The Last Battle Of Lei Jun

In 2014, Li Bin decided to establish Weilai automobile. In Xiaomi group's Beijing office, he first told the news to Lei Jun, the founder of Xiaomi group.

At that time, there were hundreds of car building teams in China. Before Li Bin found Lei Jun, more than 10 teams had already sought investment from Lei Jun.

"At that time, when it came to Internet car making, I felt like a liar." Lei Jun recalled at the Weilai automobile Weilai day activity in December 2018.

Later, Lei Jun was still connected with the new car. He not only invested in Weilai, but also in Xiaopeng automobile. Although Weilai was almost admitted to the "intensive care unit" in 2019, from now on, these are two successful investment projects. Weilai and Xiaopeng automobile stand at the head of China's new car making forces, and have been listed in the US stock market. When the concept of new energy was most "Crazy", the market value of Weilai once surpassed that of Mercedes Benz, BMW and other century old stores.

Five years after China's new car making movement, the new forces of head car building have proved that "new car building is not a fraud". More and more powerful players are also seeing opportunities.

Lei Jun, 52, embarked on the journey of re entrepreneurship.

Since the board of directors of Xiaomi proposed to study the prospect of electric vehicle industry on January 15 this year, Lei Jun officially announced that it was going to build cars on March 30, and recently, Xiaomi group has successively registered the trademarks of Xiaomi automobile, Miche and micui. In the past 100 days, whenever the high-level of Xiaomi group appeared in public, the topic of "car making" has always been mentioned.

"Car building has not officially started. It is announced in advance that we want to obtain better global resources and jointly develop Xiaomi automobile." On April 23, Wang Xiang, President of Xiaomi group, said in a forum.

Xiaomi's entry into the auto industry also has favorable external conditions. The clear subversive trend of automobile industry has appeared, and the tide of intellectualization and electrification has promoted the reshuffle of the industry.

Contrary to the "boom" of the new car building movement, the growth ceiling of smart phones is within reach, and homogenization and price war problems emerge one after another, and the global smartphone market has stagnated in the past two years. IDC had previously predicted that the annual compound growth rate of global smartphone market shipment amount from 2020 to 2023 is only 4.31%.

Under the impetus of this wave, more and more cross-border people have put themselves into a new round of car making movement in different forms.

Compared with other new forces of car making, the brand building of Xiaomi automobile is easier. Visual China

At the 2021 Shanghai International Auto Show, which opened on April 19, Huawei, Baidu, Didi, Dajiang and other technology companies showed their determination to make a big difference in the automotive industry by relying on the cutting-edge technology of automatic driving. Technology companies play an important role in the automotive industry. Many traditional car companies even take the deep binding with technology companies as their selling point.

Although Xiaomi automobile did not participate in this auto show, but the sense of existence is very high. In almost every interview with senior executives of automobile enterprises, there will be questions about how to treat such a potential competitor as Xiaomi.

Compared with Huawei, Baidu and other companies that mainly focus on autonomous driving as the core of their automotive business, Xiaomi made it clear that they wanted to build their own vehicles and build their own brand of intelligent electric vehicles. Lei Jun personally led the team, but to the outside world showed Millet's determination and strength to build cars.

However, the risks and opportunities of car building are the same. Although it has a strong software and hardware capabilities, fans operation and other necessary advantages in the automotive industry, millet car making in the market is hard to say that it will certainly stand out.

On April 19, he Xiaopeng, chairman of Xiaopeng automobile, told reporters during the Shanghai auto show that from now on, a new spring and autumn era for smart cars will come.

"In the past five years, there have been about 300 new car manufacturing enterprises in China, and there are about 10 more today. In the next 5-10 years, the global car manufacturing enterprises will be reduced to 10 main automobile enterprises. " He Xiaopeng said.

The last battle of Lei Jun

Ten years ago, when Xiaomi entered the mobile phone industry, he had an entrepreneurial mentality of being fearless of tigers, seeking evolution from 0 to 1. Even if he failed, Xiaomi had nothing to lose. But now for Xiaomi, car building is an advanced step from 1 to N. the accumulation of the past 10 years will become the chip of this big adventure.

As for Xiaomi's car making, a Xiaomi insider close to Lei Jun said, "Lei is always a steady person with a background of venture capital. He will not do this without a clear situation. In terms of the current situation, no one doubts the trend of automobile electrification. From the three key points of market, technology and opportunity, Xiaomi has been at the point where it can be started or must be started. "

Lei Jun's first understanding of electric vehicles came from Tesla. In 2013, Lei Jun visited Tesla CEO musk twice in the United States. The exchange with musk greatly touched Lei Jun. in that year, he became the owner of Tesla and began to pay attention to the electric vehicle industry.

At the Xiaomi spring conference held on March 30, Lei Jun said that car making has always been a very fashionable topic. In the past few years, Xiaomi's senior management meetings have also discussed it several times. But at that time, the theme of Xiaomi was to make up lessons, and the primary task was to do a good job in the mobile phone business. Therefore, he mainly participated in the development of the electric vehicle industry through investment.

At present, Wei Lai, Xiao Peng and ideal, the three representatives of China's new car making forces, have invested in two. In 2014, Lei Jun participated in the establishment of Weilai automobile as a founding investor, and Xiaopeng automobile, which was established in the same year, also obtained the investment of Lei Jun. Not only that, in the follow-up financing of Weilai and Xiaopeng, Lei Jun also stepped up his hand again. Xiaomi, on the other hand, has invested in nearly 10 electric vehicle industry chain companies before announcing its car production.

Until January 15 this year, when Xiaomi's board of directors proposed to seriously study the electric vehicle industry, Lei Jun actually resisted. He was worried that the battle of Xiaomi's mobile phone had not been really finished. Would he be distracted from making cars? However, Lei Jun is an investor and the first person to put forward the theory of tuyere. His famous sentence "standing on the tuyere, pigs can fly" has inspired many entrepreneurs. At the moment, he is very clear that the air vent of electric vehicles has come.

But standing in front of the current of the times, Lei Jun is still hesitant. As he said, the real problem is not whether Xiaomi can do it, but whether he dares to do it?

Lei Jun said that when Xiaomi entered the smart phone industry, he had nothing, and the competitors he faced were industry giants, but Xiaomi still made the achievements today. Now, Xiaomi's strength is much stronger than ten years ago. What is Lei Jun worried about? In fact, Xiaomi's achievements today are not only the capital of Xiaomi's car building, but also the biggest psychological burden on the way to build cars.

Because ten years ago, when Xiaomi entered the mobile phone industry, he had an entrepreneurial mentality of being fearless of tigers, seeking evolution from 0 to 1. Even if he failed, Xiaomi had nothing to lose. But now for Xiaomi, car building is an advanced step from 1 to N. the accumulation of the past 10 years will become the chip of this big adventure.

Lei Jun also asked himself repeatedly, can he still have the same courage, determination and physical strength as he did ten years ago? However, after 85 visits to the industry, in-depth exchanges with more than 200 senior automobile industry personnel, four internal management seminars and two formal board meetings, Lei Jun finally made the decision to build a car.

Lei Jun, who has known his destiny, said that Xiaomi's car making will be his last major entrepreneurial project in his life. He is very clear about what this decision means, and he is willing to put his whole reputation on the line again and fight for Xiaomi.

Lei Jun is the most important label of Xiaomi. An Qingheng, director of China Automotive Industry Advisory Committee and former director of BAIC group, pointed out that one of the advantages of Xiaomi in making cars is Lei Jun, and the role of leaders is too important.

Is 100 billion cash resources enough?

Compared with other new forces of car making, Xiaomi's starting point in terms of capital is high enough, at least not like some enterprises, in the PPT stage, because of the capital chain problem and "stillborn".

According to the announcement issued by Xiaomi group, Xiaomi plans to set up a wholly-owned subsidiary to be responsible for the intelligent electric vehicle business, and Lei Jun will be the CEO of the business. In addition, Xiaomi also disclosed that the initial investment in the car manufacturing business is 10 billion yuan, and the investment amount is expected to be 10 billion US dollars in the next 10 years.

Lei Jun said that Millet's biggest confidence in making cars is "affordable", because millet has sufficient cash reserves. According to Xiaomi 2020 annual report, as of December 31, 2020, Xiaomi has more than 100 billion yuan of cash resources.

However, it should be noted that the cash resources here include but are not limited to cash and cash equivalents, restricted cash, short-term bank deposits, short-term investments at fair value through profit or loss, and long-term bank deposits.

When Weilai was founded, Li Bin once threatened not to build cars without 20 billion yuan, but the speed of Weilai's burning money exceeded all people's expectations. According to the data, from 2017 to 2020, the net losses of Weilai were 4.985 billion yuan, 9.639 billion yuan, 11.298 billion yuan and 5.304 billion yuan respectively. Since 2016, the accumulated net loss of Weilai is about 33.7 billion yuan.

Evergrande said that since entering the field of new energy vehicles, the cumulative investment has reached 43.7 billion yuan. However, Evergrande has not yet been able to build a complete vehicle.

It is uncertain how much money Xiaomi needs to invest in order to enter the mass production stage. However, it is certain that the huge capital pressure generated by the car making business will be the challenge Xiaomi has to face in the future.

And don't forget, for millet, mobile phone business research and development investment is still important, after all, this is Xiaomi's basic disk.

An insider of Xiaomi told the reporter that Xiaomi would not transfer the mobile phone R & D personnel to the automotive department, because the product forms of mobile phones and automobiles are different, and although the mobile phone and aiot business are about to touch the ceiling, they are still in a stable rising period, and there are not many people to jump. In the future, Xiaomi's auto Department will start a new business, but now it will mobilize some people to set up the structure, and then absorb talents from the market.

Therefore, Xiaomi's cash resource reserves are not fully supported by the automobile business. The future test of Xiaomi will be its sustained profitability.

According to the annual report of 2020, Xiaomi achieved revenue of 245.8 billion yuan last year, with an adjusted net profit of 13 billion yuan and a net profit margin of about 5.3%. From the perspective of the Internet industry, Xiaomi's net profit margin is not high.

This is because in May 2018, Xiaomi made a commitment that, starting from 2018, the comprehensive net interest rate of Xiaomi's overall hardware business (including smart phones, IOT and consumer products) will not exceed 5%. If there is any excess, it will be fed back to the user.

According to Xiaomi's disclosure, in 2020, the comprehensive net profit margin of its hardware business is positive and less than 1%. We should know that the revenue of Xiaomi hardware business accounts for nearly 90%. Take 2020 as an example, about 62% of Xiaomi's revenue comes from smart phone business, and about 27% comes from IOT and consumer goods business.

However, compared with other new forces of car making, Xiaomi's starting point in terms of capital is already high enough, at least not like some enterprises, in the PPT stage, because of the capital chain problem and "stillborn".

Millet's long and short board

Technology and supply chain are the next focus of Xiaomi automobile. In terms of technology, millet has accumulated, but they are not core application patents.

The industry generally believes that the car making follows the barrel theory, as long as there is a short board, other long boards will be affected. In terms of capital, users, brand, technology, supply chain and channel of new energy vehicles, Millet's long board and short board can also be seen.

In addition to capital, Xiaomi also has strong points in terms of brand and users. Lei Jun said that in the process of thinking about whether to build a car, rice noodles gave him the greatest encouragement. In fact, with the age of some loyal rice noodles, the transition of Xiaomi's products from young people's first mobile phone to their first car will also be very natural. The huge user base of Xiaomi is enough to support the sales of Xiaomi automobile in the first stage.

Some experts in the industry analyzed the reporter of the 21st century economic report that the logic of Xiaomi's car making is reasonable. On the one hand, Xiaomi started from mobile phones and gradually extended to the ecology of aiot smart home. The future car is also a key link; On the other hand, focusing on the growth experience of future Xiaomi target consumer groups, from Xiaomi mobile phone to Xiaomi automobile, also conforms to their growth curve and meets their needs.

In addition, as of April 3, Xiaomi has opened 5000 millet homes. After a series of adjustments last year, Xiaomi has explored a new set of offline retail business model, which can realize the digital and standardized management of Xiaomi house. Lu Weibing, President of Xiaomi China, also set a goal at the end of last year to make every county in China have a millet home in the coming year.

And an industry person close to Xiaomi told reporters that Xiaomi's home will also become the sales channel of Xiaomi automobile in the future, because most of its stores are opened in the core business circle. Selling millet cars is only equivalent to adding a display stand in the store, without any additional cost.

Technology and supply chain are the next focus of Xiaomi automobile. In terms of technology, millet has accumulated, but they are not core application patents. According to the smart bud data, at present, there are 834 patents related to automobiles, of which more than 96% are invention patents, which are concentrated in the fields of wireless communication network, electronic data processing, digital information transmission, image communication, traffic control system, distance measurement, navigation and other fields, and the proportion of automobile spare parts patents is relatively low.

According to the information from the State Intellectual Property Office, more than 60% of Xiaomi's automobile patents are about intelligent cockpit and driving safety, including rearview mirror adjustment method, automatic navigation service, and in car driving safety monitoring.

As for the supply chain, the first thing Xiaomi needs to do is to integrate mature hardware resources. A person in the industry said that Xiaomi has been in the mobile phone industry for ten years and is very familiar with the manufacturing industry. In particular, during this period, Xiaomi once fell into a crisis due to the supply chain problem. Therefore, Xiaomi will attach great importance to the supply chain management in the car manufacturing business.

Ten years ago, before Xiaomi was founded, Lei Jun chose the mobile track because he found that the quality and efficiency of Chinese manufacturing industry need to be improved and improved, especially the low commercial efficiency, which directly leads to the high price of mobile phone products.

By combining the Internet model with the real economy, Lei Jun soon made Xiaomi mobile phone the first in China's smartphone market. Lei Jun has repeatedly said that Xiaomi's greatest achievement is to promote the development of the whole mobile phone industry like catfish, and together with his peers, he has turned over all the cottage machines.

However, after five years of high-speed development, in 2016, Xiaomi's mobile phone sales fell to the bottom. Although Xiaomi later recovered, this crisis has brought Xiaomi to the brink of "death". In summing up the crisis, Lei Jun later said, "this proves that Internet thinking is not enough. If we lack the awe and the willingness to learn from the experience of traditional manufacturing industry, we will not win this battle. No matter how advanced weapons we have, if we don't have a good foundation, we will lose. "

In 2020, Lei Jun also said on a public occasion that in the past decade, although Xiaomi has just begun to attach great importance to the manufacturing industry, it still does not pay enough attention to it. Therefore, in the past few years, the most important thing Xiaomi has done is to make up lessons seriously and learn from large and advanced manufacturing companies. And Xiaomi's supplementary lessons in manufacturing these years may be applied to automobile manufacturing.

Where did you settle down?

A person familiar with the matter told the 21st century economic report that Xiaomi automobile had negotiated with baowo automobile, hoping to acquire baowo automobile and obtain factory and automobile production qualification. However, the negotiations between the two sides have not been smooth.

Due to the long investment chain of automobile industry, it can drive the development of upstream and downstream enterprises in the industrial chain. The introduction of new energy vehicle projects can promote the local economic development, promote tax revenue and employment.

In the past few years, with the support of national strategies and policies, the support of local governments for new car projects is obvious. Shanghai has successively introduced Tesla, participated in the 10 billion financing of Weima round D, and participated in Zhiji automobile. After Hefei introduced Weilai, it once again extended its "olive branch" to zero. Tesla, Weilai and other companies have become the representative cards of local advanced manufacturing industry.

Where Xiaomi is going to build a production base and how to produce its own cars are also important issues for Xiaomi.

On April 2, a netizen left a message on the Wuhan City message board of changjiang.com: "has the economic development zone government contacted boss Lei to see if it can win over the project. After all, boss Lei is from Hubei."

In this regard, the Management Committee of Wuhan Economic and Technological Development Zone said: "Xiaomi, as one of the world's top 500 enterprises, is the key investment target enterprise in our district. We attach great importance to Xiaomi's official publicity of the car making incident. We have set up a special working class for the first time. We will actively and enthusiastically connect with Xiaomi, fully demonstrate our high-quality automobile ecosystem and superior business environment, and strive for the possibility of cooperation. "

Hubei Province is one of the important automobile production bases in China, with rich industrial base and perfect industrial chain. According to the National Bureau of statistics, Hubei Province will produce 2.0945 million vehicles in 2020, ranking fourth. Among them, the main automobile production of Hubei province comes from Wuhan.

Hubei is the headquarters of Dongfeng Automobile Group, one of the three central automobile enterprises in China. However, unlike Jiangsu, Zhejiang, Shanghai and Guangdong provinces, which have actively introduced new energy vehicle investment projects in recent years, no new force of first and second-line vehicle manufacturing has its headquarters in Hubei Province. Previously, only Weima automobile has built a factory in Huanggang, Hubei Province. On April 8 this year, Xiaopeng automobile officially released the latest news, saying that it had officially signed the "investment agreement on Wuhan intelligent networked automobile manufacturing base and R & D center project" with the Management Committee of Wuhan Economic and Technological Development Zone. The third production base of Xiaopeng automobile will be located in Wuhan.

In fact, Lei Jun and Xiaomi have been closely related to Wuhan. Lei Jun graduated from the computer department of Wuhan University. The second headquarters of Xiaomi group is located in Wuhan Optical Valley financial port.

However, from the development process of China's new car manufacturing history, the local government also needs to provide high-quality resources if it wants to attract a high-quality car enterprise to settle in the local area.

In addition to land, one of the most important reasons why Hefei attracted to Weilai was that it gave Weilai 7 billion yuan in financing at the most difficult time. Li Bin told the 21st century economic reporter that Weilai was negotiating with many local governments at that time. Hefei was the 19th City, but it gave support to the local government.

Xiaomi automobile project has a strong attraction for local government, but how much resources can the local government bring to Xiaomi will be an important basis for Xiaomi to consider.

Of course, in addition to Wuhan, another possibility for the location of Xiaomi automobile project is Beijing, the headquarters of Xiaomi group.

A person familiar with the matter told the 21st century economic report that Xiaomi automobile had negotiated with baowo automobile, hoping to acquire baowo automobile and obtain factory and automobile production qualification. However, the negotiations between the two sides have not been smooth.

"Shenzhou department is in a capital dilemma and needs to sell its assets. Baowo has not been active in recent years, but has become a burden and needs to be sold. Baowo's factory is very new. If Xiaomi wins, it can be rebuilt quickly. Compared with self built factory and application for qualification, it can save a lot of trouble. " Some insiders told reporters of the 21st century economic report.

Compared with Wuhan, this allows millet to build cars faster.

In fact, Hubei and Beijing are the headquarters of Dongfeng Group and BAIC group. However, due to Dongfeng and BAIC's heavy dependence on the joint venture, the independent sector has a relatively large loss. Under the background of China's opening up of joint venture stock ratio, it is necessary to introduce a high-quality local automobile manufacturing enterprise.

However, at present, Xiaomi automobile does not disclose whether it will build its own factory or will refer to the OEM mode between Weilai and Jianghuai.

"Which city Xiaomi settled in depends on how its production qualification is solved, which falls on the practical operation level. At present, the process of applying for a qualification is complicated and takes a long time. It takes at least US $100 million to purchase the qualification. In addition, Xiaomi can also take the OEM route, which depends on which path Xiaomi adopts internally. " Weima automobile chief data officer Mei Songlin told reporters.

To a certain extent, cooperation with vehicle enterprises can be reached. Vehicle manufacturers can develop and manufacture vehicle architecture, and Internet companies can develop design and intelligent Internet connection, which can bring their advantages into full play and push the products to the market as soon as possible.

Not long ago, Xiaomi and Great Wall Motors cooperation news. The two sides also gave relevant responses. Xiaomi group said that all in accordance with the announcement. Great Wall Motors denied the news. Although the two sides did not give a clear response to this cooperation, great wall and Xiaomi have already had in-depth cooperation before.

Zuo Yan'an, former chairman of Jianghuai Automobile Co., Ltd., believes that Xiaomi is more familiar with the OEM mode than the small and successful new car manufacturing enterprises, but the automobile OEM is more complex. The OEM enterprises must participate in some aspects of automobile product research and development, and must provide automobile manufacturing engineering standards belonging to Xiaomi, including supply chain management, etc, It may be the best policy to find excellent automobile enterprises to cooperate, and then build their own factories when appropriate.

Market position of Xiaomi automobile

"Looking at the past competition strategies of various Xiaomi products in the market, it is basically to win the market with high performance ratio and scale, which determines the DNA of Xiaomi automobile: novel design, high performance, low price and high quality, and huge scale."

At present, from the development trend of the whole automobile industry, the competition between enterprises is more intense, and the brand effect of electric vehicles will gradually form. Millet as a latecomer, want to stir a pool of spring water is not easy.

The biggest advantage of Xiaomi car making is that it can integrate mobile travel into the ecology that has been built by Xiaomi group. This kind of ecology is not possessed by many other automobile enterprises. From smart home to mobile travel, Xiaomi group will further strengthen its own intelligent ecology. However, the key behind this is what kind of car Xiaomi will launch to attract its huge user group.

According to Lei Jun's previously disclosed plan, Xiaomi is ready to launch his car in three years. This is the same time as Weilai, Xiaopeng and other new forces planning the first product. Xiaomi's first car is planned to be a car or SUV, with a price range of 100000-300000 yuan.

According to this calculation, when Xiaomi automobile is delivered in mass production, the market and use environment of intelligent electric vehicle have already had a good foundation, and the products will also enter a period of rapid development. Without a revolutionary breakthrough in technology, Xiaomi automobile will probably continue its previous cost performance strategy.

"Looking at the past competition strategies of various Xiaomi products in the market, it is basically to win the market with high performance ratio and scale, which determines the DNA of Xiaomi automobile: novel design, high performance, low price and high quality, and huge scale." Zhong Shi, a senior media person in the automobile industry, said.

He believes that the first round of Xiaomi automobile products are suitable for entering the market with compact and medium-sized products, and should keep pace with Tesla's expansion speed. Without sales scale, there is no future survival space.

However, from the current state, Xiaomi should push the new car to the market as soon as possible, otherwise it is not conducive to participate in market competition.

Of course, while building products, Xiaomi also needs to plan its own commercialization path.

According to Zheng Fu, global senior partner of Roland Berger, car building is not about making mobile phones or other consumer products. Making cars involves multiple operations: from tens of thousands of core parts to vehicle calibration, sales, user service and after-sales service.

However, this kind of multi-point operation is actually very difficult for any cross industry player. Therefore, Xiaomi should pay attention to its input-output ratio, as well as marketing and after-sales fields.

Compared with other new forces of car making, the brand building of Xiaomi automobile is easier.

"The brands of other new forces of car making are starting from scratch, while Xiaomi is already a successful domestic consumer electronics manufacturing giant and a few excellent brands with unique good business ecology, which has a brand appeal to the majority of users. This has inherent advantages for Xiaomi to implement the "user base" category conversion. What the peers fear is not what kind of car Xiaomi can build, but the starting point of Xiaomi automobile entering the market channel Said master Zhong.

China seems to be setting off a new round of car making fever. Mobile phone, home appliances, real estate and Internet giants are aiming at the car manufacturing industry.

On April 2, at the gathering site of the Chinese students' Union held by Lei Jun, photos of Lei Jun with Li Bin, chairman of Weilai automobile, Li Xiang, chairman of ideal automobile, he Xiaopeng, chairman of Xiaopeng automobile, and Wang Chuanfu, chairman of BYD, spread on the Internet.

In the near future, Lei Jun will take photos with these friends and become competitors.