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From Smartphones to Smart Cars: Xiaomi's Automotive Business and Its Strategic Implications

From Smartphones to Smart Cars: Xiaomi's Automotive Business and Its Strategic Implications

Leveraging their robotic vacuum expertise?

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Tech Buzz China
Feb 03, 2024
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From Smartphones to Smart Cars: Xiaomi's Automotive Business and Its Strategic Implications
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Table of Contents

Things that Caught Our Attention

Introduction

The Timeline of Xiaomi's Automobile Business

Continuous Investment in the Automotive Field

Research and Development

Manufacturing

Xiaomi's First Car

The "Human x Car x Home" Smart Ecosystem

Xiaomi’s Main Business / Ecosystem

Internet of Things and Service

The Competitive Landscape

Xiaomi's Automotive Strategy Predictions

Strengths and Weaknesses Analysis

Strategy Predictions

Positioning & Pricing

Segmentation and Targeting

Outlook

Key Takeaways

References

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Things that Caught Our Attention

  • On November 17, 2023, China's key ministries issued the "Notice on Pilot Admission and Road Use of Intelligent Connected Vehicles," focusing on L3 and L4 autonomous driving trials. Companies like BAIC's Arcfox, Changan and its Shenlan, Avatr, BMW, Mercedes-Benz, IM Motors, and Aion's Hyper recently received L3 autonomous driving test licenses, marking a growing trend in L3 level autonomous driving technology in the Chinese auto market. (Source: 36Kr)

  • A Morgan Stanley report from May 11, 2023, highlighted by the South China Morning Post, states that SoftBank's stake in Alibaba dropped from 6-7% in December 2022 to under 0.5% by May 2023. This decline is due to SoftBank selling Alibaba shares to fund its Vision Fund needs. Consequently, Jack Ma, with around 4.5% stake, became Alibaba's largest shareholder six months ago. (Source: 36Kr)

  • At a recent Asia Society Northern California conference, Tech Buzz China founder Rui Ma explored "Innovation in the US and China" with notable panellists like NIO's US head Ganesh Iyer and Bloom Energy's CEO KR Sridhar, moderated by Gary Rieschel, a cross-border VC and the founder of Qiming. See the discussion here.

Introduction

On December 28th, 2023, Xiaomi unveiled its first car model, the Xiaomi SU7, at its technology launch event in Beijing. This C-class sports sedan is scheduled for mass production starting in the first half of 2024. At the event, Lei Jun, Founder, Chairman, and CEO of Xiaomi Group, stated that Xiaomi Auto aims to rival Porsche and Tesla and aspires to be among the top five global car manufacturers within 15 to 20 years.

Xiaomi's foray into car manufacturing, a seed planted a decade ago, is approaching the pivotal phase of product realization. In this issue, we deep dive into Xiaomi's automotive business, exploring the intricacies of its strategy, the potential impact on the global automotive landscape, and the company's vision for the future of transportation. Why does a tech giant known for its smartphones decide to venture into the highly competitive automotive industry? How might Xiaomi's entry into the automotive market change traditional engineering and driving experience? These are the questions we aim to explore, providing an in-depth look at the strategic decisions and investment possibilities they present.

Freya Zhang and Ed Sander, Research Editors

Rui Ma, Consulting Editor

(click on the images above for information on the Tech Buzz China team)

Disclaimer

The Timeline of Xiaomi's Automobile Business

In April 2013, Lei Jun ventured to the United States for a meeting with Elon Musk. At the time, Xiaomi was emerging in the tech world with its new high-end Android smartphone, Xiaomi 2s, while Tesla, celebrating a decade, had just launched the Model S. Inspired by this conversation, Lei Jun wrote an article praising Musk, titled "Elon Musk of Tesla: A Cool Fellow." He then bought two Model S cars, using one for driving and the other for disassembly, possibly sparking his interest in car manufacturing. 

Continuous Investment in the Automotive Field

Post-2014, Xiaomi embarked on an ambitious investment journey that covers the gamut from auto components to complete vehicles and the aftermarket. A look at their investment history reveals a significant and diverse portfolio.

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