Lei Jun's anxiety! Xiaomi's car is in a race against time, and the game has been decided

A Xiaomi store is photographed by Jun

Author | Hu Kun

Edit | Wan Jiali

Source | Quest Technology (ID:tectech6)

Lei Jun's car ran fast, but he was still very anxious because he was still a long way from the front row.

After many Internet company founders were anxious, they ran to study life sciences and the universe. But Lei Jun firmly built the car this time.

In 1992, Lei Jun joined Kingsoft (03888.HK); in 2010, Lei Jun founded Xiaomi Group (01810.HK). Under its leadership, Xiaomi has successfully advanced to the world's top 500. Lei Jun, who should have been an investor at the age of "knowing the destiny of heaven" and enjoying the "quiet years", chose to set off again.

This time, the choice is a car. The object of Lei Jun's frequent diss, Apple, and Huawei, the biggest competitor in China, have already made business layouts in advance in the "unprecedented major changes in a hundred years" of automobiles.

"I decided to lead the team myself, and it was the last major entrepreneurial project of my life. I know what it means to make a decision, and I am willing to put on all the accumulated records and reputations in my life to fight for xiaomi cars. Choking up several times, on March 30, 2021, Lei Jun revealed to the outside world the reason for entering the automotive field.

After Lei Jun announced that Xiaomi car was built, the change of Xiaomi automobile shareholders was also full of suspense. What kind of mind is hidden behind this?

Entering 2022, Lei Jun, who is fighting for Xiaomi, faces difficult to say and easy.

01

Can you catch up?

Since the official announcement of the car, the progress of Xiaomi cars is indeed very fast.

Xiaomi Group's 2021 third quarter performance report mentioned that the number of smart electric vehicle teams has exceeded 500 people, compared with 300 people more than two months ago.

In terms of executives, the founding members of Xiaomi Automobile include Chairman Lei Jun, President Wang Xiang, Chairman Hong Feng of Tianxing Digital (Xiaomi Finance), Lu Weibing, President of China, Liu De, Director of the Organization Department, Zhang Feng, Chief of Staff, Lin Shiwei, CFO, He Yong, Vice President, Qi Yan, Senior Consultant, li Xiaoshuang, former general manager of Major Appliances, Yu Kai, former deputy chief of staff of Xiaomi, and Ye Hangjun, current chairman of the technical committee.

On the surface, Lei Jun seems to prefer to give power to someone he trusts. In fact, Lei Jun attaches great importance to the selection of people. He once said: 80% of the time in the early stage of entrepreneurship is selected.

This time, for Lei Jun, it was the last major entrepreneurship in his life, and people were naturally chosen.

It's just that these people can be seen more as the founding team that built Xiaomi cars. In the future, automotive professionals need Lei Jun to spend some effort to extend it. After all, for enterprises with Internet backgrounds such as Xiaomi, automotive talents cannot be "made" out of thin air.

Due to the lack of vehicle platform design and manufacturing capabilities and the accumulation of autonomous driving technology, Xiaomi Automobile will achieve its goals through investment and mergers and acquisitions + endogenous incubation. Investment and mergers and acquisitions are precisely the path that Lei Jun is good at.

As of the end of September last year, Xiaomi invested in a total of 62 companies in the field of intelligent vehicles, including 17 companies with intelligent driving layout, 13 enterprises with intelligent electric layout, and 6 enterprises with intelligent cockpit layout, of which 22 companies are new investments in 2021.

In terms of power batteries, Xiaomi has invested in a number of companies, including AVIC lithium batteries and Hive Energy, which rank third and fifth. It is worth mentioning that Xiaopeng Automobile may introduce AVIC lithium battery as a supplier. At present, AVIC lithium battery and Hive Energy are promoting listing.

In the field of motor and electronic control, Xiaomi department also participates in BYD semiconductors and smart core semiconductors focusing on MCU products in terms of motor electronic control. Since the experience of making mobile phones, Xiaomi understands the importance of chips.

These investments can also be seen that Xiaomi Automobile will highlight its characteristics in terms of technological attributes and interactive attributes in the future.

In addition, with the choice of Xiaomi car base to settle in Yizhuang, Xiaomi Automobile Company was also established.

Founded on September 1, 2021, Xiaomi Automobile Co., Ltd. has undertaken the heavy responsibility of vehicle manufacturing and settled in Yizhuang, Beijing. At the beginning of its establishment, its shareholder was Xiaomi Communication Technology Co., Ltd. A month and a half later, Xiaomi Communication Technology Co., Ltd. has withdrawn and changed to XIAOMI EV LIMITED, which is registered in Hong Kong, China. After penetrating, it was found that xiaomi ev limited was also registered on September 1, 2021, its registered capital was 1 million US dollars, and the first director was Zhang Feng, a partner of Xiaomi Group. In the layout of Xiaomi Group in Hong Kong and other places, Zhang Feng also plays an important role.

02

Path dependencies?

Looking at the development path of the new energy vehicle army, almost no enterprises can benchmark with the mergers and acquisitions of Xiaomi Automobile.

Xiaomi follows the path of Rebbs in the mobile phone industry chain. It is difficult for people to change their habits, and It is also difficult for Lei Jun's investment habits to change.

At the beginning of Xiaomi's car manufacturing, it has copied the business model of making mobile phones in the past, that is, through investment and mergers and acquisitions, the supply chain has been effectively integrated, and the reshaping of the industrial chain has been completed quickly at low cost. This path also confused the mobile phone industry at the time at the beginning, but xiaomi achieved rapid growth through this model. Since its establishment in 2010, Xiaomi has become a company with revenue of more than 100 billion yuan in only 7 years, and a fortune 500 company in 9 years.

This business model is copied into the automotive field, and from the perspective of less than a year, it has almost destroyed the industrial chain layout.

However, the complexity of the automotive industry chain is much greater than that of mobile phones. If you use traditional cars, there are more than 20,000 traditional auto parts and only more than 2,000 mobile phones. In new energy vehicles, due to the further strengthening of interactivity and technological attributes, their complexity is far greater than that of mobile phones.

The experience of Xiaomi making mobile phones seems to be difficult to completely replicate. It seems that the comfortable brother from the car to the mobile phone, it seems to be more lightweight.

And even if the supply chain system is mature, how to ensure the quality of parts and components and the overall quality of splicing into cars will be a common problem faced by Xiaomi and all new energy vehicle companies that rely on this model. After all, the automotive industry is more sensitive to reliability and safety, which is also a natural drawback of relying on investment and mergers and acquisitions to integrate the industrial chain model.

In this round of new energy automobile industry madness, with the help of capital, is the supply chain really trustworthy?

Entering the automotive industry, there is never a shortage of difficulties encountered. Musk also once fell into extreme anxiety and slept in the factory to deal with problems. From the safety of the three-electric system to the gloss of the body paint, the manufacture of a car from research and development design to test adjustment to delivery to consumers, may encounter endless problems, which is undoubtedly a major test for Xiaomi, which has no experience in vehicle manufacturing. With money, you can naturally intervene in the automotive industry, after all, the once closed automobile industry has opened its doors. However, having the money to apply many of the latest technologies to cars is incredibly cool. However, will this be a reliable and safe car?

Different from mobile phones, every quality problem and safety incident may endanger the life of the owner and have a negative impact on the brand of the car company. For example, before the delivery of the EX5, due to spontaneous combustion of the test car in the Chengdu R&D center, it led to a one-third chargeback rate, not to mention the impact of the brake failure on Tesla's overall brand.

Trust is hard to build, but it's easy to destroy, especially in the automotive industry. A castle built of 100 billion may become a ruin in a disaster.

It is often said that past successes may be a disaster for the future. Because most successful people will stick to the path that they relied on when they succeeded in the past, but this path may no longer be suitable for the unpredictable business world of the future.

For Lei Jun, this is still a problem that needs to be considered: in the past, the path of rapid growth in the mobile phone industry that relied on investment and mergers and acquisitions may not be fully applicable to the field of car manufacturing. How to find a balance between rapid expansion and quality control is the answer that Xiaomi car manufacturing needs to continue to pursue in the next decade or so.

However, from the education and training industry to the field of travel, we see that enterprises under the trap of capital have no scruples. Time is what they really value, and the rest may be just a wisp of smoke in the process of enterprises reaching the peak and capital profits fleeing.

03

Competition is fierce

The deep logic behind Xiaomi's car is related to the development of Xiaomi.

According to Canalys data, Xiaomi's global smartphone shipments in the third quarter of 2021 were 43.9 million units, down 7% year-on-year; its market share was 14%, ranking third in the world. Domestic Xiaomi smartphone shipments fell from 12.6 million units in the second quarter to 10.9 million units in the third quarter, and the market share fell from 17% in the second quarter to 14% in the third quarter, falling from third to fourth.

The golden age of mobile phones has quietly said goodbye to Xiaomi. From 2008 to 2016, after an era of rapid growth, the global smartphone growth increased from 150 million to 1.47 billion. After this, the shipment of smartphones showed a downward trend year by year, and the industry ceiling has come.

Satisfied with the status quo, Xiaomi may gradually become a "traditional enterprise". Lei Jun, who likes entrepreneurial challenges, does not want to survive the rest of his life in a conservative manner.

Lei Jun searched for a long time and found new energy vehicles.

The rapid penetration of electric vehicles has spawned the "greatest change in the automotive industry in a century". Without the technical barriers of the three major parts of traditional fuel vehicles, domestic cars seem to have the opportunity to overtake in curves. Similarly, the global auto giants have accumulated hundreds of years of technological advantages, and it seems that they will collapse in an instant. Musk published the electric vehicle technology patent in 2014, which added fire to this century-old change.

There is no burden of thinking of traditional car companies, and there are no scruples and new forces with crazy capital blessings, and they especially worship "software-defined cars". Internet companies firmly believe that cutting into the field of car manufacturing has a natural advantage. Of course, the intelligence of traditional enterprises has also accelerated in recent years, and the automobile has become the next important Internet technology application scenario after the mobile phone. How can Internet companies give up this huge market? Lei Jun, Li Yanhong and others, oblique thorns into the automotive field also have their strategic considerations.

Looking back at the development of smartphones, when the smartphone penetration rate reached 20% in 2010, the market began to enter the reshuffle stage. The reshuffle of new energy vehicles is also coming, and we will see an industry where many are still pouring in, and many will die. In the global passenger car market, electric vehicles are expected to reach a penetration rate of 20% by 2025. The Chinese market is more likely to exceed 20% before this. In 2021, the penetration rate of new energy vehicles will reach 17.8%, and the penetration rate will reach 20% in 2022.

And new energy subsidies have also declined this year and will end at the end of the year. This means that Xiaomi's car will inevitably fall into a cruel industry reshuffle after it comes out in 2024.

Of course, Xiaomi's choice to build a car is also in line with the trend of the times, and it is also a choice that must be made under the influence of the times.

However, there is really not much time left for Xiaomi and Lei Jun.

END