Text | Peng Fei
Operations | Song Song
When Xiaomi Group was developing at a rapid pace, Lei Jun once said that he had a "scheduled schedule, with an average of 11 meetings a day" , The average time for eating is only 3 minutes every day.” Now for Xiaomi Motors, which “fights for all the reputation of life”, Lei Jun will only be even more busy.
In the five months between the announcement of car manufacturing and the formal establishment of the company, Lei Jun frequently visited BYD, FAW Group, Great Wall Motors, Changan Automobile, Dongfeng, Evergrande Automobile, SAIC-GM-Wuling, SAIC Group, and Beijing Hyundai , Bosch, CATL and other companies, and from time to time there have been "scandals" with local governments in Beijing, Jilin, Shanghai, Tianjin, Wuhan, Hefei, etc.
Almost half of the automotive industry is “feverish” about Xiaomi cars. As Xiaomi Automobile settles in Yizhuang, Beijing, its business development will gradually enter the actual operation stage from the preliminary inspection.
Next, a new round of fierce competition began over where to locate the factory. Who will win the Xiaomi car?
01
Acquisition of Borgward Automobile Factory?
Rebus’ aura is no less than that of Huawei. On September 13, FAW Jiefang's opening stock price once approached the daily limit, setting a new high for the year. Behind the rally was the news that "Lei Jun and his entourage went to China FAW Group for in-depth discussions on cooperation matters."
But stock investors only enjoyed the carnival for one day. FAW Jiefang fell to 11.63 yuan/share on September 14, a drop of about 4%. The outside world attributed this to "Lei Jun has a new love."
News that "Xiaomi Auto may acquire production capacity and production qualifications through acquisitions" has begun to ferment in the industry. At the same time, Borgward Automobile has also surfaced as Xiaomi’s “new love partner”.
“Even if it is sent down to the provincial Development and Reform Commission and the Bureau of Industry and Information Technology to apply for new factory production qualifications, it will require a long process and other supporting procedures.” Automobile industry analyst Zhong Shi told Auto Market Story, “ The main purpose of acquiring other car companies is to save time and get it done in one step, but the price is to pay a certain economic price."
Xiaomi needs to compete with new car-making forces such as Tesla and NIO. For example, Xiaomi entered the automobile industry relatively late. Spending money to buy time is a cost-effective deal for Xiaomi Auto, which has hundreds of billions of dollars in capital.
If we look back at Xiaomi’s rapid development since its establishment, Lei Jun believes that the core reason is high efficiency. Borgward Automobile in Miyun, Beijing, has dual production qualifications for new energy and traditional energy, and has an annual production capacity of 360,000 complete vehicles. This is indeed very attractive to Xiaomi.
According to relevant reports, Borgward Automobile production has entered a stagnant stage. Even though the epidemic prevention and control situation continues to improve and the industry has already resumed work and production at 100%, the Miyun factory is still suspended for as long as a year. In 2020, the factory capacity utilization rate was only 4.83.
Three months ago, it was revealed that Xiaomi and Borgward Auto had in-depth negotiations. At that time, due to the huge disparity in the valuation of Borgward Auto, the negotiations came to an abrupt end. According to people familiar with the matter: "Lei Jun's bid was extremely low at the time, far lower than the price Lu Zhengyao paid for Borgward."
Lu Zhengyao is a director of Luckin Coffee, China UCAR, China Car Rental and Borgward Automobile long. Although he acquired the equity of Borgward Auto 67 from Beiqi Foton at the end of 2018, Lu Zhengyao did not have much capital to negotiate with Lei Jun.
For the current Borgward Automobile, the most valuable assets are its smart factory and land assets located in Miyun, Beijing.
At that time, Foton spent 4.724 billion yuan on the Borgward Beijing factory project. Its 4.0 smart factory even won the title of "Sino-German Intelligent Manufacturing Cooperation Pilot Demonstration Project" issued by the Ministry of Industry and Information Technology. However, these assets were not taken over by Lu Zhengyao.
According to Auto Market Story, in January 2019, Foton issued an announcement saying, “Since the land occupied by Borgward Automobile Factory has been included in the Huairou Science City planning, the Beijing Municipal Government has considered the future of the Science City. The planning requirements require Foton to promise that the land use rights of Borgward Motors will remain with Foton and return the land to the government when requested by Beijing. ”
This also means that the actual ownership behind the Miyun factory is no longer there. Foton is not owned by UCAR either, but by the Beijing Municipal Government. At present, the Beijing Municipal Government only leases land and properties to Borgward Auto at market prices.
In order to attract investment from Xiaomi Auto, the Beijing Municipal Government requires the factory to be taken back, which is not impossible. Since Xiaomi Auto’s headquarters is located in Beijing, it is more likely that the manufacturing plant will be located in Beijing.
"Relevant parties in Beijing are actively promoting Xiaomi to obtain production qualifications through the acquisition of Borgward Automobile, and there should be results soon." A source said.
At present, the reorganization of electric vehicle manufacturing capacity is also advocated by the country. "There are currently too many electric vehicle companies on the market and they are relatively fragmented. To become bigger and stronger in the future, electric vehicle companies need to carry out mergers and reorganizations and increase investment in advanced technology." Xiao Yaqing, Minister of Industry and Information Technology, said recently.
Theoretically, car companies with overcapacity problems all hope to "get involved" with Xiaomi. Borgward Auto is not Xiaomi's only choice, but it is speculated from recent information that although Lei Jun has recently "checked in" "There are no less than dozens of car companies, but some car companies have clearly refuted the rumors or officially responded that they will not sell their factories.
Xiaomi’s choice of Borgward Automobile Factory for OEM production is even clearer. There are many car companies that can build cars, but not many can actually negotiate with Xiaomi Auto. This can be seen from the setback of Apple's car project.
Apple CEO Cook, who is also working non-stop, has been negotiating with Hyundai, Nissan, Volkswagen and other car manufacturers for Apple Car OEM. However, surprisingly, no car company has been clearly willing to provide Apple with OEM services. Make cars and act as a foundry.
The reason is also very simple. Traditional car companies with some strength do not want to "dilute" their brand value by cooperating with Apple and becoming Apple's foundry.
“Strong car companies such as BYD, Great Wall and FAW Group have in-depth negotiations with Xiaomi Motors because they hope to share their own platforms or have in-depth mutual cooperation in other aspects. Build cars instead of becoming a foundry," an industry insider told Auto Market Story.
02
Fierce "race" for Xiaomi car factory
Industry insiders analyze that acquiring car manufacturing qualifications through the acquisition of factories is only a short-term strategy and will not be possible in the future. If Xiaomi is ruled out, it will expand its footprint and build its own factories and R&D centers in other cities. Coincidentally, there was news on September 13 that Xiaomi Auto may adopt a "dual factory" model.
"A self-built factory is definitely the location and environment that best suits you and can ensure sustainable development." In Master Zhong's view, the future base camp must be in a self-built factory. Of course, if the support of the local government where the purchased factory is located remains stable, car companies will also be happy to see the results. "Generally, it is better to be prepared on both sides. Geely has made all preparations."
Xiaomi has great ambitions in building cars. It is reported that Xiaomi plans to release its first car in 2024 and launch a new car every year. The total sales volume in three years will reach 900,000 units. Lei Jun once stated internally that Xiaomi Auto plans to "launch the car in three years and sell 100,000 units in the first year."
Industry insiders analyzed Auto Market Story, "100,000 units a year is a big goal, but it is not an unrealistic dream. 'Wei Xiaoli', the new car-making force, all start from scratch. There is no brand value at the beginning, but Xiaomi is different. A huge database of Xiaomi products has accumulated a potential user base for Xiaomi cars in the future. "
"If Xiaomi cars are mass-produced in three years, we can make a bold guess about Xiaomi noodles. The first problem is not sales, but insufficient production capacity. "Based on this concern, if the Miyun factory in Beijing with a production capacity of 360,000 yuan is acquired by Xiaomi, Xiaomi will also encounter the problem of insufficient production capacity. The "dual factories" were laid out in advance, and the logic seemed to follow its course.
Lei Jun, who has invested in new car-making forces, has a lot of experience to draw from, whether it is OEM or self-built factories.
Xiaopeng Automobile was initially produced by Haima Automobile, but in March 2020, it indirectly acquired Guangdong Foday Automobile and obtained production qualifications. At present, the tail logo of the facelift model of the Xpeng G3, the G3i, has been changed from the "Haima" logo to "Xpeng", and the second phase of the Xpeng Automobile Zhaoqing factory has also started.
The best choice for Xiaomi Auto may be to follow a multi-location route similar to that of Xpeng Auto, quickly acquiring production qualifications through acquisitions in the early stage, and expanding production capacity through self-built factories in the later stage.
Since Lei Jun officially announced that Xiaomi will build cars, local governments immediately took action and tried every means to bring Xiaomi to their cities. Cities such as Beijing, Shanghai, Wuhan, Hefei, Xi'an, and Chengdu have all extended olive branches. It can be said that the competition for factory location is far more intense than the competition for the location of Xiaomi Automobile’s headquarters.
“Which city Xiaomi Motors settles in will bring investment to the city. More importantly, it will bring talents in the automobile-related industry chain and smart cars, and is expected to introduce the entire new energy automobile industry chain. ." Industry insiders said.
According to the official introduction of Hannan District, there are 8 vehicle companies and 13 vehicle production plants in the district, including Xpeng Motors, Dongfeng Honda, Shenlong, Dongfeng Passenger Cars, Geely Lotus, Geely Commercial Vehicles, etc. focus on the development of lithium power batteries, hydrogen fuel cells and other fields. It is also a test demonstration area for intelligent connected vehicles and has good industrial advantages.
At the same time, Wuhan and Lei Jun also have a deep relationship. Wuhan University trained Lei Jun, who also has industrial layout in Wuhan. It is very likely that Xiaomi Auto will build its own factory in Wuhan.
Although there is an "optimal" target, Lei Jun is still running around choosing a location to build a car. On September 11, according to the Jilin Provincial Government website, senior leaders of Jilin Province met with Lei Jun and his delegation in Changchun; on August 31, senior leaders of Tianjin City visited Xiaomi Group for investigation and had discussions with Lei Jun on further deepening cooperation between city and enterprises.
(Picture: Senior leaders of Jilin Province met with Lei Jun and his delegation in Changchun)
“Finally, Xiaomi may compare preferential land policies, tax exemptions, etc. in various places, and consider the local industrial chain and industrial environment, etc., to choose where to locate the self-built factory,” analysts said.
03
Xiaomi is running hard
Building a car is not easy. Since Lei Jun has all the reputation, Xiaomi must be cautious when building a car. many.
But Lei Jun’s view on Xiaomi’s development has always been, “After choosing the right general direction, you must ensure the speed of running. Running itself can solve the problem.”
Made by Rebus The running speed of the car is not unpleasant. The Apple project, which was rumored to launch "Project Titan" as early as 2014, has been brewing for at least 6 years, and Xiaomi Auto has made a series of substantial progress in less than 6 months since it entered the game.
Right now, the most difficult thing about new energy vehicles is not to create a decent product, but how much sales a product can achieve.
The sales volume approved by users determines the output, and the scale of output determines the sustainability of the supply chain and capital chain. For Xiaomi Auto, without sales, the car company's life hangs on a thread, and the "dual factory" model is also a gamble in its early stage.
Regarding Xiaomi’s advantages in making cars, Master Zhong commented, “What Xiaomi is most confident about is not how much investment funds it can attract, but that the original large and mature Xiaomi ecosystem has been established, and the customer base for its automobile products has , marketing and promotion costs are much higher than those of any new car company. This is Xiaomi's valuable 'intangible asset'. ”
However, as a latecomer, Xiaomi Automobile also needs to make up for its mistakes. Very much - intelligent driving is a big course. Judging from the patents currently applied for by Xiaomi, they are mainly focused on smart cockpits, and the patents on autonomous driving are far less than those of Huawei, Baidu, Didi and other technology companies.
Judging from recent months, Xiaomi, which is “not short of money”, has been making frequent moves towards companies in the field of autonomous driving. First, it secured investment in two autonomous driving manufacturers, Zongmu Technology and Hesai Technology, and then also participated in strategic investments in DeepMotion (DeepMotion Technology) and Smart Interoperability (iParking).
Of course, the technical barriers to autonomous driving do not mean that you can overtake in a corner by acquiring a few companies. In-depth research on algorithms and real data collection are a mountain that Xiaomi Auto cannot bypass.
Xiaomi Automobile, which is well aware of this truth, has recently been poaching talents in the field of autonomous driving with high salaries, but it is too difficult to find the talents you like. Although Xiaomi's salary is nearly 20-30% higher than the market, Xiaomi officials also revealed that Xiaomi Auto has received more than 20,000 resumes, but in the end only more than 300 people completed the job, and the pace is still slower than outside expectations.
It is worth mentioning that on the day when "Xiaomi Automobile Co., Ltd." was officially established, Xiaomi officials also posted a photo of Lei Jun and 16 other team members. When the outside world analyzes the "identity" of these 16 key players, people can't help but lower their expectations. The reason is that the top management of Xiaomi Auto are all laymen. Only one member has a background in the automotive industry and is an exterior designer.
The lack of talent may hinder Xiaomi’s progress in building cars. Previously, it was widely rumored that Hu Zhengnan, the former director of Geely Research Institute, would join Xiaomi Motors, but in the end he joined Shunwei Capital due to avoidance of a non-competition agreement; there is also news that the former chief operating officer of Ford Motor (China) Electric Vehicle Division Zhu Jiang has offered to resign, and his next stop may be Xiaomi Motors, but the news has been circulating for a while and it seems that the trip has not finally taken place.
In 2024, can Xiaomi build a car that makes people "scream"? The answer is very uncertain. Looking at the future of Xiaomi Auto just from the perspective of building a car, the value of Xiaomi Auto may not be very high. Facing strong competitors and complex supply chain management in the future, it will be very difficult for Xiaomi, which lacks technology reserves in the automotive industry, to gain profits from building cars.
But from another perspective, from the perspective of building a "mobile terminal and digital space", if Xiaomi builds a car, it can really be like Lei Jun thinks, "adding four wheels to a mobile phone and a complete set of intelligent systems." "Will the value of Xiaomi cars become different? The core premise is that Xiaomi can successfully copy the electronic product ecological chain to cars.