This is the third in a series of articles that examines Chinese tech giants’ foray into EV production. EqualOcean previously covered Baidu and Huawei on this topic and will keep following new developments from this industry.
China's tech firms are entering the EV battlefield at an unprecedented pace and scale. The fast industry development led to vast discrepancies in the performance of the earliest entrants, with some degenerating into billion-dollar cautionary tales, as exemplified by the bankruptcies of Byton and Saleen, and others setting new records and becoming the face of the industry, such as Nio, XPeng and Li Auto.
Tech colossuses like Baidu and Huawei, with plenty of resources at their disposal, are also hitting this road, struggling to make cars by themselves. Xiaomi is another tech titan setting sights on manufacturing NEV recently. It pledged CNY 100 billion (USD 15.4 billion) in upfront R&D spending and could leverage its massive Internet of Things applications to build connected cars. Its first model is scheduled to be launched in 2024. This article will dive deep into Xiaomi's EV ambitions, highlighting some fundamental aspects such as delivery time, model design and ecosystem strengths.
The inception of Xiaomi NEV
Steve Jobs was to Apple what Lei Jun is to Xiaomi, the helmsman who’s steered the hardware behemoth from its humble origins to where it is now.
He believes that expanding into EV business is essential for the company. Lei started out with a computer science background in the nineties and soon became a famous angel investor as his career took off. In the last decade, he screened many EV projects and once even visited Elon Musk next to the Tesla assembly line in 2014.
In China, Lei is known for being a friend of the founders of many EV firms such as BYD, Nio, XPeng and Li Auto. To turbo-charge Xiaomi's EV dream, he performed due diligence on all the best Chinese EV supply chain companies, including Dongfeng, Bosh, GWM, SAIC, CATL and FAW in 2021. Lei disclosed that Xiaomi would announce its plan to branch out into EV production at the company's 2021 spring new product launch. He added that making EVs would be the final destination on his journey as a serial entrepreneur.
Before making any concrete move, Shunwei Capital (Chinese: 顺为资本), a venture fund started by Lei, and Xiaomi's other associated companies invested in about 100 NEV-related firms, including lithium producer Jiangxi Ganfeng Lithium, battery maker CATL, carmaker XPeng and self-driving company DeepMotion. These investments help Xiaomi get access to the best components and technologies, which will help address the supply-demand imbalance that is plaguing the industry now.
Xiaomi plans to launch its first EV model in 2024 with an annual designed capacity of 300,000 units. On March 30, 2021, Xiaomi Group established an automobile company, with Lei Jun appointed as the company's CEO. It is expected to invest CNY 10 billion at first and pour another USD 10 billion later on in the whole scheme. At the same time, Lei also disclosed that Xiaomi’s first automobile factory would be located in Yizhuang of Beijing. So far, the company has a development team consisting of 453 employees.
For Xiaomi, to debut its first model in 2024 sounds like a rather late move in China's fast-expanding EV market. Most EV startups rush to release a product, even a prototype, to generate hype and gain some exposure. After the launch, it usually takes several months, if not year, for them to produce a real car. The eagerness to get a first-mover advantage helped pave the way for the fast growth of Nio, XPeng and Li Auto. Although Xiaomi may have missed out on the best timing to enter the market, there still will be chances for latecomers who arrive on the scene even in 2024. This is because based on the estimates of China Passenger Car Association, the penetration rate of EVs was 15% in 2021 and is likely to reach 25% in 2024, meaning the industry will remain at an early adoption stage in the years to come.
What will a Xiaomi EV look like?
Though no information has been disclosed so far on Xiaomi’s EV prototype, it is widely expected to be an affordable car given Xiaomi's positioning as a middle to low-end brand in smartphones and other hardware devices.
Xiaomi started out as a cost-effective smartphone vendor, with most hit models priced at less than CNY 3,000. Interestingly, Lei once conducted a survey on Weibo that seemed to confirm the popular perception of his brand. The survey found that most of the respondents expected the price of Xiaomi's first car to be lower than CNY 100,000. But we at EqualOcean expect its first model to be above that price but less than CNY 200,000. Other than that, the vehicle should be tech-heavy, featuring an 800V charging platform and a long driving range, and is sold at the ubiquitous offline “Mi home” stores. Amenities like large central control screen, wireless charging, Mi car operating system, Mi AI voice assistant are also indispensable in our view.
Besides, a Xiaomi EV should be able to interact with its other ecosystem products. If Xiaomi has any obvious edge over other tech companies in carmaking, it is its ecosystem consisting of dozens of IoT devices. Hardware connectivity is critical for EVs. Nio’s recent decision to diversify into categories such as smartphone and AR sunglasses – ostensibly to improve user experiences – should be understood in this context. In a similar vein, Geely apparently recognizes the importance of phones as well, so much so that it acquired the handset manufacturer Meizu.
The primary paint point hampering the penetration of IoT devices today is the poor interoperability between products of various brands. But there is some interaction between mobile phones and smart cars. Almost all EV companies have developed apps that enable the phone to complete tasks like unlocking and opening doors. But this is only the beginning of a growing number of user cases where the phone serves as the entry point to more complex applications.
Users driving EVs generate a massive amount of data. As future EVs will be designed more as the extension of consumers’ living rooms – or practically a “third living room” – drivers are expected to spend more time in vehicles and perhaps generate more data than cellphones.
By that time, companies like Xiaomi, which will have a presence in both EV and smartphone sectors, can collect and analyze data from these two devices to iterate products and improve services. Ideally, a Xiaomi EV will automatically play a song once the user stops the music on a smartphone, with the switch more smooth and seamless than under Bluetooth or other data transmission protocol.
This is where Xiaomi, a player with prized IoT capabilities, can come in and make a difference. Over time, the more sophisticated interconnection between its IoT equipment – the EV included – will help Xiaomi mine more valuable data conducive to its development.