Can Xiaomi Grab Tesla's Car Business?

 

Is it Not Easy for Xiaomi to build a Car to grab Tesla's Business?

Today, according to "Late Post" learned from multiple sources, Xiaomi has determined to build a car and regards it as a strategic decision, but the specific form and path have not yet been determined, and there may still be variables. A person familiar with the matter said that Xiaomi's car may be led by Lei Jun, the founder of Xiaomi Group.

Affected by this news, Xiaomi's share price rose violently, from a drop of 4% to a rise of more than 10%, reaching a maximum of 32.3 Hong Kong dollars.

 

Then Xiaomi responded: "Wait and see, there is no..." Xiaomi's stock price subsequently fell and closed at 30.65 Hong Kong dollars, up 6.42%.

 

Some people say that there are two secrets to the surge in technology companies. 

One is to announce the car and the other is Elon Musk's tweet. Indeed, there is Baidu before and Xiaomi after. 

As long as technology companies announce to build a car, the stock price will rise sharply. 

After the news of Baidu's car building, the market value directly doubled, hitting a new high of 110 billion US dollars. 

If an Apple official claims to build a car, its market value of $3 trillion may not be a dream.

 

The reason is simple: technology is unstoppable to the changes in the auto industry. Traditional auto factories have nothing to resist. 

New automakers have not only grabbed the auto market, but more importantly, they should develop smart car linkages and automation. Incremental markets for driving, smart transportation, and smart travel. 

Every market is much larger than the imagination of traditional cars.

 

Because of this, Tesla and Weilai have become capital legends, especially Tesla, whose market value has risen from less than 100 billion U.S. dollars to nearly one trillion U.S. dollars in just one year, with a price-earnings ratio of more than 1,230 times.

 

Whether Xiaomi builds a car or not is still full of uncertainty. In the eyes of some people, it will be a matter of time for Xiaomi to build a car. 

So, what do I think of this rumor? 

In fact, only two questions need to be considered:

 

The first one is: Will Xiaomi definitely build a car?

 

The second is: what will happen if Xiaomi really builds a car?

 

Think about these two issues clearly, the truth of the late news this time is not so important.

 

Does Xiaomi have to build cars? Tech companies have become popular in building cars, and the barriers to building cars seem to be much lower in cooperation with traditional car companies. 

As a "department store", Xiaomi makes cars, and the logic seems reasonable. However, even if Xiaomi builds a car, I think it is worth thinking about the following points:

 

1. Does a good mobile phone make a good car? not necessarily. Xiaomi’s mobile phones, TVs and other product lines have all been successful, but the complexity of cars is several orders of magnitude higher than that of mobile phones and TVs. 

Although smart cars are "mobile smart electronic devices", those who make mobile phones can make cars. In other words, there is hardware experience in making smart phones, which is obviously a fallacy. 

If this is the case, OPPO and vivo can also build cars. In fact, many high-tech companies, real estate companies, and luxury cars built by traditional car companies have all died, and very few have survived.

 

2. Car manufacturing requires much higher capital, channels, manufacturing, services, etc., and the rules of the game are completely different from those of digital or home appliances. 

What many people overlook is that one of Tesla’s major competitiveness is smart manufacturing, and the super factory is part of its competitiveness. What many people overlook is that the battery swap system is the core competitiveness of NIO, which is costly. 

A lot of time to find out, there are a lot of Know-How.

 

3. The most important point is that the core of smart cars is not only cars, but also intelligence, that is, AI technology, especially autonomous driving. 

This is the focus of Tesla and Xiaopeng, and it is the reason why Baidu is favored to build cars. This is the key to the inability of traditional car companies to stop new forces in car manufacturing. 

In terms of autonomous driving, Xiaomi has a zero foundation. Although it can be obtained by spending money and time, it must be long enough and large enough investment. 

Xiaopeng, Weilai, Ideal and Baidu have been tossing for almost 10 years now. Tesla has been tossing pure electric cars for almost 20 years.

 

4. Xiaomi's "gross profit margin is not higher than 5%" pricing strategy and Internet marketing capabilities have limited impact on the automotive industry. 

After all, who wants PK to be cheap, who has the cost-effectiveness, and who can market, Wuling Hongguang is already in the front, and the 28,800-based MINIEV should know about it? 

None of the new forces that are doing a good job in car-making have won by "cost-effectiveness".

 

5. As far as the car is concerned, talking about the IoT ecological chain is quite fictitious-of course you can YY, remotely control the air conditioner at home in the Xiaomi car.

 

6. It is true that Lei Jun himself is more concerned about car building. He has visited Musk twice, He Xiaopeng is a good friend of Lei Jun, and Shunwei Capital has invested in Xiaopeng Motors for multiple rounds. 

Some people say that Xiaopeng Motors is "the millet of the automobile industry". 

It is "the young man's first car". Of course, this relationship will not fundamentally affect whether Xiaomi builds a car. But if Xiaomi builds a car, it is likely to have some cooperation with Xiaopeng (not just competition).

 

For investors:

Short-term investors, speculating on news, the truth of news is very important.

 Now that there is a mixed news on the Internet, we must pay attention to discrimination.

 

Long-term investors should not only look at the news but also look at the long-term value. 

If they are optimistic about Xiaomi's car manufacturing, they should plan to hold their positions for a long time, because the time from the official announcement to mass production of the car must be very long, at least two or three years. 

If you are optimistic about Xiaomi making cars, it doesn't matter whether the news this time is true or not.