On the afternoon of November 15th, the term “Xiaomi Cars” surged to the top of Weibo’s trending topics.
On the same day, in the “Announcement of Road Motor Vehicle Production Enterprises and Products” (Batch 377) issued by the Ministry of Industry and Information Technology, two models of Xiaomi-branded electric cars were listed.
Reportedly, Xiaomi’s first car is a pure electric sedan with the models SU7 and SU7 Max, measuring 4.997 meters in length. The main difference between the two models lies in the power, with the former having a peak motor power of 220KW, and the latter 275KW, possibly indicating a high-performance version. The batteries are respectively phosphate iron lithium batteries (Xiangyang Fudi Battery) and ternary lithium-ion batteries (CATL), with Xiangyang Fudi Battery being a subsidiary of BYD.
The announcement reveals that the product models of Xiaomi-branded electric sedans are BJ7000MBEVR2 and BJ7000MBEVA1. The declaring enterprise is Beijing Automotive Group Off-Road Vehicle Co., Ltd., and the declared production address is “No. 21 Huanjing Road, Beijing Economic and Technological Development Zone.”
According to information from Tianyancha, on November 3rd, Xiaomi Jingming Technology Co., Ltd.’s Beijing First Branch was established, with Lei Yun as the person in charge. Its business scope includes software development, data processing services, communication equipment sales, electronic product sales, etc. The headquarters is Xiaomi Jingming Technology Co., Ltd., and the registered address of the branch is Building 9, No. 21 Huanjing Road, Beijing Economic and Technological Development Zone.
In accordance with current regulations, domestic new energy vehicle manufacturers must obtain two qualifications to produce and sell: firstly, approval of the car investment project by the National Development and Reform Commission (NDRC), and secondly, the qualification for access to the automobile production enterprises by the Ministry of Industry and Information Technology (MIIT). New energy vehicle companies need to prove their financing, R&D, production, and quality assurance capabilities, recognized by the NDRC. After obtaining this qualification, companies must build factories within 2 years and sell vehicles within 3 years. The second qualification is the access qualification for automobile production enterprises, supervised by the MIIT, and car companies need to meet the requirements of the “Regulations on the Access Management of New Energy Vehicle Production Enterprises and Products.”
In August of this year, there were reports that Xiaomi had received approval from the NDRC to produce electric vehicles. Now, with the MIIT’s “entry ticket” for car manufacturing, it implies that Xiaomi has obtained the qualification for automobile production.
Formal Launch Expected in the First Half of 2024
Since Lei Jun announced Xiaomi’s entry into the smart car industry, the developments of Xiaomi Cars have been closely monitored.
In August, netizens claimed to have encountered four disguised Xiaomi cars speeding on the Urumqi-Changji urban expressway. On August 19, Lei Jun, the founder and CEO of Xiaomi Group, appeared in Xinjiang, releasing a Weibo post testing the #XiaomiMixFold3# with Leica optics and a four-shot five-focal-length setup. Observant netizens noticed a banner in the photo that seemingly read “Fighting for Xiaomi Cars.”
In October 2023, Lei Jun announced that Xiaomi Cars were progressing smoothly and would officially launch in the first half of 2024. According to Xiaomi’s announcement, Xiaomi officially entered the field of smart electric vehicles and would invest $10 billion in the next 10 years. Lei Jun believes that smart electric vehicles are the broadest development track for the next 10 years.
At the Xiaomi new product launch event in October, Xiaomi introduced the Penglai OS operating system, applicable not only to mobile devices but also to Xiaomi Cars. According to Lei Jun, Penglai OS is based on the deep evolution of Android and Xiaomi’s self-developed Vela system. It completely rewrites the underlying architecture, laying a public foundation for the future interconnection of tens of billions of devices.
On October 16, Guo Mingxi, an analyst at TF International Securities, released a research report stating that Xiaomi’s first car is expected to be launched in 2024, with estimated shipments of 50,000 to 60,000 units.
In the report, Guo Mingxi stated that the Huawei Nova 7M’s sales exceeded expectations, symbolizing that the competition in the Chinese electric vehicle market is shifting from manufacturing to autonomous driving, software, marketing, and channels. He believes that this new competitive landscape favors Xiaomi’s entry into the car market.
He also mentioned that Xiaomi’s first car’s selling price would be below 300,000 RMB, with key selling points including autonomous driving, software ecosystem, 800V fast charging, and power configuration.
Xiaomi Cars Might Produce Themselves
From the information published by the MIIT, although Xiaomi Cars show the declaring enterprise as Beijing Automotive Group, the production address indicates that it is the location of Xiaomi Cars’ self-built factory.
According to information obtained from Baidu’s platform, Xiaomi Cars’ factory is being constructed in Beijing Yizhuang, located at the Majuqiao Intelligent Manufacturing Base (Intelligent Manufacturing Base) in Beijing Yizhuang New City. The total estimated investment for the project is 63 billion yuan.
It is understood that Xiaomi Cars’ factory will be built in two phases, with annual production capacities for the first and second phases being 150,000 vehicles each. After the factory is officially established, the total capacity can reach 300,000 vehicles per year.
During the construction of Xiaomi Cars’ factory, the company is actively recruiting talents related to whole vehicle production and whole vehicle technology. Xiaomi’s official recruitment information shows that the company has talent needs for positions such as production manager, workshop safety engineer, and lean engineer in the automotive workshop in the Beijing area. There is also considerable demand for positions related to whole vehicle production, such as stamping, die-casting, die-casting molds, die-casting machining, body, painting, and sheet metal.
In addition, Xiaomi is also establishing its own car sales channels, preparing for nationwide sales. From September to October 2023, Xiaomi Jingming Technology Co., Ltd. (a wholly-owned subsidiary of Xiaomi Intelligent Technology Co., Ltd.) successively established subsidiaries in Wuhan, Shenzhen, Xi’an, Hangzhou, Guangzhou, Shanghai, and Suzhou. The newly established companies’ business scope covers the sales of whole vehicles for new energy vehicles.
In fact, to smoothly enter the car manufacturing industry, Xiaomi started continuous and high-intensity investments in the automotive field several years ago. The Yangtze Xiaomi Industrial Fund and Shunwei Capital are important investment entities in the Xiaomi ecosystem.
Shunwei Capital, controlled by Lei Jun, participated in NIO’s Series A financing in 2015, Series B financing in 2016, and A+ round financing for Xiaopeng Motors in 2017. In the same year, Shunwei Capital led the A-round financing for the intelligent driving startup Momenta and provided continuous support in the B-round, C-round, and C+ financing.
In August 2021, Xiaomi acquired the autonomous driving company DeepMotion Tech Limited, continuously enhancing its research and development capabilities in intelligent driving perception, positioning, planning, control, etc. DeepMotion Tech has a wide layout in areas such as high-precision positioning, high-precision maps, and 3D scene reconstruction.
Automotive Industry Enters Warring States Era
Although Xiaomi Cars has obtained production qualifications, the competition in the automotive industry has become increasingly fierce. Can the fledgling Xiaomi Cars get a slice of the pie?
Liu Feilei, the Secretary of the Board of Directors of GAC Aion, recently stated, “The automotive industry is entering the ‘Warring States era,’ and resources are accelerating towards top-tier enterprises.” He believes that the price war in the automotive market will intensify in 2023, and market competition will enter the “elimination round.” In the future, 3-5 top-tier enterprises will be formed. The top five brands in the new energy vehicle market in 2022 accounted for 50.1% of the market sales, and it is expected that the top five brands will account for 80% of sales by 2030.
Previously, Lei Jun also said, “When the electric vehicle industry enters a mature stage, the top five brands in the world will occupy more than 80% of the market share. In other words, the only way to succeed is to become one of the top five and achieve annual shipments of over 10 million vehicles. Competition will be fierce.”
In addition to new forces in car manufacturing, traditional car companies are also actively transforming and entering the new energy track, possessing competitive advantages in terms of financial strength, manufacturing experience, etc., which puts some pressure on new car manufacturing forces.
A research report from CITIC Securities pointed out that the competition in the smart electric vehicle industry is fierce, and the product strength of independent brands and new forces is rapidly increasing. In the next few years, high-performance and cost-effective models are expected to accelerate to market. Factors such as price competition may also pose risks of lower-than-expected new car sales.
CITIC Securities research believes that Xiaomi’s advantages in the supply chain, software, users, ecology, and channels will help it occupy a place in the smart car market. Compared with other new car manufacturing forces, it is expected to achieve the goal of annual sales of 100,000 vehicles and positive gross profit more quickly, thereby opening up additional valuation space in the hundreds of billions. However, for Xiaomi Cars to succeed, it will face challenges such as early high R&D expenditure, subsequent sales volume increase, and when the gross profit margin will quickly recover to a healthy level.