With the approaching of mass production and delivery milestones, Xiaomi's car is becoming a hot topic in China.  

In the past three months, Hu Zhengnan, a partner at Shunwei Capital, disclosed Xiaomi's car's energy consumption test performance on social media. Xiaomi's founder and CEO Lei Jun also showed his whereabout  in Xinjiang, saying that the summer testing is underway.

It is rumored that the first phase of the factory has entered the trial production stage and is currently recruiting workers. The launch of Xiaomi's car is close.  

The car factory has started the trial production 

Recently, there have been external reports that the Xiaomi car factory in Beijing's Yizhuang has started production and is in the trial production stage, producing about 50 test vehicles per week.

The report quoted insiders as saying, "Xiaomi's car is expected to obtain the approval from the Ministry of Industry and Information Technology in the next two months, and production can start by the end of the year at the latest."

Currently, the external construction of the first phase of Xiaomi's factory is basically completed, and most of the internal areas are being decorated, with only small-scale construction remaining. At the same time, Xiaomi's car factory is recruiting workshop workers on a large scale, including operators, repair workers, maintenance workers, logistics engineers, and interns. The recruitment scale is around 100 people, with an average salary of 6,000 to 7,000 yuan, working 8 hours a day, with weekends off, and can start at any time.

According to Xiaomi's previous plans, the car factory will be built in two phases. The first phase covers an area of nearly 720,000 square meters and includes 4 factories, with an estimated annual capacity of 150,000 vehicles. The second phase is planned to start construction in 2024 and be completed in 2025. Now, it seems that the first phase of the factory is basically completed.

In addition to the internal construction of the factory, the supporting infrastructure around Xiaomi's factory is also being gradually built. In August of this year, the Beijing Municipal Engineering Construction Bidding and Tendering Trading System issued a tender notice for the "Beijing Yizhuang New City Xiaomi Intelligent Manufacturing Industrial Base Project (Phase I) supporting Huanjing Road (South Street of Xin South District - Xin Four Road) road and municipal engineering (survey)."

In addition, several office buildings have been built on the north side of the first phase of Xiaomi's factory, and the roads between the buildings, the entrance and exit of the east side underground garage, and other areas have been completed.

The first model may debut this year

At the same time, as the production time of Xiaomi's car approaches, Xiaomi executives have recently been frequently revealing information about Xiaomi's car, breaking the previous statement by Lei Jun that "there will be no disclosure of progress in car manufacturing in the next two years."

On August 19th, Lei Jun posted a post on his personal Weibo account, with the IP located in Xinjiang. One of the pictures showed Lei Jun, Lu Weibing, the president of Xiaomi Group, and Hu Zhengnan, a partner at Shunwei Capital, holding a banner with the words "Fighting for Xiaomi's Car". Later, Lu Weibing also posted a group of photos with a similar background, with the caption: "On the road... Xiaomi, go for it."

Image source: Lei Jun's Weibo

At that time, it was speculated that Lei Jun was personally leading the team to conduct road tests for Xiaomi's car in Xinjiang during the summer. This speculation was later indirectly confirmed when Lu Weibing revealed in the second quarter financial report that Xiaomi's car had indeed conducted summer tests in Xinjiang. "Currently, it is going very smoothly and should exceed our original expectations and plans." Lu Weibing also emphasized once again that the goal of Xiaomi's car to start mass production in the first half of 2024 has not changed.

According to insiders at Xiaomi, Xiaomi is preparing for the launch event of Xiaomi's car and Xiaomi 14, and the first model may debut this year.

TiPost App has previously compiled information about Xiaomi's first model in a report, including:

• In terms of appearance, from the leaked images from the previous supplier, it can be seen that the car body may adopt a sleek design, similar to the Tesla Model 3, and the size of the car body may reach B+ level. The top of the vehicle is a giant integrated panoramic sunroof, equipped with hidden door handles and continuous taillights. The tailgate also has a noticeable spoiler, and the wheels have a double five-spoke design with the new Xiaomi logo in the center.

• The nameplate of the suspected Xiaomi car shows that the battery pack has a rated voltage of 726.7V, a rated capacity of 139Ah, a battery pack capacity of 101kWh, and weighs 642kg. Based on this, it can be inferred that Xiaomi's first car model is likely to support 800V high-voltage fast charging, and the expected price will be around 300,000 yuan.

• Xiaomi may choose CATL and BYD's subsidiary, Fudi Battery, to provide car batteries. The base model will be equipped with Fudi's lithium iron phosphate blade battery, and the high-end model will be equipped with CATL's Kirin battery, creating differentiation in pricing and configuration.

• In terms of other configurations, the first car model may be equipped with one Heesai hybrid solid-state radar AT128 as the main radar, and several Heesai solid-state radars as blind spot radars.

In addition, there have been internal reports that the design and configuration of Xiaomi's first car model have been basically finalized, and the design work for Xiaomi's second car model, MX11, has also been completed, and it is expected to debut next year.

What advantages does Xiaomi have as a latecomer in the car market  

Before its official release, Xiaomi's car still remains a "mysterious veil," and the public's curiosity about Xiaomi's car is not only due to Xiaomi Group and Lei Jun's leadership, but also because of its identity as the "last entrant in the new force" in the industry.

Nowadays, competitors in the market are intensively competing in terms of price and configuration, making the competition more fierce. What advantages does Xiaomi's late entry into the car industry bring?

Overall, one advantage is price.

External reports have indicated that the overall hardware profit margin of Xiaomi's car will not exceed 1%, and profits will rely on software services and the ecosystem. This means that if the hardware cost of a car is 100,000 yuan, the car manufacturer will only make a profit of 1,000 yuan, which will result in an attractive starting price.

However, it should be noted that while a "1% profit margin" can provide an attractive hardware price, whether this strategy of replicating the selling point of smartphones can work in the car industry remains questionable.

The founder, chairman, and CEO of Li Xiang, Ideal Motors, once stated on social media: "A car company with basic common sense generally sets the stable gross profit margin of its products between 15% and 25% (corresponding to the retail price based on standard pricing, not the sales price after promotion and discounting), and the worst case scenario would not be lower than 15% gross profit margin (the agency model needs to include the dealer's sales gross profit margin in the calculation)."

In the current stage of the automotive market, the core source of revenue still comes from selling cars. Even Tesla, which claims to sell cars at zero profit, still has a profit margin of 18.2%.

From the current investment situation, since Q2 2022, Xiaomi has listed the "costs of innovative businesses such as Xiaomi Smart Electric Vehicles" and has invested over $5.5 billion in innovative businesses such as smart electric vehicles; of which, it invested 1.4 billion yuan in the most recent quarter.

Lou Weibing explained, "In order to ensure the technological leadership and smooth R&D of the first car, our investment is substantial; we will disclose the investment in new businesses every quarter, and from the perspective of cash flow, the numbers will be higher."

In addition, compared to other car companies, the premium ability of Xiaomi's unreleased cars still needs to be observed. According to Xiaomi's suppliers, Xiaomi's expected sales target for suppliers is "100,000 units in the first year and 2 million units in 5 years".

However, interestingly, there have been recent reports that Xiaomi's car has finalized China Innovation Huar (formerly known as China Innovation Lithium) and CATL as primary and secondary battery suppliers at the current stage. However, judging from the pace of model and battery development, the first model has already been offline, making it unlikely for China Innovation Huar to become the supplier of Xiaomi's first model. This move has been referred to as a "smokescreen" released for bargaining negotiations.

Looking at Xiaomi's cash situation, it has already spent over half of the billions of dollars invested in the past ten years. Whether the "1% gross profit margin" can allocate the upfront investment costs and maintain stable cash flow still depends on sales performance.

The release and mass production of the first car is the key for Xiaomi's car to make its debut and the foundation for the subsequent models' revenue. Regardless of whether the "1% gross profit margin" is implemented, for Xiaomi, which is good at cost-effectiveness, the pricing of its first model is still worth looking forward to.

The next is the ability of intelligent driving.

In August last year, Lei Jun directly stated that he chose autonomous driving as the breakthrough direction for intelligent electric vehicles, and firmly followed the path of full-stack self-research.

Xiaomi has built a dedicated team for the autonomous driving project, covering autonomous driving sectors such as sensors, chips, perception control algorithms, simulation technology, high-precision maps, high-precision positioning, toolchains, and training capabilities, and also invested in artificial intelligence laboratories, Xiao Ai classmates, and mobile phone cameras to support the project.

At that time, Xiaomi released the first real-life video of its autonomous driving technology on the road, demonstrating abilities such as unprotected automatic U-turns, automatic right turns, automatic detours, automatic detours around accident vehicles, automatic detours around roundabouts, zebra crossing yielding to pedestrians, autonomous valet parking, automatic downhill, automatic detours around 90-degree narrow bends, and automatic charging by robotic arms.

After a year, although Xiaomi has not publicly disclosed the progress of its autonomous driving research and development, car companies are now aggressively promoting the urban NOA battle in the automotive market.

This year, companies such as Xiaopeng and Huawei have advanced the implementation of urban assisted driving in cities such as Guangzhou, Shanghai, and Shenzhen. Xiaopeng plans to open XNGP, which does not rely on high-precision maps, in about 50 cities before the end of the year. Huawei expects to implement NOA in 15 mapless cities in Q3 this year, and add 30 more mapless cities in Q4, reaching a total of 45 cities. In addition, Li Auto also released NOA without relying on high-precision maps in June this year, and announced that it will open 100 intelligent driving cities by the end of the year.

If Xiaomi wants to achieve its initial goal of "Xiaomi's autonomous driving entering the industry's top camp by 2024", it must quickly enter the urban NOA battle and attach the label of intelligence.

The third is car-machine linkage.

Compared to other new forces in car manufacturing, Xiaomi's unique advantage lies in its accumulation in the mobile phone and IoT business, which can combine with car products to create a complete linkage ecosystem. Lei Jun believes that electric vehicles will evolve into consumer electronics in the future, and cars are part of Xiaomi's fully intelligent ecosystem, ranging from mobile phones to wearable devices, smart homes, smart offices, and smart travel, forming a complete intelligent ecosystem for all scenarios.

According to external sources, Xiaomi is developing its own operating system, which is a self-developed system compatible with AOSP (Android Open Source Project). This means that Xiaomi's self-developed operating system may cover various terminal devices such as car machines, tablets, and smartwatches.

In addition, the record of Xiaomi Technology Co., Ltd. registering the domain name mios.cn with the Ministry of Industry and Information Technology shows that it was approved on August 24.

It is speculated that Xiaomi's development strategy may be similar to Huawei's HarmonyOS, which means that in the initial stage, it will prioritize compatibility with the Android system to maintain its existing user base.

From the update progress of MIUI, Xiaomi's first car may be officially launched before MIUI 16. MIUI 15 may have some improvements related to Xiaomi cars.

Previously, an insider from Xiaomi revealed to the TiPost App that Xiaomi has a dedicated team responsible for car-machine connectivity. It has set up a car electronics department in the mobile phone division, mainly engaged in consumer electronics on-board and car accessories related businesses.

Car-machine connectivity is becoming an important focus for improving the intelligent cockpit experience. On one hand, Geely acquired Meizu and released the Flyme Auto car-machine operating system. On the other hand, FeiFan released the new Bach cockpit digital ecosystem, supporting connectivity between OPPO, Vivo, and other mobile phone brands and car machines. NIO will also launch the NIO Phone this month to enhance the car-machine connectivity experience.

"Car manufacturers without mobile software empowerment will gradually fall behind in the future." Shen Ziyu, CEO of Xingji Meizu, has emphasized the importance of car-machine connectivity, and Xiaomi's accumulation in the mobile phone business is undoubtedly an advantage that other car companies do not have.

As of September, it has been two and a half years since Lei Jun first announced Xiaomi's entry into the smart electric vehicle industry.

During these two years, Lei Jun not only invested a huge amount of money in car manufacturing, but also devoted half of his energy to the automotive business. The success or failure of Xiaomi's car business not only affects the success or failure of Lei Jun's last venture, but also directly impacts the revenue of the entire Xiaomi Group.

Now, the first product prototype has been produced, and the factory has entered the trial production stage, preparing for mass production. Xiaomi's car is about to make its debut. Can Xiaomi, which regards "becoming one of the top five in the world with an annual shipment of over 10 million units" as the only way to succeed in the car business, replicate the "catfish effect" of the mobile phone era?

(This article was first published on TiPost App, Reporting by Xiao Man and editin by Zhang Min)