Everyone knows what happened this week. Lei Jun is really a model for Chinese entrepreneurship. It is not easy for Xiaomi to start a business under such a successful situation.
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Xiaomi officially enters the automotive industry:
At Xiaomi's press conference this week, Lei Jun announced his official entry into the field of electric vehicles and said that he would invest hundreds of billions to support the development of the project. He said that this will be his last major entrepreneurship, and he is willing to block the reputation and asset accumulation he has accumulated throughout his life. He believes that the development of electric vehicles is based on AloT's natural selection, which is also his idea for many years.
Lei Jun has long touted Xiaomi as an Internet company that also produces hardware. "I call Xiaomi the triathlete of the new economy, where Xiaomi produces hardware and equipment, sells its products through e-commerce, and provides services on the Internet,"
The Beijing-based company doubled its profit in 2020 from the previous year, with revenue of more than ($3 billion). Internet service revenue has increased by nearly 20%. Revenues from IoT and lifestyle products increased by 8.6%.
Xiaomi originated from the wave of transformation from functional phones to smart phones:
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The origin of the company : It was founded in 2010, when consumers were switching from feature phones to smart phones.
By launching affordable products, Xiaomi was able to differentiate itself from its early competitors. The first phone, and it was reported that 300,000 orders were received within 34 hours of its release.
Li Lianfeng, research director of market research company IDC, said: "If you compare the automotive industry with mobile phones, it is at a critical moment similar to the transition from feature phones to smart phones."
"With the development of battery technology and infrastructure construction, the barriers to entry for the electric vehicle industry have actually been lowered. Consumer acceptance is not a big obstacle," Li said. "The upcoming game is to allow players to meet the specific needs of different consumers."
Danny Chen, a colleague of Hong Kong-based credit rating agency Pengyuan International who specializes in the automotive industry, said that the key for all participants is to develop something unique.
"Automakers are competing to develop a product that can change the landscape, such as how the iPhone changes the mobile phone market," Chen said.
With the global plan to reach the goal of carbon neutrality by 2060, the electric vehicle industry has also sprung up under the influence of government subsidies, but is Xiaomi entering the market late now?
UBS (UBS) analyst Paul Gong said: "We think it is not too late to enter this market." He added that China's electric vehicle market is expected to grow tenfold in the next ten years.
He said that different companies can gain market share by leveraging their advantages.
Xiaomi's future road is still very long and difficult:
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Despite the market potential, analysts warn that manufacturing electric cars is very different from assembling smartphones.
Charlie Dai, chief analyst at Forrester, a market research firm, said: "The electric vehicle market requires long-term investment and a range of different functions."
"The technical complexity, business model and supply network ecosystem are very different, not only for the vehicle itself, but also for the investment in the entire ecosystem, such as batteries, motor control, charging piles and after-sales service."
"For cars, technical requirements, especially in terms of safety, are much higher than mobile phones, and the entire ecosystem requires a lot of investment," said Li of IDC.
Time is also of the utmost importance to Xiaomi. Due to the complexity of the automotive industry's supply chain and strict safety standards, it usually takes several years to bring a new car to the market.
At present, Chinese consumers already have many electric cars to choose from, from Tesla to cheap cars with prices as low as RMB 30,000, such as the red light mini electric cars of Wuling Motors.
According to market research company Canalys, both automakers lag behind China's two best-selling electric vehicles last year.
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Also in the game are domestic manufacturers such as BYD, SAIC and Great Wall Motors, as well as start-ups Xiaopeng and Weilai Motors supported by Lei Jun. Several technology giants, including search engine company Baidu and telecommunications giant Huawei Technologies Co., Ltd., are also considering entering this field.
Foreign brands may bring additional competitive pressure. Canalys chief automotive analyst Chris Jones said that by the time Xiaomi launches electric cars, traditional automakers such as Volkswagen, Toyota, Honda and Nissan will take the lead a few years ago.
Jones said: "From now until the first Xiaomi electric car comes out, a lot of things will happen on the market."
Despite this, Xiaomi's Lei still believes that the opportunity to seize this rapidly growing market share is too tempting.
"Smart electric vehicles are one of the biggest business opportunities in the next decade, and an essential part of smart life," Ray wrote in an internal letter after the product launch on Tuesday.
The CEO said that after meeting with Tesla founder Elon Musk in 2013 and buying his own electric car from the brand, he became interested in the electric car industry.
One way Xiaomi can reduce the production cost of electric vehicles is to cooperate with established manufacturers. At the product launch on Tuesday, Lei Jun said, By the end of 2020, the company’s cash reserves are RMB 108 billion. The company also has more than 10,000 engineers engaged in research and development, and plans to hire another 5,000 in 2021.
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