官宣造车1000多天后，小米汽车终于问世。2023年12月28日，小米召开小米汽车技术发布会，可以说，这场发布会的技术炫技，炫得我眼花撩乱。
Lei Jun, chairman of Xiaomi Group, released a package of technologies, such as CTB integrated battery technology, which has the world's highest volume efficiency of 77.8% and uses Xiaomi's 800V silicon carbide high-voltage platform with a maximum voltage of 871V. Lei Jun introduced that Xiaomi’s battery has passed the world’s most stringent thermal failure safety standards, uses 17 layers of high-voltage insulation protection, has the largest cooling area of 7.8m² in its class, and uses 165 pieces of aerogel for heat insulation. At the same time, the industry's first cell inversion technology is adopted to ensure the safety of the passenger compartment to the greatest extent. Lei Jun said that Xiaomi Motors is determined to be the king of winter range of electric vehicles.
▲Picture: Xiaomi car launch conference
Before I finished watching the press conference, I had an intracranial orgasm.
Unfortunately, at this technology conference, Lei Jun did not reveal the price of Xiaomi cars. But this does not affect the small shock that Lei Jun brought to the new energy industry at this conference.
Before the release of Xiaomi Motors, Lei Jun revealed that 3,400 engineers were invested in Xiaomi Motors' first car, with R&D costs exceeding 10 billion yuan, which was "more than ten times the investment" as per industry practice. Judging from the specific performance parameters, the high-investment Xiaomi automobile is indeed very competitive. For example, the high-end Xiaomi car supports 800V charging, has a battery capacity of up to 101 degrees, and has dual motors with front and rear motor powers of 220 kilowatts and 275 kilowatts respectively.
Although Xiaomi Auto's technical strength is impressive, it may be difficult for it to replicate the myth that the first-generation Xiaomi mobile phone set off the market as soon as it came out.
Because in the past two years, as many old and new forces have increased their efforts in related businesses, the new energy vehicle industry has been extremely "involved", and Xiaomi Auto does not have many differentiated advantages. Especially considering that Xiaomi Motors has not yet achieved economies of scale, it is difficult to participate in "price wars" endlessly, and it is difficult to convince consumers to pay.
"If you don't do this, you will fall behind."
Lei Jun was forced to enter the new energy market
Unlike most companies that take the initiative to enter the new energy vehicle market, Xiaomi's launch of Mi Auto is actually very passive.
In September 2022, in an interview with CCTV's "Genting Dialogue", Lei Jun said that Xiaomi's decision to build a car was a forced decision. "If you don't do it, you will fall behind."
Although smartphones are still the popular computing platform, as the economy is under pressure and consumers are less motivated to replace their phones, the dividends of the smartphone industry are disappearing at an accelerated rate.
▲Picture source: IDC
IDC data shows that in 2022, global smartphone shipments will be 1.21 billion units, a year-on-year decrease of 11.3%, the lowest record since 2013. Counterpoint data shows that global smartphone shipments are expected to continue to decline by 5% year-on-year in 2023, hitting the lowest level in ten years.
In the context of the disappearance of dividends in the smartphone market, Xiaomi's mobile phone shipments have also been "falling." Official data shows that in 2022, Xiaomi mobile phone shipments will reach 153 million units globally, a year-on-year decrease of 19.8%. IDC data shows that in Q1-Q2 of 2023, global shipments of Xiaomi mobile phones fell by 23.5% and 16% year-on-year respectively.
Although Xiaomi has previously built multiple business lines such as IoT and Internet services, since smartphones are the core business that connects the above business lines, the decline in shipments of this product will hardly affect Xiaomi's overall performance.
The financial report shows that in 2022 and the first three quarters of 2023, Xiaomi’s revenue will be 280.04 billion yuan and 197.7 billion yuan respectively, down 14.7% and 7.6% year-on-year respectively. Obviously, the existing mobile phone, IoT, Internet and other businesses are no longer able to promote Xiaomi's continued growth.
Against this background, Xiaomi is targeting the more promising new energy vehicle track. Data disclosed by the China Association of Automobile Manufacturers shows that from 2020 to 2022, China's new energy vehicle sales were 1.367 million, 3.521 million, and 6.887 million vehicles respectively, representing year-on-year increases of 10.9%, 157.57%, and 95.6% respectively. Both scale and growth rate continued to expand.
Of course, Xiaomi chose to enter the new energy vehicle track because its existing business can easily be linked with new energy vehicles.
▲Source: CCTV
In an interview with CCTV's "Face to Face" on December 18, 2023, Lei Jun said that Xiaomi has many natural advantages in making cars. "Because the essence of today's smart electric vehicles is the integration of the automotive industry and the consumer electronics industry. It is a big integration, so entering the automotive industry is challenging for Xiaomi. Generally speaking, the difficulty is controllable."
On December 27, Lei Jun issued an article saying, “Our ‘whole ecology of people, cars, and homes’ has officially closed the loop and ushered in the ‘leapfrog’ moment!” It is understood that Xiaomi has previously launched the Thermal OS system, which is dedicated to connecting Xiaomi’s mobile phones, cars, and many IoT terminals. After the release of Xiaomi Auto, Xiaomi’s Internet of Everything ecosystem has officially closed the loop.
Key information has been disclosed
Xiaomi Auto may not dare to focus on extremely low prices
Judging from the information disclosed at the Xiaomi technology conference and the Ministry of Industry and Information Technology, the Xiaomi car has a size of 4997mmx1963mmx1440mm and a wheelbase of 3000mm. It is positioned as a C-class car and is in the same level as Zhijie S7, NIO ET7 and BYD Seal.
▲Source: Ministry of Industry and Information Technology
Xiaomi cars will have two versions: high-end and low-end. The low-end model SU7 has a vehicle voltage of 400V and is equipped with a 73.6-degree BYD battery with a range of 628km and 668km respectively; the high-end version SU7Pro/Max has a vehicle voltage of 800V and is equipped with a 101-degree CATL battery with a range of 800km and 750km.
Although Xiaomi has not disclosed the price of Xiaomi cars, compared with similar products in the industry and revelations from car bloggers, Xiaomi cars may not be cheap.
In comparison, the prices of 2023 BYD Han EV Champion Edition, 2022 Xpeng P7 and other products with the same configuration as Xiaomi's entry-level models are around 200,000 yuan. The starting price of Xiaomi Motors SU7 will most likely be set at this range.
Since the high-end versions of Xiaomi cars are equipped with many powerful technologies, the price of SU7Pro/Max should be higher.
▲Picture: Xiaomi SU7
In the current new energy vehicle market, the most cost-effective product equipped with a 100-degree battery is the Jikrypton 001WE version, with a starting price of 300,000 yuan. The price of Xiaomi Auto's SU7Pro/Max equipped with a large 100-degree battery should not be lower than the Jikrypton 001WE version.
In November 2023, Han Lu, Chief Content Officer of Old Driver, broke the news that "Xiaomi cars are priced at over 300,000 yuan, and the high-end version is expected to be nearly 400,000 yuan." This should refer to SU7Pro/Max.
Overall, the price range of Xiaomi cars may be between 200,000 and 400,000 yuan. In response, on December 26, Lei Jun posted on social media that "Xiaomi SU7 is indeed a bit expensive."
Obviously, Xiaomi Auto will not follow the extremely low-price product strategy of the first generation Xiaomi mobile phones. This may be because Xiaomi realizes that in the automotive industry, low-end products are not imaginative.
From a market perspective, the market share of entry-level new energy vehicles is gradually declining. Data from the China Automobile Association shows that at the end of 2022, new energy vehicles with a starting price of less than 100,000 yuan accounted for 21.4% of sales, a year-on-year decrease of 9 percentage points, and market dividends are gradually fading.
▲Picture source: Nezha Automobile
In this context, Nezha Automobile, which “makes cars for the people”, has set a negative example for Xiaomi. Since its establishment, Nezha Automobile's products have focused on extremely low prices. The current main product Nezha V starts at only 83,900 yuan.
Of course, there is no problem that car companies are committed to providing consumers with high-quality and low-priced products. However, it is worth noting that, unlike ordinary consumer goods, the automobile industry involves complex industrial chains and extremely high manufacturing costs. Low-priced products require extremely high shipment volumes to balance upstream costs.
Unfortunately, sales of Nezha cars are very limited. Official data shows that from January to November 2023, Nezha Auto delivered a total of 122,400 vehicles, a year-on-year decrease of 15.19%. Among them, the monthly sales volume in November was only 12,506 vehicles, a decrease of 17.02%, and the annual target of 250,000 vehicles was less than half completed.
This also determines that Nezha Auto's gross profit margin is too low. In April 2022, "Eye of the Storm" broke the news that "Nezha Auto's gross profit margin is only about 5%." In comparison, in 2022, the gross profit margins of "Wei Xiaoli" will be 19.4%, 13.7% and 9.4% respectively.
Data disclosed by 360 Company shows that from 2020 to 2022, Nezha suffered a cumulative loss of 11.148 billion yuan. In 2022, Nezha Automobile suffered a net loss of 6.919 billion yuan. Calculated based on this data, Nezha Bicycle’s loss in 2022 will be approximately 45,000 yuan.
Since it has continued to release profits, Xiaomi obviously does not want to be trapped in losses, causing investors to question.
New energy “involution” intensifies
Can Xiaomi Motors withstand the pressure?
Although Lei Jun claimed that Xiaomi cars are expensive, "they are 'reasonably expensive' and the experience will definitely exceed everyone's expectations." However, considering the current new energy vehicle market, it may be difficult for the expensive Xiaomi cars to become an instant hit.
Different from general personalized products, cars have strong social attributes, and the level of brand tone directly determines the strength of the car's bargaining power. Although Xiaomi mobile phones have been impacting the high-end market for many years, at present, the high-endization process of Xiaomi mobile phones is not ideal.
▲Picture source: IDC
Data disclosed by IDC shows that in the first half of 2023, Xiaomi only occupied 3.7% of China's high-end mobile phone market (priced above US$600), which is far lower than Apple and Huawei. The 2023 Q3 financial report shows that the average selling price (ASP) of Xiaomi mobile phones is only 997 yuan, a year-on-year decrease of 5.8%.
From this point of view, the Xiaomi brand has not yet shed its low-end image. This also determines that after the launch of Xiaomi cars, it will be difficult for middle-class families who highly identify with high-end brands such as Apple, Huawei, Mercedes-Benz, and Audi to pay for themselves.
In addition to the difficulty in supporting the high price due to the brand tone, another major challenge facing Xiaomi Motors is the intensified competition in the new energy automobile industry. Leading automobile brands that have achieved scale have repeatedly provoked price wars.
▲Picture source: China Automobile Association
Data disclosed by the China Automobile Association shows that from 2021 to 2022 and the first half of 2023, China's new energy vehicle sales growth rates will be 159.8%, 93.4% and 44.1% respectively, with an obvious downward trend.
Due to the decline in market growth, in order to ship on a larger scale, many car companies have lowered the selling prices of their products since 2023, trying to exchange price for volume. For example, at the beginning of 2023, the prices of Tesla Model 3 and Model Y were reduced by 20,000 to 48,000 yuan. In December, BYD, Leapmotor, and FAW Toyota also launched car purchase promotions.
In response to the future direction of the new energy vehicle market, Yu Chengdong, CEO of Huawei Smart Car Solutions BU, said, "The volume you are seeing has just begun, and it will increase in the future. The reshuffle of the auto market in the future will be very fierce, and the market competition will be very fierce."
This is not good news for Xiaomi Motors, which is still in the ramp-up period of production capacity and has not yet achieved economies of scale. Because as market competition pressure gradually increases, other cars that have achieved scale may take the initiative to give up profits, which will put huge pressure on Xiaomi Motors.
Taking BYD Seal as an example, the EV version of this product has dimensions of 4800mmX1875mmX1460mm and a wheelbase of 2920mm, which is at the same level as Xiaomi cars.
In 2023, Dolphin's annual cumulative sales will reach 330,905 vehicles, with average monthly sales exceeding 30,000 vehicles. Thanks to this, the research department of UBS Investment Bank dismantled the BYD Seal (550km range version) and showed that the gross profit margin of the car is approximately 16% and the pre-interest and tax profit margin is 5%. In addition, BYD has a 25% cost advantage compared to traditional OEMs.
It is true that Xiaomi has previously invested in many companies related to the upstream automobile industry chain through Xiaomi Intelligent Manufacturing Fund, Xiaomi Industrial Investment Fund, Shunwei Capital and other investment institutions. However, compared to BYD, which has been deeply involved in the automobile industry for many years and has accumulated deep supply chain resources, Xiaomi Auto's profit margins are difficult to compare with BYD Seal.
Due to the relatively high profit margin, in November 2023, BYD's Seal Champion Edition launched a limited-time promotion of 2,000 to 9,000 yuan, and the 550km elite version was priced at only 189,800 yuan.
Faced with an intensifying price war, it is difficult for Xiaomi Motors not to fall into a dilemma: if the price is reduced, it will be difficult to balance the high upstream manufacturing costs; if the price is not reduced, it will be difficult to convince consumers to pay.
Li Xiang, CEO of Li Auto, believes that “in the next three years, competition will be extremely fierce, and five major brands will eventually be born,” three of which are BYD, Tesla and Huawei.
Lei Jun put forward his own goal: Xiaomi Motors will become one of the top five automakers in the world within 20 years.
▲Picture: Lei Jun at the press conference