Chinese smartphone giant Xiaomi may not be a household name globally, but it’s succeeded where Apple failed by launching its own electric car. That’s a feat Apple couldn't accomplish despite a decade of effort and billions of dollars spent. Now, Xiaomi is turning its sights to Tesla.
Bloomberg Originals explains why Xiaomi is betting big on EVs.
00:00 Introduction 01:41 What is Xiaomi 03:46 Why electric cars? 04:45 How the tech company did it 07:00 Why its cars are popular 08:12 China’s EV ecosystem 09:00 Xiaomi’s global ambitions
02:42I mean, what kind of tech company sells mattresses?
02:45The goal that Xiaomi is trying to achieve is to seamlessly integrate Xiaomi's products.
02:51into almost every corner of your life.
02:55The EV project is to fill in that void for Xiaomi so that it can build a fuller ecosystem for its users.
03:03But there was another reason.
03:05In 2021, the company's growth hit a roadblock.
03:10The biggest reason for Xiaomi to enter into EVs was because of U.S. sanctions.
03:16And that actually put Xiaomi management into a panic because smartphones were still quite a big chunk of their revenue at that time.
03:24What shall we do?
03:26The board was actually asking Lei Zhen, what are you going to do if you can't sell smartphones anymore?
03:32So when it was first brought up, Lei Zhen was struggling a lot.
03:36Lei Zhen wrestled with the idea for a good reason.
03:39Many people say EVs are actually smartphones with wells, but it's much complicated than that.
03:47If you're making a smartphone, I think the number of components is probably over a thousand or two thousand or so components.
03:55If you're making a car, that number jumps to tens of thousands of components and a very extensive supply chain.
04:03Lei Zhen admitted that he was not someone who knew about EV that well.
04:08And then you have to bring in talent, right?
04:11The best way to do that is to scoop from other companies.
04:16So Lei Zhen said about wooing the best talent from across China's EV industry.
04:21Xiaomi's headhunters actually reached out and basically offered them the salary that they cannot say no.
04:28Chile is probably one of the best examples because their former director of their research institute decided to go over to Lei Zhen's investment fund.
04:41We also know that executives from BMW, from other Chinese automakers such as SAIC and Woo Ling have also joined Xiaomi.
04:51With talent in hand, Xiaomi threw itself into all parts of the EV supply chain,
04:56investing over $1.6 billion into more than a hundred companies,
05:01and eventually constructing its own factory in Beijing.
05:05I don't think we've seen anything like that in the auto industry,
05:09at least definitely for the China market.
05:12In 2024, Xiaomi launched its first car, the SU7.
05:17All of this has sent Xiaomi's stock surging faster than its European counterparts.
05:27Xiaomi has always denied us.
05:29But just looking at Xiaomi's first EV, the SU7 sedan, a lot of people would say that it resembles a Porsche Taycan.
05:38They are trying to learn from the best.
05:41And in the meantime, the boundary between learning and copycatting, I don't think it's that clear.
05:48And Xiaomi's been taking notes on mistakes as well, avoiding issues which slowed its competitors down.
05:55So, how did a company, largely unknown outside of China, manage to do what Apple couldn't?
06:14Apple and Xiaomi probably were reaching for different goals.
06:19Apple was really looking to disrupt the entire automotive industry with something like an entirely autonomous car that required no human assistance.
06:29While Xiaomi took a more grounded approach, it's not a completely new disruptive product on the market.
06:37On top of this, Xiaomi has proved to be very efficient at scaling up.
06:42It took 230 days for the EV maker to pump out its first 100,000 units.
06:48While for some of its Chinese competitors, this took far longer.
06:52And it's a good thing too, because their cars are selling fast.
06:56Its price tag is part of the reason why.
06:59In China, the starting price for Xiaomi's SU7 is just over $30,000.
07:05And its follow-up vehicle, the YU7, is around $35,000.
07:10This makes them competitive alternatives to Tesla's Model 3 and Model Y.
07:17The incredible pace of Xiaomi's EV development also shows how unique China's market is.
07:23Through the past decade, the Chinese government has invested heavily into building out this charging network,
07:30as well as a supply chain that goes everything from batteries to technology such as LiDARs.
07:37So all of these state support has meant that there's a very mature and sophisticated supply chain to help get a new brand off the ground.
07:47In 2024, just over 64% of all passenger EV sales were in China.
07:53And China has around 140 EV manufacturers.
07:58But when looking at a list of the country's best-selling cars, Xiaomi is a small player.
08:05It's not bad for a company that has only three years of experience making EVs.
08:10But if you talk about BYD or Tesla, they are on a million level.
08:16Xiaomi set an ambitious goal to become one of the world's top five car makers within the next 15 to 20 years.
08:23To make that happen, Xiaomi needs to find customers outside of China.
08:28But there are a lot of hurdles in the way.
08:30Similar to other Chinese automakers, Xiaomi is going to face a lot of geopolitical uncertainties as it expands globally.
08:39You've got all of these trade barriers that regions such as the EU, the US, Canada, Turkey,
08:46they have all introduced tariffs to try to stave off this wave of Chinese EV expansion.
08:53The US has a 100% tariff on Chinese EVs, effectively locking Xiaomi out.
09:00It's very, very difficult for a Chinese brand to penetrate that market.
09:05The industry dominant player right now is BYD.
09:08And you've also got the industry pioneer, Tesla, that is actually suffering a slump in sales.
09:15So it's very hard to say how things will turn out within the next decade.
09:23the Washington-Mwegenian cat is affected by Microsoft account by punto arrow.
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