More than ten years after creating Xiaomi and bringing the Beijing-based company to the podium of global smartphone manufacturers, Lei Jun is embarking on a new major challenge. At the end of a major conference presenting new connected phones and bracelets, the Chinese serial entrepreneur opened a new page in Xiaomi’s history by launching into the manufacture of intelligent electric cars.
“This initiative represents the last major entrepreneurial project of my life, said Lei Jun, whose aura in China is reminiscent of that of a certain Steve Job. I am ready to put my entire personal reputation on the line and fight for the future of our intelligent electric vehicle ”.
As a sign of the importance given to this new activity, Lei Jun will directly manage a new subsidiary dedicated to electric vehicles, in addition to his role as CEO of Xiaomi. After an initial investment of 10 billion yuan ($ 1.5 billion), the company pledged to invest at least $ 10 billion over the next ten years in the new entity.
Xiaomi isn’t the first Chinese tech giant to eye the electric vehicle market. Baidu announced in January the creation of an independent entity for this purpose as well as a partnership with Geely, the Chinese manufacturer which owns Volvo. In February, Reuters reported that Huawei was in talks with state-owned manufacturer Changan and other companies to make electric vehicles. In the United States, Google and Apple are also working on entering the electric vehicle market. Everyone is betting that future cars will become more and more autonomous and connected.
New energy vehicles are booming in China, the world’s largest market in this field, and could represent an important growth driver for manufacturers of smartphones and consumer electronics. But it is also an extremely competitive market with the strong presence of Tesla, Chinese start-ups (Nio, Li Auto, Xpeng) and many traditional players who have decided to invest billions in electricity in China during the next few years.
Xiaomi, for whom mobile phones are just one piece at the heart of an ecosystem of connected objects, believes it has an interesting card to play. The manufacturer, which sells a range of products ranging from smart scooters and pressure cookers to air purifiers and toothbrushes, highlights its “proven” expertise in the business model of hardware-based Internet services and stresses that ‘It has many technologies that can be applied to the smart electric vehicle industry. “Getting into this activity is an obvious choice for us as we develop our ecosystem [d’objets] intelligent “, Lei Jun explained.
Another argument, “mid cars” could appeal to a community of customers who are very attached to the brand. Xiaomi also has significant financial resources. At the end of 2020, the group held cash of 108 billion yuan (14 billion euros). “I am fully aware of the risks of the automotive industry. I am also aware that the project will take at least three to five years with tens of billions of investments ”, Xiaomi’s boss said at an event in Beijing.
As with its smartphones and other electronics, the company will outsource the manufacture of its electric cars to manufacturers. Announced as a supposed partner of Xiaomi, Great Wall Motors has denied the information.
The rise of Xiaomi in a decade (the company will celebrate its eleven in a week) and its projects in 5G, artificial intelligence and the Internet of Things have ended up attracting the attention of the American authorities. In January, the company was blacklisted by the US Department of Defense. But unlike Huawei, Xiaomi managed to get a ruling on the ban in a US court.