Electrical: Xiaomi CEO becomes car salesman – 04/05/2024 – Tech

A little more than a decade after founding Xiaomi as an Apple imitation, Lei Jun has finally surpassed his Silicon Valley rival.

While Apple this year quietly abandoned a decade-long, billion-dollar project to build an electric vehicle, the Chinese group now has electric cars rolling off production lines in Beijing every two minutes.

Lei’s marketing talent and penchant for turning ideas into products have earned him comparisons to Steve Jobs, such as the nickname “Lei Jobs” within China.

Last week, he took to the stage in Beijing in a turquoise blazer to extol his triumph of making a car just three years after unveiling the project.

“It was so difficult [construir um carro] — so difficult that even a giant like Apple gave up,” he told hundreds of excited fans.

The hard work shows signs of bearing fruit: Xiaomi shares rose 12% on Tuesday in response to strong demand for the SU7 model following the launch event. The company has received more than 100,000 pre-orders, although many of these are refundable deposits.

Since founding Xiaomi with seven colleagues in 2010, Lei has built the company into the world’s third-largest phone maker and built a product line so diverse that the Xiaomi logo adorns everything from suitcases to smart washing machines.

In 2021, Lei made the group’s boldest bet yet, announcing a plan to mass-produce cars by 2024 based on an initial investment of $1.5 billion in what he said would be his “last big entrepreneurial venture.”

The new car fits into Xiaomi’s product universe, allowing drivers to turn on everything from home lights to the rice cooker from the center console.

“When trying to make a car for the last three years, every day I shook with fear,” he said last week. “It was a huge weight on my mind.”

A person briefed on the initiative said Lei dedicated 70 to 80 percent of his time over the past year to Xiaomi’s car project, starting in the office at 7 a.m. and working until 10 or 11 p.m.

“Lei has ambitions to turn Xiaomi into one of China’s top three EV manufacturers,” the person said.

This would also make Xiaomi one of the biggest EV manufacturers in the world. Its factory on the outskirts of Beijing can produce 150,000 cars a year, with expansion plans that would double capacity, according to state media. Executives said Xiaomi’s global presence, with smartphone distributors and stores around the world, would accelerate car sales abroad.

However, it is being launched in a highly competitive Chinese market that is in the midst of a price war.

The country’s vast supply of stylish, cheap, high-quality electric cars has made Citi analyst Jeff Chung less optimistic about the prospects for Xiaomi’s new offering, which closely resembles the Porsche Taycan and is priced starting price of 215.9 thousand yuan (US$29.8 thousand)

“In the end, everyone could be a loser in the 200,000 to 300,000 yuan pure electric vehicle segment,” he noted.

The group’s rapid transition from EV hopeful to mass production has been aided by the emergence of a mature supply chain in China for the electric car industry.

Domestic EV makers, along with Tesla, which has a large factory in Shanghai, have fostered a large talent pool and a new breed of suppliers, from battery giants like CATL to aluminum parts makers like Wencan Group.

A supplier of automation equipment for the Xiaomi factory said there were dozens of former Tesla employees working inside the plant. “Tesla is like the Whampoa military academy of EVs,” he said, referring to the 1920s training camp for the Chinese forces that would eventually unite the country. Similarly, Apple also recruited Tesla talent from Silicon Valley in the early days of its car project.

A Xiaomi spokesperson said the company received 30,000 CVs from people with experience at major car manufacturers shortly after announcing its EV business, with 3,000 engineers now on staff at the unit.

Lei began his career as a programmer in college in the central Chinese city of Wuhan. In 1989, together with an older former student, he launched his first product: encryption software sold on a floppy disk.

His next company, started in a local hotel room, sold computers and software as well as printing and photocopying services. “As the business grew in different directions, it became increasingly difficult to make money,” he recalled during a recent Xiaomi event.

Eventually, he became head of Kingsoft, a Chinese software maker that produces productivity tools similar to Microsoft Office. He continues to hold a 23% stake in the company, which is listed in Hong Kong and valued at HK$31 billion ($4 billion).

Three years after Jobs launched the first iPhone in 2007, Lei assembled a team to build a smartphone with similar features. Xiaomi devices have become known for their high-quality specifications and affordable prices. Heavily promoted by Lei, they quickly gained a legion of fans.

But the image of being a valuable player has been difficult to overcome. Lei has repeatedly tried to make premium phones, but has failed to find many buyers at prices close to Apple’s.

This has left Xiaomi selling high-quality products on razor-thin margins: the group’s profit margin was 6.4% last year, compared to Apple’s 26%. Investors value the group at just under $50 billion, or about one-fiftieth of Apple’s market capitalization.

Frank He, technology analyst at HSBC Qianhai Securities, said Xiaomi makes about half of its profits from services sold to users, especially from the group’s app store in China, which replaces the country’s banned Google Play store.

He said he expected Xiaomi’s cars to be sold at a loss over the next two years as the automaker grew, but that eventually the group would make a small profit on each car sold and profit from services sold to drivers.

“President Lei wanted to have a new growth engine with a larger addressable market,” he said. “Xiaomi’s unique advantage is brand power. It is both in China and outside China.”

Christoph Weber, general manager of engineering software company AutoForm, worked with Xiaomi’s car unit in Shanghai and said Lei seemed ready to repeat his success by starting with a high-quality car.

“They think like a technology company, not like a traditional automotive company,” he said.