Shulou(Shulou.com)11/24 Report--

According to news from Oct. 17, Apple has been working on a secret project called Titan to create a real electric car since 2014. Apple has replaced four Titan project leaders and changed its vision for cars several times. Apple has spent more than $1 billion on the project over the past few years, but has yet to launch an electric car. To make matters worse, Apple's proud tradition of secrecy has also been broken, resulting in a lot of negative information being exposed by the media.

In the same year that Apple engineers began to develop Titan cars, Xiaomi invested 84 million yuan in cartographer Khalid. This is Xiaomi's first investment in electric vehicle-related technology, and then it has been involved in battery, chip, charging, lithium, self-driving and other fields. Meanwhile, Xiaomi announced in 2021 that it expects to invest $10 billion in smart electric vehicles over the next 10 years. Xiaomi now plans to launch its first electric car, codenamed MS11, or Modena. Once it gets final approval from Chinese regulators, Xiaomi plans to list in the first half of next year.

It is not clear whether Xiaomi's foray into electric vehicles will be successful. But judging from the company's avid fans, the Modena is likely to have sizeable sales from the start. According to Xiaomi, 13 million people in China own at least five different Xiaomi devices or appliances, not including smartphones. These people may become early users of Modena.

Although Apple is Xiaomi's strongest competitor in smartphones, Xiaomi is likely to steal the limelight from Apple in the automotive sector. Apple has been trying to gain a foothold in cars for years, and Xiaomi, despite its mistakes, has established a car manufacturing division that covers the entire manufacturing chain and seems likely to become the first smartphone maker to produce electric cars. Neither Xiaomi nor Apple commented.

However, the author says he rarely hears people around him talking about Xiaomi's electric car plans. This view can be short-sighted or dangerous. First, as the first electric car produced by an electronic device manufacturer, the Modena may eventually become a true "smartphone on wheels". This phrase means that electric vehicles are expected to be the main source of income and driving force for electric car manufacturers in the future.

Apple earns hundreds of billions of dollars a year from its iPhone business, making it the most valuable company. As a result, carmakers are likely to have the same success in electric vehicles. However, traditional carmakers only vaguely describe the source of revenue generated by electric vehicles. It can be said that there are no electric cars that can be called "smartphones on wheels". They are still just cars.

However, if Xiaomi's goal is to produce "smartphones on wheels", Xiaomi, which has been hugely successful in the smartphone business, seems more likely to develop a blueprint for internet connectivity than traditional carmakers.

Before Xiaomi, another equipment giant also tried to enter the field of electric vehicles. In 2015, vacuum cleaner designer James James Dyson announced that he would build an electric car powered by his own solid-state battery and set up a team in a UK laboratory. Four years later, however, Dyson cancelled the project, even though it had already spent $612 million. 'it 's too hard to make money in electric cars,'he said. Most players who enter the industry find it difficult to scale up, compete and make money.

In 2004, Xiaomi founder Lei Jun sold the online bookstore Zhuoyu.com to Amazon for $75 million, and later founded Xiaomi and ran a series of other companies to become a venture capitalist. Just four years later, Xiaomi has become the world's third-largest smartphone seller, after Samsung and Apple, and has maintained that position.

In the next few years, Xiaomi acquired or invested in BYD semiconductors, self-driving start-ups (including Geometry Partners, Zongmu Technology, Deep Motion Technology, Black Sesame Technology, etc.), battery manufacturers (Honeycomb Energy and WeLion), lithium producers (Ganfeng Lithium Industry), electrolytic salt manufacturers (Xinchen New Materials), etc. As of the middle of last year, Xiaomi had acquired stakes in 74 electric vehicle-related companies, analysts said.

In a regulatory filing in 2021, Lei Jun announced that Xiaomi would enter the field of electric vehicles and planned to invest $10 billion in the development of electric vehicles, launching its first model in the first half of 2024. "I am willing to bet all the achievements and reputation I have accumulated in my life to fight for Xiaomi," Lei Jun said at the time. Xiaomi, on the other hand, will be ready to sprint for 5-10 years. "

Analysts say Lei Jun seems really interested in electric cars and self-driving features. But another reason for his decision is that smartphone sales growth is slowing. Analysts say smartphone sales are close to saturation. Lei Jun believes that electric cars will be the basis for Xiaomi's next blowout growth.

In February, two blurry espionage photos of allegedly Modena cars appeared on the industry website RushLane. The first photo shows a stylish white car with an all-glass roof. Another photo shows the sign of the battery. If true, this means that the battery capacity is quite large, reaching 101kWh, similar to Tesla's ModelS battery. This suggests that Xiaomi's car may have a range of well over 300 miles each time it is fully charged. "Xiaomi is a wake-up call for Tesla and other Chinese companies," said Daniel Ives, an analyst at Wade Bush Securities.

Chinese consumer electronics watchers advise understanding Xiaomi and its smartphone strategy of embedding most of the fancy features of competitors in their phones, adding highlights such as Leica dual wide-angle cameras and selling them at far lower prices than their main local competitors Huawei, OPPO and vivo. Although Xiaomi sells about 150 million smartphones a year, its profits are small. This is intentional because it tries to expand market share by competing with other suppliers. Instead, Xiaomi's biggest profits come from services offered on its phones, such as cloud storage, music streaming, TV shows, movie and game subscriptions, and lending apps.

Bill Bill Russo, a Shanghai-based auto industry consultant and former Chrysler executive, predicts that Xiaomi will adopt a similar strategy in electric vehicles. The company will equip the Modena with various functions and sell them at much lower prices than Tesla and BYD models. Rosso explained: "this is their brand differentiation, so wait and see!"

So, what functions will Xiaomi have? Since Lei Jun first bought a stake in Khalid in 2014, Xiaomi's press releases, acquisitions and investments show that the company has made great efforts to develop self-driving capabilities, which Apple and Tesla also attach great importance to.

In an August 2022 press release, Xiaomi said it had formed a research and development team of more than 500 people to study the self-driving functions of its electric vehicles and to develop chips, sensors and algorithms. Therefore, Modena will support autopilot as long as it is approved by Chinese regulators. At present, Chinese consumer cars are allowed to be equipped with L2-level auxiliary driving systems, which means that as long as drivers keep their eyes on the road, they can drive themselves on highways with maps. Analysts expect the Modena to have at least L2 autopilot.

Xiaomi is awaiting final regulatory approval from China's Ministry of Industry and Information Technology, and analysts believe Xiaomi's application is highly likely to be approved. In an earnings call in August, Lu Weibing, Xiaomi's president, said the electric car would be released next year. Analysts expect Lei Jun to unveil the model at the Beijing Auto Show scheduled for April 25 to May 4.

Rosso believes that if traditional carmakers are to succeed, they must keep a close eye on Xiaomi's operations in the electric vehicle business and try to follow suit. At present, he finds that their view of the auto industry is "very similar to what Nokia and Motorola think of phones", that is, they only think of mobile phones as phones, a single-dimensional product sold by Nokia and Motorola.

Instead, Mr Rosso says modern business models involving mobile phones and electric cars should focus on generating income from services provided to users or drivers.

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