Writing by | Leng Zelin

Edited by | Wang Pan

On July 4th, Hubei Xingji Era Technology Co., Ltd., a subsidiary of Geely, and Zhuhai Meizu Technology Co., Ltd. jointly held a strategic investment signing ceremony in Hangzhou, officially announcing that Xingji Era holds 79.09% of the controlling rights of Meizu Technology and obtains sole control of Meizu Technology.

At the ceremony, Xingji Era Chairman Li Shufu and Meizu Technology founder Huang Zhang shook hands. Li Shufu leaned back slightly with ease, while Huang Zhang stood straight and even rigid, with similar smiles but possibly different emotions behind them.

Li Shufu, who previously crossed over from refrigerators to motorcycles and now to automobiles, is currently the leader of domestic independent brands. Geely Group is also gradually shrinking its encirclement in the new energy market, including satellites, chips, mobile phones, and car machines. Meizu is clearly part of this grand layout as well.

Meanwhile, Huang Zhang, another cross-border player, faced a bumpy road after transitioning from MP3 to mobile phones. The outcome is that Meizu has already lost its position in the ranking of mainstream mobile phone brands in China. Even with the trend of new energy, the possibility of Meizu relying on its own strength to compete with mobile phone manufacturers in the car machine field is almost zero. Backing the domestic “independent leader” is obviously the best choice.

The difference between the two is that one is just one piece of the puzzle, while the other is the “only” choice.

NIO defends against Apple, Geely becomes Apple

In the current trend of mobile phone manufacturers’ rush into the new energy vehicle field, there are also two representatives emerging among the main engine manufacturers, namely NIO and Geely.

NIO CEO Li Bin once stated that NIO’s entry into the mobile phone market is essentially not an offensive action, but a defensive one.

For example, the UWB digital key, which has become popular this year, can achieve non-contact operation (unlocking, starting, etc.) through UWB technology. However, Apple does not open the interface, so NIO users of the second-generation car models cannot achieve non-contact unlocking and other functions through Apple phones.

Therefore, we also see that in addition to the mobile phone UWB/BLE key, the ET7 also has NIO’s own UWB smart key and NFC functions.

However, it is obvious that vehicle unlocking and starting functions are just one node in the process of intelligent evolution of automobiles. In the current trend of closer integration between cars and phones, it is impossible to fully hand over more functions to a single key.

If Apple formally launches smart cars, it is highly likely to establish a high “ecological wall” to strengthen its coordination ability, which will lead to a decline in competitiveness or experience of the same type of cars. Apple can form a deep bond with cars through its high sales volume of phones, which is similar to the “high-frequency hits low-frequency” strategy often used by Internet companies.## The Defense Strategy of NIO and the Development Strategy of Geely in the Automotive Industry

NIO needs to defend itself, and at least Li Bin needs to ensure that NIO users won’t find their experience greatly downgraded due to Apple’s entrance. However, there are significant differences between Geely and NIO. Xingji Era Technology Co., Ltd. is located in Wuhan Economic and Technological Development Zone, where Geely has also set up other enterprises such as Eka Technologies, Lotus Automobile Headquarters/Production Base, and Xinqing Technologies. They correspond respectively to the car system, vehicle carrier, chips, and mobile phones, forming a huge layout that a new force automaker finds difficult to own. Although NIO also has a chip-making plan, based on the chip-making experience of Xiaomi and Huawei, it is difficult for new entrants to make technological innovations in the early stage.

According to Li Shufu, “Mobile phones are rapidly iterated mobile terminals and are also carriers for validating and innovating software in the electronics product market. They can quickly share successful innovations with users and transfer a part of the success that is safe and reliable to the application in cars, achieving a close interaction of car and mobile software technology.”

In other words, Geely hopes to transfer its experience from the mobile phone verification system to the car system by ensuring its reliability and usability. Additionally, with more than 3.2 million mass-produced vehicles of Eka, it can provide support for the development of chips by the Xinqing Technologies. In the end, all parties can complete the verification and debugging on the self-produced complete vehicles.

Recently, the “Dragon Eagle No.1 Display car”, jointly created by Eka and Xinqing Technologies, made its debut in Wuhan, and the “Dragon Eagle No.1” chip has also completed debugging and verification on multiple car models, and will be available one after another in the fourth quarter of this year.

It is not difficult to see that Geely’s speed in the past two years is constantly accelerating from development to commercialization.

While automakers such as NIO are wary of Apple’s entry, it seems that only Geely’s model is most in line with what Apple should look like in the new energy era, such as providing continuous updates and upgrades for its self-developed software and hardware based on its huge vehicle inventory.

Of course, completing such a positive cycle is also extremely difficult, and any link cannot go wrong.

Why Meizu

In February of this year, Yin Shujun, former president of Meitu Mobile, joined NIO to be responsible for its mobile phone business, and NIO also released mobile phone-related positions on recruitment websites. According to media reports, NIO’s mobile phone project was planned even before Xiaomi announced the car-making, with the team set up in Shenzhen.

Currently, there is no news about NIO’s acquisition or OEM, which is highly likely to be designed and developed by NIO itself. On the contrary, Geely announced its foray into the mobile phone industry last September and it has taken less than a year to acquire Meizu.

Shen Ziyu, Vice Chairman of Xingji Era, also shared some details at the ceremony. The project was launched in July last year, and from negotiation to final signing, it only took four months between Xingji Era and Meizu.

In addition to Meizu’s desire to enter the automotive industry, the “capital” of Meizu itself is undoubtedly the best target for Geely.On one hand, as a company that entered the mobile internet industry even before Xiaomi, Meizu has accumulated a lot of experience in user interaction and mobile phone design. Although its Flyme system has not become mainstream, it has consistently received high praise in history.

On the other hand, a 0.1% low market share is almost a big gift package prepared for traditional automakers like Geely who lack internet genes, which means Geely can quickly obtain a mature “product + system” and control over the enterprise itself at a lower price.

After this strategic investment, Shenziyu will concurrently serve as the chairman of Meizu Technology, while Huang Zhang will become a product strategy consultant. Other senior management teams of Meizu Technology remain stable. Although the official statement claims that Meizu Technology will continue to operate as an independent brand, it will obviously make way for the Xingji era.

For example, Shenziyu stated that Xingji era will focus on the high-end smartphone market, which actually conflicts with Meizu’s digital series flagship positioning.

It is worth noting that the Meizu 19, which was supposed to be released this year, did not arrive on schedule during the 618 event. Earlier, some media reported that Xingji era’s first mobile phone product will be launched at the beginning of next year, not for public sale, but will appear as a gift with a new car under Geely’s Lotus brand.

Combining the above information, this product is likely to be the Meizu 19 that was not released this year, or it will appear as the Geely special edition of the Meizu 19.

At the same time, this also leads to the third reason Geely purchased Meizu, that is, Meizu itself has a certain sales volume and popularity.

Mobile phones are also products that highly depend on economies of scale. Even if automakers like NIO can achieve a 100% purchase rate, in 2021, their annual mobile phone sales will only be equivalent to the delivery volume of vehicles, which is only 100,000 vehicles.

In 2021, Meizu’s sales volume was also 450,000 units, making sure Geely won’t have to start from scratch in an unfamiliar market.

Of course, what kind of sparks Geely and Meizu can create, and what kind of business model can emerge from the combination of mobile phones and cars, will require multiple integrations and adjustments.

The road to success is long and arduous, but Geely has taken the first step.

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.