During an annual speech held on the evening of August 11, Xiaomi‘s founder, chairman and CEO Lei Jun announced the progress of the firm’s recent efforts in automated driving technology. He also showcased a new book entitled “The Business Thoughts of Xiaomi Corp. (Chinese Edition),” which was dictated by Lei Jun, then compiled by Xu Jieyun. It was published on August 1, 2022.
In the book, Lei Jun reveals some inside stories about Xiaomi‘s vehicle manufacturing. Lei disclosed that for Xiaomi, making cars is the general trend of development and there is no other choice. He noted that there are several objective facts: First, the smartphone industry has become mature and competition is fierce; Second, cars are the largest personal consumer goods, and smart cars are the big thing at present; Third, smart cars are an indispensable part of the intelligent ecosystem, forming a complete life together with personal mobile devices and smart home products.
Lei Jun also said that car making is also one of the most important decisions in Xiaomi‘s history, and it is the result of repeated argumentation and careful decision-making by the company’s management. Starting from January 15, 2021, after 75 days of 85 visits and communication in the industry, in-depth exchanges with more than 200 senior people in the automobile industry, four internal management discussions and two formal board meetings, the most important decision in Xiaomi history was finally made – the company will formally enter the smart electric vehicle market, with an investment of $10 billion in the next 10 years and an initial investment of 10 billion yuan ($1.46 billion). Lei is personally leading the team and serves as CEO of the intelligent electric vehicle business. In addition, this will be the last major entrepreneurial project in Lei Jun’s life.
Lei also said that the essence of electric vehicles has already become a “consumer electronics” product, and “software-defined vehicles” will be the critical part of competition. At the same time, EVs will come to embody a “triathlon” business model, with future revenue being composed of hardware, software and various automobile services. Further, if smart electric vehicles transform into “consumer electronics,” they will inevitably follow the laws of the consumer electronics industry. When the industry enters a mature stage after 15 to 20 years, the top five brands in the world will hold more than 80% of the market. That is to say, it is only meaningful to finally enter the top five in the global industry and ship more than 10 million units annually. The competition will be extremely tight.
Regarding the fundamental test basis for strategic decision-making, Lei said that the comments of a Xiaomi fan named Wu Xiangyu played a key role in its final decision. Wu said: “If you dare to make it, I will buy it.” For this reason, Lei Jun decided not to think too much and no longer was entangled. At present, he only cares about building a good car for “Mi Fans,” as they are called. “Xiaomi has tens of millions of loyal fans and users in China, and as long as 1% of them are willing to give us a chance, Xiaomi‘s auto business can get a fantastic start.”
On August 19, Xiaomi released its financial report for the second quarter ended June 30, 2022. According to the report, its innovative business expenses such as smart electric vehicles in this quarter were 611 million yuan. In the field of automated driving, an R&D team of more than 500 people has been set up, and a technical layout strategy for full-stack self-developed algorithms has been formulated. In the field of automated driving, the investment related to R&D in the first phase is 3.3 billion yuan.