Xiaomi, which did not catch up with the early market, faces many competitors and it is not easy to occupy a place in the market.
On February 19, 2021, news that Xiaomi was determined to build a car triggered fluctuations in the capital market. The stock price of Xiaomi Group (stock code: HK0181) once rose by more than 12% during the session, and by the close of trading, the increase was 6.42%.
In fact, rumors about Xiaomi building cars are not the first time, nor are they groundless. Xiaomi has made it clear many times before that "Xiaomi has no plans to build a car" and "anyone who says Xiaomi is going to build a car is fake news." Looking at the statements and reactions this time, there are some expectations and room for imagination.
The complex between Lei Jun and others
As the founder of Xiaomi, Lei Jun is familiar to everyone. He is a technical expert and has been a venture capital investor. He has advanced ideas, first-class vision and innovative spirit.
Lei Jun’s passion for cars began many years ago. As early as seven years ago in November 2014, Shunwei Capital founded by Lei Jun invested in NIO. It is said that he also visited Musk in Silicon Valley at that time, which shows that he is indeed forward-looking. Since then, he also invested in another car company, Xpeng Motors.
Building cars is not a business activity unique to a technology company. In recent years, a number of technology giants have entered the business. In the past, LeTV, which had been planning for several years and remained determined, was joined by mobile phone giants Apple, Samsung, and Huawei, as well as Internet giants BTA (Alibaba, Tencent, Baidu), Sony, and Foxconn.
It can be said that in the field of automobiles, Xiaomi waited and watched with foresight, but did not really participate in it. As the founder of Xiaomi, Lei Jun only participated in the car manufacturing industry as a strategic investor.
Why are technology companies so interested in building cars that they have crossed over to get involved?
A recent piece of news cannot help but arouse our deep thought and vigilance.
Lifan's first "Production and Sales Report" this year shows that in January this year, Lifan produced 105 new energy vehicles, a year-on-year increase of 600; it sold 107 vehicles, a year-on-year increase of 613.33. In sharp contrast, it produced 12 traditional passenger cars in January, a year-on-year decrease of 91.6; it sold 1 unit. A year-on-year decrease of 98.18.
One month, 107 to 1, such a disparity is staggering. This also reflects the current situation of the auto market: smart cars are gaining momentum, while sales of traditional cars have declined severely. Therefore, Lifan is leaning towards the new energy electric vehicle industry through restructuring.
"Smart cars are another epoch-making disruption after smartphones, but their scale impact and market growth will far exceed that of mobile phones. In the context of the new 'new four modernizations' "The upgrade of EE architecture will drive the value focus of the automotive industry to shift from hardware to software, and the rules of the industry will be redefined, creating epic opportunities." This is a passage from an investment report by Essence Securities.
"The iterative development paths of smart cars and smartphones are very similar. They are both epoch-making products of the mobile Internet wave, and both follow the 'change of interaction - upgrade of architecture - evolution of ecology' This development path. Smartphones have subverted the traditional key-based interaction mode of feature phones, giving users a new touch experience, and realized a gorgeous transformation from communication tools to all-purpose 'scenario tools'; smart cars have also reproduced This path uses the car cockpit as a breakthrough, through intelligent instrumentation and autonomous driving changes, to transform the role of the car from a traditional travel tool into the most enjoyable 'mobile third space'," the report describes.
It is not difficult to understand why technology giants like Lei Jun, especially mobile phone giants Apple, Samsung, Huawei, and Xiaomi, the winners of the smartphone revolution, must actively deploy and cross-border smart cars. Come to the industry. There is no doubt that lagging behind may make the industry miss opportunities for development. After all, the market is big enough and the future is bright.
New car-making forces
There are certain similarities in history. In the mobile phone industry back then, the rising star Apple killed the old overlord Nokia. Today, this kind of iteration and change may be happening in the automobile industry.
"The changes in the automobile industry have opened a time window for the adjustment of the automobile industry chain and the expansion of the ecosystem. A new track has begun to be built, and a new marathon has begun." On February 20, Li Shufu said in Geely Group said in an internal speech.
"The traditional automobile industry chain is an industrial chain with mechatronics as the core; the new automobile industry chain is information and communication technology plus mechatronics to form an ecosystem industry chain. In this sense, automobiles The company is transforming into a software company.”
From this passage, it is not difficult to see Geely’s crisis awareness as a traditional car company.
"The new force in car manufacturing must be the future. The new force in car manufacturing is Apple, and the traditional car maker is Nokia." It is too early to say this, but if Xiaomi wants to build a car, it has to talk about its competitors.
Let’s start with Baidu, which entered the automotive industry as a vehicle manufacturer. On January 11 this year, Baidu and Geely Holdings joined hands to jointly form a smart electric vehicle company targeting the passenger car market. Baidu held 51 shares and Geely held 49 shares. On February 18, Robin Li said that the new brand and first investment had been completed. The executive director of the company has been established, and a new smart electric vehicle will be launched within three years.
As we all know, Baidu, which started out as a search engine, has accumulated a lot of experience in cloud computing and search. It has also been deeply involved in fields such as autonomous driving, Internet of Vehicles, and high-precision maps for many years. In the future, Baidu will use artificial intelligence, APOLLO autonomous driving, Baidu Maps, Xiaodu Vehicle and other intelligent technologies are applied to smart electric vehicles.
Let’s talk about Apple. On February 3, according to South Korea’s Dong-A Ilbo, Apple will invest 4 trillion won (approximately US$3.6 billion) in Kia Motors and cooperate with Kia in its factory in Georgia, USA. , produces electric vehicles.
In addition, Alibaba, SAIC and Zhangjiang Hi-Tech jointly build smart cars; Huawei cooperates with Changan and CATL.
Of course, the most noteworthy one is Tesla. Tesla has created an epoch-making smart car with its "Apple"-like business model. Li Xiang, the founder of Li Auto, once commented that "Tesla is the only smart car in the world." Because it is based on software and hardware, using the vehicle OTA as a bridge, it has achieved continuous upgrading and frequent use of the car, truly turning the car into a new one. Upgrade from "feature phone" to "smart phone".
Using software, Tesla updates the in-vehicle infotainment system and extends it to FOTA upgrades in core areas such as autonomous driving, body control, and battery management to improve the performance of the vehicle itself. More importantly, it realizes the profit model of software service charging, that is, charging for software application stores and advanced connection services.
It is also the success of Tesla that allows the outside world to see the hope of software-defined smart cars. This is also an important reason why the capital market spares no effort to give ultra-high premiums to new car-making forces.
In 2020, Tesla’s market value increased 7 times, and NIO’s highest increase was as high as 14 times.
Even Xpeng Motors and Li Auto, which were only listed in 2020, have soared in stock price, with their market value increasing by up to 300 yuan compared with the IPO. It can be seen that the outside world has given great affirmation to the future of the new energy vehicle industry.
Xiaomi’s advantage?
During Xiaomi’s 10th anniversary, Lei Jun proposed to upgrade the “mobile phone AIOT” strategy, and smart electric vehicles are undoubtedly the next growth pole.
Of course, technology companies have their advantages in crossing the automobile market. This refers to software rather than hardware. For example: Tencent is a supplier of smart car networking solutions. Huawei provides "three electrics" and chips to car companies.
In fact, the automotive software market is huge. According to McKinsey's forecast, the automotive software market will climb from US$34 billion in 2002 to US$84 billion in 2030, with a CAGR of 9 during the period, exceeding the overall compound growth rate of the software market.
If Xiaomi builds cars, the resources it has are mainly in the following aspects:
According to industry insiders, by 2025, many automobile OEMs are likely to It sells cars at close to cost and provides value to users primarily through software.
Can smart cars be reduced to 100,000 yuan? Maybe not too far away. On February 14, media reported that Tesla China President Zhu Xiaotong said that it was developing a cheaper model for the public, with an estimated retail price of only 160,000 yuan. However, this statement has not been officially recognized by Tesla. However, securities analysts believe that by taking advantage of the superior cost control capabilities of Chinese factories, Tesla still has strong room for downgrading, and the price of 100,000 yuan is not nonsense.
Of course, Tesla does not hesitate to cut prices. Its intention is to compete for market share and make money by relying on software. Tesla's self-driving software has acquired more than 3 billion miles of road data since its release in 2019, providing support for its Full Self-Driving Option Package (FSD). The price has also risen, from $5,000 to $1,000. USD, up 100.
Back to the topic, what would happen if Xiaomi built a car? At present, new technology giants entering the game and building cross-border cars mainly adopt an alliance model of cooperation with old players.
"Huawei Changan, Baidu Geely, Alibaba SAIC, Foxconn Byton, Apple Kia" are currently the most active alliance partners of technology giants entering the car manufacturing industry, that is, technology giants and traditional car companies.
Although Xiaomi has experience in cost control and industrial chain integration when making mobile phones before, its net profit margin is not high. In the third quarter of 2020, its net profit margin was 5.7. It can be seen that if Xiaomi builds a car across borders, it will not have an advantage in terms of hardware. Seizing the incremental markets such as intelligent connected vehicles, autonomous driving, and intelligent transportation is the strength and accumulation of technology companies.
At present, in Xiaomi’s smart car territory, it has invested in Kaili De, Weilai, Xiaopeng Automobile, and PATEO, registered and established the “Xiaomi Auto Network”, and laid out the Internet of Vehicles project. If Xiaomi really wants to enter the smart car industry, it will not be easy to occupy a place in the market if it fails to catch up with the early market and faces many competitors.