team for Apple’s car manufacturing project was led by Bob Mansfield, a retired former senior vice president of hardware at Apple, with former Chrysler senior vice president Doug Betts as executive director. After taking over, Mansfield hired Dan Dodge, founder and former CEO of QNX and former head of BlackBerry’s automotive software department.
| In August 2018, Doug Field, former vice president of Mac hardware engineering at Apple, returned to Apple to serve as executive director of the “Project Titan” project after working at Tesla for five years, during which time he oversaw the production and manufacturing of the Model 3. Meanwhile, Apple also hired former senior designer at Tesla and Microsoft, Andrew Kim, and former Tesla executive Steve MacManus, who are responsible for AR glasses that may be used in the Apple electric car and the design of the car exterior and interior, respectively. In just 2018, Apple hired nearly 50 employees from Tesla, including talents in autonomous driving technology, quality control, powertrain, mechanical design, software engineering, and supply chain systems.
| In June 2019, Apple acquired Drive.ar, a startup focused on autonomous driving technology. In 2020, John Giannandrea, head of AI and machine learning at Apple, took over as head of the car project from Bob Mansfield. At the end of 2020, Apple also hired Manfred Harrer, former chief engineer of chassis development at Porsche.According to incomplete statistics from the professional social networking site LinkedIn, as of 2020, the “Apple Car” team had more than 1,200 people, including 170 from Ford, over 300 from Tesla, and over 110 from privately-owned automotive research institutions.
Xiaomi’s car division currently only has CEO Lei Jun and Xiaomi veteran Wang Chuan, who are trying to poach talent from various automotive related companies. In the current domestic intelligent market, there are many players including NIO, IDEAL, XPeng, WM Motor, IM Auto, R Auto, Salon, Changan Huawei, Zeekr, Jidu, Aiways, BYD, and Evergrande. Enterprises such as IM Auto, Jidu Auto, and R Auto are eagerly recruiting talents while NIO, IDEAL, and XPeng are also strengthening their teams. Xiaomi may have to enter the talent war next.
The “Apple Car” project was put on hold this year, reportedly due to a lack of suitable contract manufacturers. Likewise, Xiaomi has not disclosed any details of its car making technology or contract manufacturers. Industry insiders speculate that Xiaomi may take the route of consumer electronics contract manufacturing. “Especially since a large part of Xiaomi’s resources are located in Wuhan, it can collaborate with Dongfeng Motors. Dongfeng’s passenger cars have always been relatively weak, so working with Xiaomi to create a stir is possible, and Dongfeng has idle production capacity to help Xiaomi make cars.” However, from a professional standpoint, manufacturing cars and mobile phones have obvious differences in terms of production processes. Car production lines have complex stamping, welding, painting, and assembly processes that require deep participation. There are also speculations within the industry that Xiaomi may acquire a car company, but this remains unconfirmed.
As a company without prior car manufacturing experience, how Xiaomi can create truly high-quality products that meet automobile standards, and ultimately become a mature product, is a huge challenge.
Slow and Steady: Xiaomi’s Perfect Timing, Geographical Advantage, and Talent Pool
Lei Jun shared Xiaomi’s research on car making. In the past 75 days, Xiaomi’s management team has undergone 85 deep communications with industry insiders, over 200 senior experts in the automotive industry, four internal management discussion meetings, and two formal board of director meetings for extensive research and verification, before making this decision. It can be seen that Lei Jun was hesitant but eventually convinced himself to make cars. Lei Jun summarized the decision as being based on the following pillars: Xiaomi has enough money and can bear the loss; Xiaomi has its own people, mature technical staff, and large number of fans; Xiaomi has the world’s best ecosystem.
If we understand the above points as people and elements, Xiaomi’s car making project has perfect timing, geographical advantage, and talent pool.
- Timing: Based on national policies
In recent years, the development of new energy vehicles in China has been rapid, but the space for growth is still large. According to statistics, at the end of 2020, China’s new energy vehicle ownership accounted for only 1.75% of the total car ownership, but the growth rate is extremely fast.According to the “New Energy Vehicle Industry Development Plan (2021-2035)” issued by the State Council, developing new energy vehicles is a necessary path for China to move from a major automobile country to an automobile power. By 2025, it is expected that the sales of new energy vehicles will account for 20% of the total automobile sales, and commercialization of highly automated driving in specific areas and specific scenarios will be achieved. By 2035, pure electric vehicles will become the mainstream of vehicle sales, and the use of electric vehicles in the public domain will be fully realized.
The country strongly supports new energy and automobile electrification, and Xiaomi’s entry at this time still belongs to the dividend period.
- Advantage: Market Orientation
In addition, automotive technology is undergoing rapid changes, and its development of intelligence, networking, electrification, and sharing cannot be achieved without the promotion of software technology. From a numerical point of view, when we open the automobile software library of a high-end car, we find that the software code has reached nearly 150 million lines, and this number will exceed 200 million lines in the future, far exceeding the 14 million lines of software code for Boeing 787. “Software-defined cars” have become a new trend in the automotive industry.
The definition and attributes of automobiles have quietly migrated. It is changing from a typical mechanical product to a power electronic product, an Internet product, and an electronic information high-tech product based on mechanical products. It is a walking machine and also a “data-driven experience, software-defined car” mobile intelligent terminal.
Understanding a car as a mobile intelligent terminal, just as a phone is an intelligent terminal, software-defined cars have become a new platform for the development of the Internet. Xiaomi, with its rich ecosystem applications, can be transferred to the automotive field, giving cars new connotations and meanings.
- Human Resources: Looking at Xiaomi’s Heritage
Yes, after reviewing Xiaomi’s ten years, it has a solid foundation and deep heritage.
From the beginning of making intelligent phones to the present, Xiaomi has a stable global third-ranked smartphone business.
Xiaomi has loyal fans and users. Before the press conference, Xiaomi’s official microblog did a survey, nearly 20,000 people participated, and 92% of them chose “support Xiaomi’s car-making”.
For technology companies, the most critical points are money and talent. As of the end of 2020, Xiaomi had a total cash accumulation of 108 billion yuan. Xiaomi has more than 10,000 R&D engineers, and will recruit another 5,000 in 2021.Xiaomi has replicated its experience in making smartphones to many other fields such as smart TVs, smart home products, laptops and more. This has not only ingrained Xiaomi’s brand as the leader in high-quality and cost-effective products but also formed an ecosystem around smartphones which includes investing and incubating in smart hardware. Now, Xiaomi’s ecosystem is centered around smartphones and includes smart hardware, household products, office supplies and more which cover all aspects of our lives and have strong binding effects. So, what will happen if this synergetic effect extends to cars?
Xiaomi entering the car industry may seem “fast” compared to Apple, who is not fully prepared to enter this industry. However, Xiaomi has the advantage of timing, location and people in China, making it the right time to enter the industry now.
In summary, Xiaomi’s decision to enter the car industry is already set in stone and it is worth looking forward to. Nowadays, “Lei Buxi” has become “Lei Sike”. When it comes to competing with the real “Musk” electric cars, it will be exciting to see how the competition unfolds.
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.