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SU7 Now that the chips are on the table, Xiaomi needs to repeat its success.

Text丨He Qianming Si Wenwen

Editor: Gong Fangyi

In 2018, Xiaomi went public in Hong Kong, catching up with the continuous decline in global smartphone sales, and its IPO price fell 1.18% on the day of its IPO. Lei Jun later bought a pair of ripped jeans to wear to remember this moment.

The pressure from the main business forced Xiaomi's management to actively explore new growth points. Model 3 Already released in China,NIO、XiaopengThe company is rushing to deliver its first car. As one of the few new opportunities in the market, electric vehicles are being explored by Xiaomi.

A former core employee of Xiaomi once told us that the staff department responsible for formulating Xiaomi's strategy took the lead in launching a project called "micar" to research car manufacturing. Wang Chuan, then Xiaomi's chief of staff, communicated with senior executives of companies such as Weilai and Xiaopeng many times to understand the industry situation. A year later, Wang Chuan took out a research report at a board meeting and suggested to Lei Jun that Xiaomi could start car manufacturing from the end of 2019 to the beginning of 2020.

However, the sudden downturn in the situation of new car companies has caused Lei Jun to temporarily suspend car manufacturing.TeslaOn the verge of cash flow interruption; Weilai, invested by Lei Jun, lost 10 billion yuan a year and its cash reserves were less than 900 million yuan at their lowest.

Just one year later, Tesla and NIO weathered the storm, with Tesla’s market value increasing eightfold, replacingToyotaIt has become the world's most valuable automaker. Weilai survived a near-death experience. The market value of this company invested by Lei Jun has rapidly expanded from about $8 billion to $100 billion, surpassing Xiaomi. As global smartphone shipments continue to decline, a person close to Lei Jun said that some Xiaomi employees jumped ship to new car companies at the time, and Lei Jun was worried that "if we don't build cars, everyone will run away."

On January 15, 2021, the United States restricted capital investment in Xiaomi, which became the starting point for Xiaomi's public version of car manufacturing. Lei Jun used this as the opening of his speech on July 19, 2024, and in the next 70 minutes or so he said two things: why and how to build a car.

Lei Jun said that after learning of the US decision, Xiaomi held an emergency board meeting to discuss what the company should do if the mobile phone business could not be carried out. At this meeting, car manufacturing was once again put on the agenda. In the next half month, Lei Jun, Wang Chuan and other Xiaomi executives went to several car factories for research, and the conclusion soon surfaced: Xiaomi's entry into car manufacturing is the best choice.

On February 9, 2021, we exclusively disclosed that Xiaomi has decided to build cars.

The market was excited about this and Xiaomi's stock price rose by more than 10% that day.

At that time, Lei Jun was convening a meeting with dozens of mid-level and senior executives. The topic was no longer whether Xiaomi should build a car, but what factors would cause Xiaomi to fail in building a car. A participant said that the market had already given them the answer.

After Xiaomi decided to build a car, the media reported that Xiaomi had discussed that Wang Chuan might be the person in charge of building a car. He has led a team to research and develop cars for many years. During Xiaomi's expansion period, Wang Chuan built a TV business in addition to mobile phones. Lei Jun also mentioned in his speech on the 19th that he did not want to lead the team to build a car at first, but the board of directors asked him to take charge.

But in the end Lei Jun decided to leave on his own.

The project was launched with Xiaomi's money and people, aiming to compete with Tesla Model 3

In September 2021, Lei Jun released the first group photo of Xiaomi's 17-member core team for car manufacturing. Only Li Tianyuan, who was in charge of design, joined from outside, while the others were senior executives of Xiaomi Group or transferred from there.BMWThe chief designer of the pure electric vehicles iX and i7 is now responsible forXiaomi MotorsHe resigned in 2021 to join Xiaomi and is one of the members of the automotive team specifically mentioned in Lei Jun's speech.

Served asauspiciousHu Zhengnan, the director of the research institute, was also included in Lei Jun's presentation on July 19. Hu Zhengnan, who has more than 20 years of experience in car manufacturing, is another key figure.

He led the development of the platform and product architecture of many Geely models. After Xiaomi announced its plan to build cars, he told Lei Jun that his contract with Geely had expired and that he "especially wanted to know how Internet companies build cars". After leaving Geely, Hu Zhengnan first became a partner of Lei Jun's Shunwei Capital, and later served as Lei Jun's car-building consultant, assisting in the management of Xiaomi's vehicle hardware, power department and other core departments, and helped Xiaomi recruit many engineers from Geely Research Institute.

Today, Xiaomi's automotive team has 7,000 people, most of whom come from the automotive industry. A person close to Xiaomi said that Xiaomi Auto mainly relies on "building cars from scratch" and "giving more room for training" to attract candidates. Its salary is higher than that of traditional car companies or automotive suppliers, but lower than that of new car companies such as Ideal, Weilai, and Huawei.

More than 100 people transferred from Xiaomi Group, including Yu Kai, who is in charge of the cockpit department, and Ye Hangjun, who is in charge of the intelligent driving department. The separately formed car sales team is led by Lu Weibing, partner and president of Xiaomi Group, and reports to Lei Jun.

Compared with the lack of talent in car manufacturing, Xiaomi had relatively abundant funds in the early stage of car manufacturing. At the beginning of 2021, Xiaomi's cash reserves exceeded 100 billion yuan, which was larger than a number of new car companies and traditional car companies. Lei Jun believes that cars will also have an end game, and it will be a winner-takes-all game like mobile phones. Only by being among the top five in the world can it survive.

Lei Jun said this is also Xiaomi's long-term goal for making cars. He therefore rejected venture capital and decided to invest in making cars with Xiaomi Group, with an initial investment of 10 billion yuan and a plan to invest 10 billion US dollars in the next 10 years.

In 2021, Model 3 wholesale sales in China approached 300,000 units.Wuling Hongguang MINI Later, it became the second largest new energy vehicle product in China. At that time, the first car of almost all new Chinese car companies was an SUV, not only because SUVs were more popular than sedans in China, but also because they wanted a theoretical range of more than 500 kilometers. The thickness of the battery pack laid flat on the chassis was more than 12 cm, and the SUV had more space inside the car, which could reduce the impact of the battery pack on the space.

Another person close to Lei Jun said that another important motivation for Lei Jun to make cars priced over 200,000 yuan is to build a high-end brand. "As long as the brand is established, we can make a car priced at 100,000 yuan at any time."

From making cars to selling them, Xiaomi tries to reduce the probability of errors in its first car

As far as we know, Xiaomi started pre-research on automobiles in the second quarter of 2021 and plans to enter the small-scale production stage in the third quarter of 2023. This means that they need to complete a series of links such as engineering analysis and design, industrialization approval, mold development, and test verification within two years to prepare for mass production in the first quarter of 2024.

An engineer who used to work for a large joint venture car company praised the development speed of Xiaomi Auto, saying that it usually took them four years to develop a whole vehicle.

Most new car companies have adopted the strategy of conservative development of the first car and accelerated iteration in the later stage. For example, the chassis of Tesla's first-generation Roadster was modified from the Lotus Elise sports car; Ideal ONE chose the extended-range route of burning oil; Xiaopeng G3 test car was covered with a shellLexus NX。

One of Xiaomi's ways to shorten the development cycle of new cars is to try to use solutions that are fully verified by the market: the appearance of SU7 is similar toPorsche Taycan, headlights likeMcLaren 720S; the CTB battery integration technology has been used in Tesla,BYDThe intelligent driving BEV+Transformer route is also the choice of most car companies; as for one-piece die-casting, under the demonstration of Tesla, more car companies have gradually incorporated it into the manufacturing process.

Xiaomi also selected SU7 suppliers with a similar mindset, such as the brake controller from Bosch, the brake caliper from Brembo, and the CDC damper from ZF. A person close to Xiaomi's suppliers commented that Xiaomi Auto was very "solid" in selecting suppliers, basically only global first-tier suppliers were selected, and the supply chain team was also familiar with the market and market conditions, with clear negotiation targets, "not like a novice."

There are some exceptions, such as the one-piece die-casting machine that did not use Lijin or Buhler's die-casting machine but was customized by Haitian. People close to the bidding said that Haitian's low price and high degree of cooperation were one of the keys to winning the bid.

In the production and manufacturing link that can easily become a bottleneck for the project, Xiaomi finally chose to build its own factory from the beginning, rather than outsourcing in the early stage like Weilai, Xiaopeng, and Ideal. This is a risky move. In addition to the large investment, the competent authorities are very strict in approving the qualifications of new car manufacturers in order to prevent overcapacity. To this day, there are very few car companies that have independently obtained licenses after 2020.

One year after the announcement of car manufacturing, in April 2022, Xiaomi’s automobile factory started construction in Yizhuang, Beijing. The entire project is divided into two phases, with an annual production capacity of 300,000 vehicles. The second phase of the factory will be completed in early 2025.

In terms of selling cars, in addition to price and the influence of the founder, Xiaomi Auto also uses the sales channels of the mobile phone business, namely the tens of thousands of Xiaomi stores opened by Xiaomi and its huge dealers (expanded as needed), as well as newly built direct delivery centers and dealer stores - direct sales + distribution has also been verified by peers - in addition to Tesla, now Xiaopeng,Nezha、Zeekr、Avita, BYD Tang and others have already turned to dealers to a large extent or completely.

Currently, Xiaomi Auto places the delivery link, which is more noticeable to users, in its own delivery center, and dealers are mainly responsible for after-sales services such as agency sales and repair and maintenance. The first batch of dealer stores are mainly located in auto malls in first- and second-tier cities. A person close to Xiaomi Auto dealers said that Xiaomi's requirements for store decoration are relatively pragmatic. For a 4S store of more than 3,000 square meters, the cost of replacing the decoration of other brands with Xiaomi can be controlled within 2 million yuan.

As of June 30, Xiaomi Auto has 87 stores. Lei Jun said that by December 2024, Xiaomi Auto will have 220 sales stores. This is the number that new forces such as Xiaopeng and Ideal can achieve after about six years of establishment.

After "squeezing onto the table", Xiaomi's second car is undergoing mass production verification

In August 2011, Xiaomi released its first mobile phone, and sold 400,000 units in less than half a year, far exceeding the market and Lei Jun's expectations, and within a few years it ranked among the top three in the Chinese market. However, as companies such as Huawei, OPPO, and vivo invested heavily, Xiaomi's sales channels fell behind its competitors, and in 2016 it encountered supply chain problems, with many products delayed in delivery, and once fell out of the top five in the Chinese market.

Lei Jun called this period a do-or-die moment for Xiaomi in 2020, saying that “no company has ever successfully reversed a sales decline.”

Competition in the automotive industry is equally fierce.FordThis century-old car company has also begun to fall behind because of its failed three-cylinder engine strategy in the Chinese market.Volvo, Jaguar,Land RoverevenRolls-RoyceThe brand has changed hands several times.

Like Xiaomi mobile phone in 2011, Xiaomi Auto caught up with a rare brand birth window in a cruel industry - the huge Chinese market expects local brands, and technological changes allow new companies to cross the moat of old giants.

Every global car brand known today was first established through a series of successful products. The most recent is Tesla, which launched Model S、Model 3、Model Y Three successful products and three sales leaps have established economies of scale and built the brand. Today, we can maintain sales without competing on price or even launching new products.

Xiaomi's second car has entered the mass production verification stage and is expected to be released in the first half of next year. According to multiple media reports, it will be a pure electric SUV that competes with Tesla's Model Y. Several people close to Xiaomi said that the new car and SU7 share the same platform and a certain proportion of parts. There are only some clues about the third car. Some say it is an extended-range SUV, some say it is a modified SU7, and some supply chain people speculate that it is a more popular model within 200,000 yuan.

In his speech on July 19, Lei Jun reviewed the initial lack of optimism about the Xiaomi SU7 and the insufficient production capacity after its launch, and said with emotion that Xiaomi Auto "finally made it to the table." Now it has to repeat the success of the SU7 - and keep repeating it.

Li Zinan and Zhao Yu also contributed to this article.

Title image source: Movie "Fast and Furious"