Foreign media: Xiaomi's car manufacturing is underestimated, and the "smartphone on the wheel" really needs to come

On October 17th, it was announced that since 2014, Apple has been committed to promoting a secret project called "Titan" aimed at creating a true electric vehicle. Apple has replaced four leaders of the Titan project and has repeatedly changed its vision for cars

On October 17th, it was announced that since 2014, Apple has been committed to promoting a secret project called "Titan" aimed at creating a true electric vehicle. Apple has replaced four leaders of the Titan project and has repeatedly changed its vision for cars. In the past few years, Apple has spent over $1 billion on this project, but has not yet launched an electric vehicle. Even worse, Apple's proud tradition of confidentiality has been broken, resulting in many negative information being exposed by the media.

In the same year that Apple engineers began developing the Titan car, Xiaomi invested 84 million yuan in cartographer Kailide. This is Xiaomi's first investment in electric vehicle related technology, which later involved fields such as batteries, chips, charging, lithium, and autonomous driving. Meanwhile, Xiaomi announced in 2021 that it expects to invest $10 billion in the smart electric vehicle business over the next 10 years. Currently, Xiaomi plans to release its first electric vehicle, codenamed MS11, or Modena. Once approved by Chinese regulatory authorities, Xiaomi plans to go public in the first half of next year.

It is not yet clear whether Xiaomi will succeed in entering the electric vehicle industry. But from the enthusiastic loyal fans of the company, Modena is likely to have significant sales from the beginning. According to Xiaomi, there are 13 million people in China who own at least five different Xiaomi devices or appliances, excluding smartphones. These people may become early users of Modena.

Although Apple is Xiaomi's strongest competitor in smartphones, Xiaomi may steal Apple's lead in the automotive industry. Apple has been trying to establish a foothold in the automotive industry for many years, and although Xiaomi has also made mistakes, it has established a car manufacturing department that covers the entire manufacturing chain and seems likely to become the first smartphone manufacturer to produce electric vehicles. Both Xiaomi and Apple did not comment on this.

However, the author of this article states that he rarely hears people around him discussing Xiaomi's electric vehicle plan. This viewpoint may be short-sighted or dangerous. Firstly, as the first electric vehicle produced by an electronic device manufacturer, the Modena may eventually become the true 'smartphone on the wheels'. This phrase means that electric vehicles are expected to become the main source of revenue and driving force for electric vehicle manufacturers in the future.

Apple earns hundreds of billions of dollars annually from its iPhone business, making it the company with the highest market value. Therefore, car manufacturers may achieve similar success in the field of electric vehicles. However, traditional car manufacturers only have vague descriptions of the sources of revenue brought by electric vehicles. It can be said that currently there is no electric vehicle that can be called a "smartphone on the wheel", they are still just cars.

However, if Xiaomi's goal is to produce "smartphones on the wheels," then Xiaomi, which has achieved great success in the smartphone business, seems more likely than traditional car manufacturers to develop a blueprint for internet connectivity.

Before Xiaomi, another equipment giant also attempted to enter the field of electric vehicles. In 2015, vacuum cleaner designer James Dyson announced that he would produce electric vehicles powered by his own solid-state batteries and formed a team in a UK laboratory. However, four years later, Dyson cancelled the project, despite having already spent $612 million at the time. He said it's too difficult to make money in the field of electric vehicles! Most players entering this industry find it very difficult to expand, compete, and make money.

In 2004, Xiaomi founder Lei Jun sold the online bookstore Excellence Network to Amazon for $75 million. Later, he founded Xiaomi and ran a series of other companies, becoming a venture capitalist. Just four years later, Xiaomi became the world's third largest smartphone seller, second only to Samsung and Apple, and has maintained this position.

In the following years, Xiaomi acquired or invested in BYD Semiconductor, autonomous driving startups (including Geometry Partners, Zongmu Technology, Shendong Technology, Black Sesame Technology, etc.), battery manufacturers (Honeycomb Energy and WeLion), lithium producers (Ganfeng Lithium), electrolytic salt manufacturers (Xinchen New Materials), etc. Analysts say that as of mid year last year, Xiaomi had acquired a total of 74 shares in electric vehicle related companies.

In the document submitted to regulatory authorities in 2021, Lei Jun announced that Xiaomi will enter the electric vehicle industry and plans to invest $10 billion in the development of electric vehicles, launching its first model in the first half of 2024. Lei Jun said at the time, "I am willing to bet on all the achievements and reputation I have accumulated in my life to fight for Xiaomi Motors. And Xiaomi Motors will also be fully prepared to sprint for 5-10 years

Analysts say that Lei Jun seems really interested in electric vehicles and autonomous driving functions. But another reason for his decision is that the growth of smartphone sales is slowing down. Analysts say smartphone sales are nearing saturation. Lei Jun believes that electric vehicles will become the foundation for Xiaomi's next explosive growth.

In February of this year, two blurry spy photos allegedly of Modena cars appeared on the industry website RushLane. The first photo shows a stylish white sedan with a full glass roof. Another photo shows the identification plate of the battery. If true, this means that the battery capacity is quite large, reaching 101 kilowatt hours, which is similar to the Tesla ModelS battery. This indicates that Xiaomi's car may have a range of well over 300 miles (approximately 480 kilometers) after each full charge. Daniel Ives, an analyst at Wade Bush Securities, said, "Xiaomi has sounded the alarm for Tesla and other Chinese companies

People who are interested in consumer electronics products in China suggest understanding Xiaomi and focusing on its smartphone strategy, which involves embedding most of its competitors' fancy features into their phones, adding highlights such as Leica's dual wide-angle camera, and selling them at prices far lower than major local competitors such as Huawei, OPPO, and vivo. Although Xiaomi sells approximately 150 million smartphones annually, its profits are minimal. This is intentional as it attempts to expand market share by competing with other suppliers. On the contrary, Xiaomi's biggest profit comes from services provided on its phones, such as cloud storage, music streaming, TV programs, movie and game subscriptions, and lending applications.

Bill Russo, an automotive industry consultant based in Shanghai and former Chrysler executive, predicts that Xiaomi will adopt a similar strategy in the electric vehicle industry. The company will equip the Modena with various features and sell it at a much lower price than Tesla and BYD models. Russell explained, "This is their brand differentiation, so wait and see

So, what functions will Xiaomi Motors have? Since Lei Jun initially invested in Kailide in 2014, Xiaomi's press releases, acquisitions, and investments have shown that the company has made significant efforts in developing autonomous driving capabilities, and Apple and Tesla also attach great importance to this technology.

In an August 2022 press release, Xiaomi stated that the company had formed a research and development team of over 500 people to study the autonomous driving function of its electric vehicles and develop chips, sensors, and algorithms. Therefore, as long as approved by Chinese regulatory authorities, Modena will support autonomous driving. At present, Chinese consumer cars are allowed to be equipped with L2 level auxiliary driving systems, which means that as long as the driver's eyes are fixed on the road, they can achieve autonomous driving on highways with maps. Analysts expect that Modena will have at least L2 level autonomous driving capabilities.

Xiaomi is waiting for the final regulatory approval from the Ministry of Industry and Information Technology of China, and analysts believe that Xiaomi's application is highly likely to be approved. During the financial report conference call in August, Xiaomi President Lu Weibing stated that the electric vehicle would be released next year. Analysts expect Lei Jun to announce this model at the Beijing Auto Show scheduled for April 25th to May 4th.

Rosso believes that if traditional automakers want to succeed, they must closely monitor Xiaomi's operations in the electric vehicle business and strive to follow suit. At present, he found that their views on the automotive industry are "very similar to the views of Nokia and Motorola on the phone", that is, they only consider mobile phones as phones, a single dimensional product sold by Nokia and Motorola.

On the contrary, Rosso stated that modern business models involving mobile phones and electric vehicles should focus on earning income from services provided to users or drivers.(Small)