Xiaomi EV

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Hi listeners, today we're covering a company
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that built its name on viral smartphones and
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a magic touch for creating every kind of smart
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home appliance imaginable. We are of course talking
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about Xiaomi. This company, which started far
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from the automotive world, has just launched
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its first two EV models and the result is stunning.
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The Su7 sedan and the Y7 SUV have become one
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of the most wanted and pre -ordered EVs in China.
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It also made the fastest EV sports car in history
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so far. This is Xiaomi EV. We're your hosts.
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I'm Linda. I'm Pan. Welcome back to Ascent. Hello
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listeners, welcome back to this episode of Ascent.
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Welcome back everyone. In this episode, you'll
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learn about Xiaomi EV, its recent EV creation,
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Su7, Ultra, Yu7, and yes, that's the only right
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way to pronounce it. I thought we were going
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with the spelling, like the YU7 and SU7. Yeah,
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SU7, that's right. We'll get to the naming conventions
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in a bit. And who is... Lei Jun, this man who
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is originally from a very small town in Hubei.
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He's a CEO, by the way. Right. And built one
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of the top cell phone companies in China. Why
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did Lei Jun even wanted to build this EV company
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from scratch? And what are the financial reasons
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that he may have wanted to do that? Also, to
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give you a little bit more context. This is our
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second attempt to making this. Yeah, so you've
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never heard an episode titled EVs of China because
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we never released it. Why did we not release
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it? We started with five companies in the EV
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research for episode zero. Let's call it that.
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And it was NIO, XPeng, Xiaomi, Li Auto, and BYD
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and decided that... It was completely out of
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control, the amount of research that we had to
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do. And after that two -hour recording session,
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we both felt like that our brains are both on
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fire. And that was way too big. So this is the
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second time of tackling this. We will get to
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the other companies later on. But for this time,
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we will just focus on Xiaomi. Yeah, our brains
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are still on fire. Like controllable fire. Actually,
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yes. It is not. Xiaomi EV is not to be underestimated.
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The amount of research that we both have to put
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into this to sort of reverse engineer how this
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decision is being made is a lot of work. How
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about we start with Lei Jun himself? Yes. The
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history of the CEO. Lei Jun actually had a few
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nicknames that people called him. I know in Chinese,
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there's like Lei Bu Si after Steve Jobs. That's
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the only one I know. And he was also called the
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Elon Musk of China because since building EB,
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he has gained that reputation. Yeah. He now dresses
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like Elon too. Yeah, he does, right? He used
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to dress like Steve Jobs and now he dresses like
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Elon. Exactly. We wanted to explore whether he
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was the real Tony Stark of China. And actually,
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I think he can get to pretty close to that because
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Lei Jun, if you translate that name into English.
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It's Thunder and Army. Like, guys. I think it's
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less of an Iron Man, but more of a Thor. Yeah,
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yeah, yeah. So, yeah, he definitely belongs to
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one of the... He's definitely an Avenger. A hero.
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Yeah, definitely an Avenger. He also has quite
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a solid followership on social media. I think
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this is very similar to Elon Musk as well, but
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for different reasons. Elon, because now that
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he's more involved in government and he developed
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crazier projects. But Lei Jun's Weibo, which
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is the ex of China, and on Bilibili, which is
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the YouTube of China, cumulatively, he has a
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very large followership. He has about 5 .7 million
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subscribers and 200 million views on the equivalent
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of YouTube in China. So he's like the tech Kardashian
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of China. Exactly. And he posts so many things
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about the process of... this car is being made.
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It's probably like 200 hours of Lei Jun talking
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on the internet. Well, I'm not kidding. Like
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I watch a lot of hours right now. I think after
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this episode, I'm going to go for like a Lei
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Jun detox. Like in my dreams, I have him on the
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figures. Like talk to me about, oh, how to build
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a product while he is posting so many things
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on social media. He would also claim that he
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is actually a big introvert. He is afraid of
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social interaction. And when he is shooting videos
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in the company or in the factories, he would
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get nervous. And you can see it. His hand would
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fidget. I can see that actually from his talks.
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They're mostly scripted. Which is how introverts
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do presentations. Speaking from personal experience.
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We'll try our best to give you the financial
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details, but in the meantime, also paint a more
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3D picture of who Leijun is. So by the end of
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the episode, you would maybe know more about
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him as an entrepreneur, as someone who started
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a huge venture, his personality. I will give
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you a little spoiler. Needless to say, he is...
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Extremely intelligent and capable. He's very
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much of an engineer at heart. And he is sort
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of a GOAT product manager. He is really crazy
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about making products. What's a GOAT? Greatest
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of all time. Oh, sorry. There's something new.
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Should I say GOAT? Product manager GOAT. And
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he's very ambitious and loves competition. Lei
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Jun was born in... 1969. In a very small town
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in Hubei called Xiantao, he had showed very early
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interest in engineering, aka he likes to take
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things apart and assemble them. I think we just
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call it a kid. Yeah. Take things apart and can't
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put it back. He is that kind of person, what
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we would call in China, a study machine or a
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study god. Most of the Silicon Valley CEOs, they
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quit school to start their business. Like Steve
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Jobs and Mark Zuckerberg. Lei Jun has a very
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different approach. He didn't quit school. He
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didn't quit school. But he finished his school
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within two years. He finished undergrad within
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two years. Right. That is similar. So instead
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of quitting school, he still wants to get that
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degree. And he just wanted to wrap things up
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faster. So within two years of time, he got a
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perfect score and graduated with a computer science
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degree. And this is the 80s in China. The whole
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computer science program only has about 15 computers
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in total. And that's it. Right. Actually, sorry,
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side track. My mom did computer science and they
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didn't have personal computers back then. It
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was like a big room. Yeah. You wear a hazmat
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suit and then you staple like holes in. paper
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and then you that's your input right so that
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that's learning about computer science back in
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the 70s and 80s and that's the condition where
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you would start learning yeah and he's coding
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is really good he taught himself most of the
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programming and coding his work is featured in
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the textbook for freshman students wow that's
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how good his work is wow and also he loves gambling
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too he plays poker a lot and his only excuse
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is that if you're trained as a programmer then
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you That must mean that you don't socialize enough.
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Therefore, you need to socialize through... Gambling?
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Gambling. Not encouraged. Not encouraged. And
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you have to start playing cards as early as you
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can. And the person who loses gets lunch for
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everyone. So that's kind of his rules. That's
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how he gets lunch at school. For me, this is
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like semi -bullying. But he's very good at playing
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poker. And he loves a big crowd around him. The
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reason that he got so much into coding is through
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a book that was published in the 70s, late 70s.
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It's called The Fire in the Valley. The Birth
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and Death of Personal Computer by Michael Swain
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and Paul Freiberger. The book is roughly about,
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so the 70s, well, the contemporaries were protesting
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the computer as a tool. of dehumanization and
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oppression because it just came out, right? It
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was a big machine. A motley collection of college
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dropouts, hippies and electronic fanatics were
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engaged in something much more subversive. They
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call it subversive. They're obsessed with the
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idea of getting computers powered into their
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own hand. They launched from their garages a
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hobbyist movement that grew into a whole industry
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and ultimately a social and technological revolution.
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This is a nonfiction or fiction? It's a fiction
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book. It is a nonfiction book documenting the
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entirety of the first computer was created in
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1964 or something. But it was about the first
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decade of those who are the hippiest or those
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who are the college drug house. The trailblazers
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of the modern computer industry. Exactly, the
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trailblazers. So he read that book and he was
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made believe that The revolution of personal
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computing is coming. He believes in that the
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relationship between a person and a computing
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machine will be the rest of the history for the
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next couple of decades. And he bet it right.
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So he really got inspired by this book. And then
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I'll just make it very short. He started making
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softwares when, you know, graduating from college
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and after two years. This is early 90s, right?
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Or the... 89, around that time. By the time that
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he left Wuhan University, the savings that he's
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got out of selling softwares that he made was
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4 ,000 RMB, which is about $500. And then the
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average GDP in China in 1989 was about $311 that
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year. Wow. So he made a lot of money. That's
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a lot of money in... Chinese standards back then.
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Yeah, exactly. So he graduated and he was believing
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that my future will forever be related to software
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making. After he graduated from college, he started
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a series of software ventures. We'll save you
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a lot of time here because we would like to make
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a separate episode just on Xiaomi itself. So
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a lot of those are related to Xiaomi, but I'll
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just sum it up for you here. He joined a company
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that Qiu Bojun started and made a software WPS,
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which is sort of the equivalent of Microsoft
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at that time. The software that he had worked
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on is called Pangu. That's the first attempt.
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Work Office Collaboration Software. Oh, so not
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the operating system, but the office software.
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Right, right, right. The office software, right.
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Did not work out completely. He recruited a lot
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more engineers and worked on a separate version.
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He didn't sell as many copies that he wanted
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to. Very frustrated. Decided to go into the market
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and find out why. Discovered that, oh, it was
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way too advanced for market and it was way too
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expensive. Because nobody paid for Microsoft
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in China back then, right? Right. He was... Exactly.
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Yeah, like people get pirated versions. Right,
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right. Pirated versions. Personal computers were
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just starting in China at the time. Do you remember
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the year that you had a personal computer in
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your room? 1995. But that's because my parents
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are, you know, into the industry. Right. And
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my family got our first computer in 1997, which
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is around that time. But you're right. I don't
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think anyone paid a lot of money for software.
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No, we got like pirated. Sorry. Sorry, Microsoft.
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But we were using pirated version all the way
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until 2000. Sounds about right. So he realized
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that if you want to be competing with the pirated
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version of the software, you need to offer something
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that is super easy to use and at a much cheaper
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price. Attempt number two was exactly that software.
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It's called Computer 101. 电脑入门 in Chinese. It
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is basically a walkthrough for any beginner who
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wants to use computer. How do you start? Because
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computer was a new thing. That's very smart.
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Yeah, I remember doing typing lessons and we
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bought the program on typing lessons. There you
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go. Yeah. The price that he'd offer the new software
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was only a fraction. And then he, you know, proposed
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a new direction to work on. Like, obviously,
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that software was great, but it wasn't long lasting
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enough. And also two other people enter the internet
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market, which later became his competitor. One
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is Ding Lei from NetEase. The other one is Ma
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Huateng, Pony Ma from Tencent. Okay, so NetEase
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is mainly gaming right now. And then Tencent
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is just the owner of WeChat for context. Well,
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I think obviously these two companies are on
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the list for future discussions too. But these
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are gigantic companies. Both of them are younger
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than... So Lei Jun decided that, okay, how about
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this? I compete in a slightly different way with
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NetEase. So he started a gaming venture within
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his company. Sword Heroes Fate, also called JX
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Online, was the first generation of RPG gaming
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in China. Attempt number three, very popular,
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still exists today. A lot of different versions.
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One of the largest MMORPGs. Really? Yeah. Still
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exist. Okay, so that's not bad, right? And then
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you get a lot of people like playing this who
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are still paying money. Okay, not enough. Keep
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on going. 1999, this 10 years after his first
00:14:10.980 --> 00:14:15.019
attempt, he created this dictionary software
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and I bet you have used it before because I've
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been using it for a long time. What's it called?
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金山死吧, Kingsoft Dictionary. Yeah. Kingsoft Dictionary
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was attempt number four. This... Suffer itself
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also sold a million copies. And towards the end
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of his venture in Kingsoft, Lastbit was also
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something that I have used. I'm not sure whether
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you have used that before. It's zhouyou .com?
00:14:40.970 --> 00:14:45.330
No, I haven't used it. It is the very early attempt
00:14:45.330 --> 00:14:49.909
of e -commerce. Joyo .com was sold to Amazon
00:14:49.909 --> 00:14:56.129
in 2004 with $75 million. Oh, it's the precursor
00:14:56.129 --> 00:14:58.690
of Amazon .cn. Exactly. That's right. It was
00:14:58.690 --> 00:15:01.450
the green, overall green layout. Yes, it was
00:15:01.450 --> 00:15:04.990
a precursor to Amazon. Anyways, five products.
00:15:05.230 --> 00:15:07.990
Five different attempts. He probably have made
00:15:07.990 --> 00:15:10.850
a lot more things on that way. These are only
00:15:10.850 --> 00:15:14.529
some of the more famous, more, you know, noticeable
00:15:14.529 --> 00:15:17.840
ones. Exactly. Like in terms of revenue. Right.
00:15:18.379 --> 00:15:22.840
Kingsoft finally went public in 2007. He was
00:15:22.840 --> 00:15:26.679
the CEO for Kingsoft at the age of 29. Was he
00:15:26.679 --> 00:15:28.879
part of the co -founding team? Did he own shares
00:15:28.879 --> 00:15:31.299
or was he more like a product manager? He owned
00:15:31.299 --> 00:15:34.019
shares. Up until today, I think he's still very
00:15:34.019 --> 00:15:36.419
heavily affiliated with Kingsoft. The gaming
00:15:36.419 --> 00:15:39.159
part and the non -gaming part. But you know,
00:15:39.179 --> 00:15:43.799
Kingsoft isn't at the top. Today. In China today,
00:15:43.940 --> 00:15:46.480
right? But it's still there. Yeah, he's still
00:15:46.480 --> 00:15:49.940
there. And he knows that. And he feels deeply
00:15:49.940 --> 00:15:53.659
bothered by this fact. He's a crazy smart guy.
00:15:53.899 --> 00:15:56.299
You know, graduated computer science within two
00:15:56.299 --> 00:15:58.159
years, right? Like at the top of everything,
00:15:58.299 --> 00:16:01.480
like earned 4 ,000 before he left college. He
00:16:01.480 --> 00:16:03.600
had a very emotional moment when Kingsoft went
00:16:03.600 --> 00:16:07.000
public. And he said, when we worked on Bangu,
00:16:07.080 --> 00:16:11.200
which is the... The Microsoft office. I recruited
00:16:11.200 --> 00:16:13.840
some of the best engineers in China. The saddest
00:16:13.840 --> 00:16:16.340
thing is that we worked all night and all day
00:16:16.340 --> 00:16:19.259
on this thing for three and five years. And we
00:16:19.259 --> 00:16:23.480
created this software that is so disliked by
00:16:23.480 --> 00:16:27.500
the market. And I feel so sad and defeated. We
00:16:27.500 --> 00:16:30.320
could have done something differently and achieved
00:16:30.320 --> 00:16:32.539
so much more. And I asked myself, how did we
00:16:32.539 --> 00:16:36.080
come to this? And he said everyone should go
00:16:36.080 --> 00:16:38.779
to be a sales or promoter sometime in his life
00:16:38.779 --> 00:16:42.039
to make minimum amount of money, but you will
00:16:42.039 --> 00:16:45.559
learn so much. Right. And then the reason that
00:16:45.559 --> 00:16:48.879
he said it is because up until 2007, the moment
00:16:48.879 --> 00:16:52.039
that King Software was brought to public, the
00:16:52.039 --> 00:16:54.720
most revenue generating bit and the profit making
00:16:54.720 --> 00:16:57.980
bit for the company is the game. It's not the
00:16:57.980 --> 00:17:01.820
software. Right. And he felt... quite sad as
00:17:01.820 --> 00:17:04.680
a but he also produced the game right he does
00:17:04.680 --> 00:17:08.400
but maybe it's not true to his heart he wants
00:17:08.400 --> 00:17:11.420
to be an engineer he wants to be a product manager
00:17:11.420 --> 00:17:13.680
but he doesn't want to be working on a game i'm
00:17:13.680 --> 00:17:16.859
making a lot of profit on this thing that i don't
00:17:16.859 --> 00:17:19.480
particularly like but i'm not making a lot of
00:17:19.480 --> 00:17:22.880
profit on this thing that i really believe right
00:17:22.880 --> 00:17:27.599
right believe is the keyword to Leijun. And if
00:17:27.599 --> 00:17:30.880
you remember what else happened in 2007, first,
00:17:31.059 --> 00:17:35.859
Apple launched iPhone. Second thing, Microsoft
00:17:35.859 --> 00:17:38.279
also launches first smartphone back in the days.
00:17:38.339 --> 00:17:41.500
I don't even know. It's too early. Like I didn't
00:17:41.500 --> 00:17:45.720
have any phone. It's called Crossbow. Wrapping
00:17:45.720 --> 00:17:51.940
up, Kingsoft was a very courageous attempt for
00:17:51.940 --> 00:17:56.380
young Leijun. Imagine your 20s to your early
00:17:56.380 --> 00:18:00.279
30s. You did so many things like that. Like just
00:18:00.279 --> 00:18:03.740
about our age, he's already a CEO. And then on
00:18:03.740 --> 00:18:07.640
to the next chapter. Even though he brought Kingsoft
00:18:07.640 --> 00:18:12.539
to public, to IPO, he was not satisfied. It wasn't
00:18:12.539 --> 00:18:15.339
his product. It's not his thing. Yeah. So he
00:18:15.339 --> 00:18:19.220
decided, I must do something else. Yeah. And
00:18:19.220 --> 00:18:24.900
here comes the second. large company that he
00:18:24.900 --> 00:18:28.200
initiated. And this one, we all know what it
00:18:28.200 --> 00:18:34.000
is. Xiaomi. Exactly. I had a question. I was
00:18:34.000 --> 00:18:36.019
like, do we have anything in between Kingsoft
00:18:36.019 --> 00:18:39.779
and Xiaomi? First of all, Xiaomi. So Linda, what
00:18:39.779 --> 00:18:42.700
does Xiaomi mean in Chinese? Little rice. Little
00:18:42.700 --> 00:18:45.279
rice. Or just rice. Or couscous, right? Little
00:18:45.279 --> 00:18:48.740
rice. Wait, it's actually couscous. Oh my god.
00:18:48.799 --> 00:18:51.299
But it also means little rice. It could be little
00:18:51.299 --> 00:18:53.599
rice, it could be couscous. How cute is that,
00:18:53.720 --> 00:18:56.920
right? Oh, because rice is da mi. Okay, sorry.
00:18:58.579 --> 00:19:01.940
No one can really pronounce a word that starts
00:19:01.940 --> 00:19:05.039
with X, right? Like, if you were to be looking
00:19:05.039 --> 00:19:07.220
up a dictionary, the only word that you can...
00:19:07.660 --> 00:19:09.480
that you will look at that start with an X, it's
00:19:09.480 --> 00:19:14.799
xylophone. Xiaomi? It's very hard for the Western
00:19:14.799 --> 00:19:20.059
market to pronounce that. So he had a partner
00:19:20.059 --> 00:19:25.480
who was the UI and UX designer for Xiaomi's cell
00:19:25.480 --> 00:19:27.480
phone later on. And his name is called Li Wanqiang,
00:19:27.539 --> 00:19:30.579
who is also a veteran from Kingsoft that Legion
00:19:30.579 --> 00:19:35.940
trusts very deeply. Li Wanqiang's dad. made a
00:19:35.940 --> 00:19:40.019
couscous porridge and sent it to the office on
00:19:40.019 --> 00:19:43.019
the day this company was registered and starting
00:19:43.019 --> 00:19:46.900
to operate. This is such a wholesome story. And
00:19:46.900 --> 00:19:49.960
then there is a photo documenting a group of
00:19:49.960 --> 00:19:53.619
them, the early, the beginners who were in nowadays
00:19:53.619 --> 00:19:58.720
Yinggu building in Zhongguancun and it was room
00:19:58.720 --> 00:20:03.920
807. It was all of them in the same place. They
00:20:03.920 --> 00:20:08.880
were standing around what we call a rice cooker.
00:20:09.339 --> 00:20:13.319
And in that rice cooker is the couscous. It's
00:20:13.319 --> 00:20:15.319
the birth of Xiaomi. It's the birth of Xiaomi.
00:20:15.579 --> 00:20:18.759
Literally, Xiaomi was there. It was present.
00:20:18.920 --> 00:20:21.839
Couscous was there. Imagine if the dad cooked
00:20:21.839 --> 00:20:23.799
something else that day. Like, Xiaomi would have
00:20:23.799 --> 00:20:28.220
been... Would have been like, I don't know, durian
00:20:28.220 --> 00:20:31.440
or like whatever. Well, thankfully, it wasn't
00:20:31.440 --> 00:20:33.859
that crazy. Thank you, dad. Yeah, thank you,
00:20:33.859 --> 00:20:35.420
Li Wenqiang's dad for giving us such a great
00:20:35.420 --> 00:20:42.720
story. So then, we'll shorten it. But we all
00:20:42.720 --> 00:20:45.019
know about Xiaomi's story that the most famous
00:20:45.019 --> 00:20:47.799
product that they've ever created is the product
00:20:47.799 --> 00:20:53.700
that they've launched in 2011, which is Xiaomi's
00:20:53.700 --> 00:20:57.619
first phone. And that phone, why was it so popular?
00:20:57.960 --> 00:21:02.180
It was cheap. It was cheap, but comparing to
00:21:02.180 --> 00:21:06.819
who it is cheap, right? 2010 was when iPhone
00:21:06.819 --> 00:21:10.359
4S, also my first cell phone, smartphone, was
00:21:10.359 --> 00:21:18.680
launched. iPhone 4S was prized at $4 ,988 RMB.
00:21:18.940 --> 00:21:23.400
Like $800? Yeah, somewhere around that. And do
00:21:23.400 --> 00:21:26.440
you know what is the annual GDP per person in
00:21:26.440 --> 00:21:31.519
China in 2011? Okay, I'll just tell you. It's
00:21:31.519 --> 00:21:39.220
about 5 ,700 US dollars and translate into 35K
00:21:39.220 --> 00:21:41.099
RMB around that. So if you were to be buying
00:21:41.099 --> 00:21:45.559
a phone, it is one seventh of your annual income.
00:21:45.839 --> 00:21:48.339
But annual GDP is way higher than annual income.
00:21:48.839 --> 00:21:50.460
For a typical country. Right, right, right. Yeah,
00:21:50.519 --> 00:21:52.599
for sure. So I think it would have probably taken
00:21:52.599 --> 00:21:54.779
you a few months to get your iPhone, like salary
00:21:54.779 --> 00:21:56.319
to get your iPhone back then. Exactly, that's
00:21:56.319 --> 00:22:00.039
right, that's right. What Xiaomi did was by putting
00:22:00.039 --> 00:22:03.160
everything together and knowing that the wave
00:22:03.160 --> 00:22:07.160
is here, like every single human being will be
00:22:07.160 --> 00:22:11.299
using a small machine. And as a believer of that,
00:22:11.500 --> 00:22:16.000
and also given the supply chain advantages, Leijun
00:22:16.000 --> 00:22:19.500
built... a phone that was in direct competition
00:22:19.500 --> 00:22:25.160
with iPhone. That phone was less than $2 ,000
00:22:25.160 --> 00:22:29.420
quiet. It was $1 ,999. So less than half the
00:22:29.420 --> 00:22:33.319
price of an Apple. Yes. A couple, $200, $300.
00:22:33.720 --> 00:22:37.119
But with, I would say, 80 % of the functionalities.
00:22:37.839 --> 00:22:41.670
Right. Yeah. Yeah. Actually, he's the first one
00:22:41.670 --> 00:22:44.950
to tap into cheap Chinese manufacturing and scale
00:22:44.950 --> 00:22:49.250
it to the world. And this is the same challenge
00:22:49.250 --> 00:22:52.789
that he had encountered while selling the software.
00:22:53.069 --> 00:22:56.210
If you don't bring your cost down, there will
00:22:56.210 --> 00:22:59.069
be a million parroted versions just floating
00:22:59.069 --> 00:23:01.769
around in the market. So you must develop something
00:23:01.769 --> 00:23:05.779
that is... The mass will use it. The price will
00:23:05.779 --> 00:23:08.420
be low. This is also at a period where China
00:23:08.420 --> 00:23:10.440
doesn't know how to do branding yet. Because
00:23:10.440 --> 00:23:12.940
I think China only learned to do branding after
00:23:12.940 --> 00:23:17.180
Legion. Well, like in the past, let's say five
00:23:17.180 --> 00:23:20.319
-ish years, like really after 2017, 18, when
00:23:20.319 --> 00:23:23.019
you start seeing Chinese brands in the international
00:23:23.019 --> 00:23:25.319
market. So back then it was a production house.
00:23:25.720 --> 00:23:30.019
And production houses cannot offer premium price
00:23:30.019 --> 00:23:32.359
products because they don't have the branding
00:23:32.359 --> 00:23:34.519
power. So they need to keep the cost down. That's
00:23:34.519 --> 00:23:37.779
right. That's right. And so what Xiaomi has done
00:23:37.779 --> 00:23:40.750
is legitimized. the cell phone making supply
00:23:40.750 --> 00:23:43.150
chain. Some of the cell phone makers really did
00:23:43.150 --> 00:23:45.869
wonders for the Chinese cell phone manufacturing
00:23:45.869 --> 00:23:48.970
business. Apple obviously is one, and Xiaomi
00:23:48.970 --> 00:23:51.930
is another one. Anyways, the conclusion is, Lei
00:23:51.930 --> 00:23:56.069
Jun's product making philosophy is, he doesn't
00:23:56.069 --> 00:23:59.309
like selling a straw at a gold bricks price.
00:23:59.789 --> 00:24:02.210
If he thinks that this is something that everyone
00:24:02.210 --> 00:24:05.390
will be using in the future, then, scale economy,
00:24:05.690 --> 00:24:09.680
I must find a way. so that more people can make
00:24:09.680 --> 00:24:13.500
use of it. Yeah. Which correspond to the product
00:24:13.500 --> 00:24:15.859
that he made later on, which is a Siri called
00:24:15.859 --> 00:24:18.400
Redmi, which is an even cheaper phone that he
00:24:18.400 --> 00:24:21.599
had made. He just tapped into a market that back
00:24:21.599 --> 00:24:24.099
then the market leaders like Apple and Samsung
00:24:24.099 --> 00:24:28.440
are not thinking about. And there wasn't another
00:24:28.440 --> 00:24:33.200
brand or supplier that has the skill to do this.
00:24:33.259 --> 00:24:35.619
Right. So it was a perfect niche in hindsight.
00:24:36.359 --> 00:24:38.500
That isn't even a niche. It's like a mass market.
00:24:38.680 --> 00:24:42.119
Right. He was ready. He picked it out. And in
00:24:42.119 --> 00:24:45.920
his reflection after Kingsoft, he asked himself,
00:24:46.099 --> 00:24:49.299
what did I miss such that I did not bring Kingsoft
00:24:49.299 --> 00:24:51.640
the way that I wanted to? And then he realized
00:24:51.640 --> 00:24:55.220
that, oh, I picked the wrong market. Yeah. Learning
00:24:55.220 --> 00:24:57.680
from your past. Exactly. I must pick something
00:24:57.680 --> 00:25:01.799
that will scale, that will have a demand. Therefore,
00:25:01.980 --> 00:25:05.420
I jump onto it. And I ride the waves, which is
00:25:05.420 --> 00:25:07.859
the correct way of doing business. And of course,
00:25:07.880 --> 00:25:11.339
he started the business in eight years. This
00:25:11.339 --> 00:25:13.779
time in eight years, 2018, Xiaomi went public.
00:25:13.940 --> 00:25:16.279
And then the valuation was 200x the original
00:25:16.279 --> 00:25:19.460
value. So it was impressive. Yeah. And you mentioned
00:25:19.460 --> 00:25:21.720
that there were four different lines within Xiaomi,
00:25:21.819 --> 00:25:24.980
right? Yes. Business lines. Yes. What are those?
00:25:25.099 --> 00:25:29.230
So we have obviously the smartphone. And I'm
00:25:29.230 --> 00:25:31.309
looking at, so we only have financial reporting
00:25:31.309 --> 00:25:35.569
after 2018, after it went public. So smartphone
00:25:35.569 --> 00:25:39.490
was the biggest segment back in 2018. Now it's
00:25:39.490 --> 00:25:42.690
about still half of the annual revenue, but one
00:25:42.690 --> 00:25:46.089
third of the gross income. And then it started
00:25:46.089 --> 00:25:51.410
their IoT and lifestyle products. So that is
00:25:51.410 --> 00:25:57.059
your Xiaomi. What else do we use? My Wi -Fi is
00:25:57.059 --> 00:25:59.160
Xiaomi hardware. My humidifier is Xiaomi. My
00:25:59.160 --> 00:26:07.319
alarm clock is Xiaomi. Small electronics. Yeah,
00:26:07.319 --> 00:26:13.140
appliances. And that is now also a significant
00:26:13.140 --> 00:26:15.839
part of their revenue. I think 30 % and then
00:26:15.839 --> 00:26:20.259
about 30 % of their gross profit. And then they
00:26:20.259 --> 00:26:22.099
have something called internet services, which
00:26:22.099 --> 00:26:24.589
is less well -known. Most of it is advertising
00:26:24.589 --> 00:26:26.990
money coming from Xiaomi cell phone or Xiaomi
00:26:26.990 --> 00:26:30.410
TV. Even though it's only 11 % of their total
00:26:30.410 --> 00:26:35.410
revenue share, it makes up for more in terms
00:26:35.410 --> 00:26:38.049
of gross profit than the smartphone business.
00:26:38.309 --> 00:26:39.730
That would make sense. Because the margin of
00:26:39.730 --> 00:26:44.130
it is so low. It's kind of... And Lei Jun was...
00:26:44.539 --> 00:26:47.960
so proud of that margin call right remember in
00:26:47.960 --> 00:26:50.579
one of the earlier releases for xiaomi phone
00:26:50.579 --> 00:26:54.319
he said that he will never exceed five percent
00:26:54.319 --> 00:26:58.460
of profit margin i didn't know that but now it's
00:26:58.460 --> 00:27:00.920
yeah on on the cell phone business yeah and he
00:27:00.920 --> 00:27:03.819
made a promise he made a public promise to all
00:27:03.819 --> 00:27:06.599
of those who are buying xiaomi's phones i think
00:27:06.599 --> 00:27:09.299
that could be one of the reason why the cell
00:27:09.299 --> 00:27:12.980
phone margin has to be so low yeah But this is
00:27:12.980 --> 00:27:15.779
great. It brought him skill, but also a trap
00:27:15.779 --> 00:27:18.359
that he always have to be constantly looking
00:27:18.359 --> 00:27:20.700
for something that will bring more profit to
00:27:20.700 --> 00:27:24.799
the company. Yeah. I didn't remember he said
00:27:24.799 --> 00:27:28.579
5%, but that's interesting because currently
00:27:28.579 --> 00:27:33.109
their gross... for cell phone is higher than
00:27:33.109 --> 00:27:37.369
5%. But I think it's because they're doing this
00:27:37.369 --> 00:27:39.890
mass market and there's a lot of economies of
00:27:39.890 --> 00:27:43.170
scale. But guess how much margin they have for
00:27:43.170 --> 00:27:47.630
internet services? I would say 40, 50%. 77. 77?
00:27:47.990 --> 00:27:52.230
Yeah. What is in that service? It's mostly advertising,
00:27:52.470 --> 00:27:54.569
right? So if you buy a Xiaomi phone, for example,
00:27:54.569 --> 00:27:58.460
and then you'll see some ads. And from the advertisers,
00:27:58.460 --> 00:28:00.480
they collect the money. But it's almost like,
00:28:00.500 --> 00:28:03.759
yes, you have the hardware, but then it's an
00:28:03.759 --> 00:28:05.319
accounting thing where you don't really count
00:28:05.319 --> 00:28:09.019
the costs. Gotcha. So there's literally no cost.
00:28:09.099 --> 00:28:11.400
Software services generally have a higher margin.
00:28:11.420 --> 00:28:13.740
But this one, because they own the whole hardware
00:28:13.740 --> 00:28:17.880
and ecosystem, it probably even lowers the cost
00:28:17.880 --> 00:28:21.059
even more. So that's the three product lines,
00:28:21.140 --> 00:28:23.259
smartphone, IoT, and lifestyle products, and
00:28:23.259 --> 00:28:26.099
internet services. And then here's our last one,
00:28:26.140 --> 00:28:29.240
which is the new business, Smart EV. This one,
00:28:29.259 --> 00:28:31.700
they started reporting revenue only starting
00:28:31.700 --> 00:28:33.920
from last year because that's when their first
00:28:33.920 --> 00:28:39.440
car launched. And even within nine months of
00:28:39.440 --> 00:28:46.180
the first sale of the SU7, in 2024, they generated
00:28:46.180 --> 00:28:50.019
9 % of the total revenue. So 32 billion Chinese
00:28:50.019 --> 00:28:57.750
yuan. business line in nine months. And their
00:28:57.750 --> 00:29:01.789
gross margin is, I think, at 18 % the entire
00:29:01.789 --> 00:29:03.849
year. But it's much higher if you look at more
00:29:03.849 --> 00:29:07.009
recent numbers. That's their gross margin. They're
00:29:07.009 --> 00:29:08.930
still making a loss because they're still investing
00:29:08.930 --> 00:29:12.849
in R &D and whatnot. But it's amazing. It's amazing.
00:29:13.089 --> 00:29:16.950
It's so fast. That brings us to a very interesting
00:29:16.950 --> 00:29:20.069
observation that I've made about how Lei Jun
00:29:20.069 --> 00:29:22.750
wants to run Xiaomi. First of all, he was born
00:29:22.750 --> 00:29:25.559
in a really good time. where the internet was
00:29:25.559 --> 00:29:28.359
booming. Internet related hardware is booming.
00:29:28.940 --> 00:29:32.160
And then he absolutely recognized that and he
00:29:32.160 --> 00:29:36.240
is completely aware of it. And he took advantage
00:29:36.240 --> 00:29:39.420
of that, right? Like the market is there. And
00:29:39.420 --> 00:29:43.359
then he himself, as an engineer, firmly believes
00:29:43.359 --> 00:29:48.000
in that he wants to build something great. And
00:29:48.000 --> 00:29:52.259
he wants to really understand the client's need.
00:29:52.829 --> 00:29:56.029
And that was written down in one of the books
00:29:56.029 --> 00:29:59.109
that he published in 2022. And he said, oh, befriend
00:29:59.109 --> 00:30:01.450
with your users. He's all about customer feedback.
00:30:01.549 --> 00:30:04.150
It's even to the point where his product managers
00:30:04.150 --> 00:30:07.670
are like, please stop. We're not making this
00:30:07.670 --> 00:30:14.509
change for 15 people. And he loves offering the
00:30:14.509 --> 00:30:16.930
products or services at a very competitive price.
00:30:17.369 --> 00:30:22.410
When he tells a story, Lei Junhe has above average
00:30:22.410 --> 00:30:25.150
engineering level of storytelling techniques.
00:30:25.589 --> 00:30:28.269
He's really good at it. And he's also very good
00:30:28.269 --> 00:30:33.170
at making something complex quite simple. Simple
00:30:33.170 --> 00:30:35.950
and straightforward because not all of his audience,
00:30:36.049 --> 00:30:38.130
most of his audience doesn't have any engineering
00:30:38.130 --> 00:30:42.180
background. So he managed to make... Like making
00:30:42.180 --> 00:30:45.039
a car sound simple but sophisticated. Right,
00:30:45.140 --> 00:30:48.019
yeah, for sure. That's something that he has.
00:30:48.220 --> 00:30:51.440
Talent. Yeah, definitely a unique talent. Before
00:30:51.440 --> 00:30:54.240
we dive into the EV bit, I want to start with
00:30:54.240 --> 00:30:57.700
a few questions. All right. What was your impression
00:30:57.700 --> 00:31:02.579
of all of Xiaomi's product before the EV? I would
00:31:02.579 --> 00:31:07.420
say it's cheap, cheaper than average market.
00:31:09.289 --> 00:31:13.349
I think they built a reputation around the fact
00:31:13.349 --> 00:31:18.109
that they're selling at cost plus. And so for
00:31:18.109 --> 00:31:21.569
the average consumer, you trust that they're
00:31:21.569 --> 00:31:25.329
not making a huge profit when you're purchasing
00:31:25.329 --> 00:31:28.690
their product. And their designs are usually
00:31:28.690 --> 00:31:32.529
wide and simple, straightforward. So for someone
00:31:32.529 --> 00:31:35.970
who's minimalist or for someone who... cares
00:31:35.970 --> 00:31:40.349
more about the the cost and maybe just not so
00:31:40.349 --> 00:31:44.210
much about the fancy schmancy like branding it
00:31:44.210 --> 00:31:46.890
i'm i'm definitely their target audience yeah
00:31:46.890 --> 00:31:48.549
like i bought a lot of xiaomi products around
00:31:48.549 --> 00:31:51.750
the house yeah um knowing that they're good quality
00:31:51.750 --> 00:31:56.410
good customer service and they won't overprice
00:31:56.410 --> 00:32:00.549
right yeah i have very similar impressions on
00:32:00.549 --> 00:32:05.279
xiaomi products minimalist not the loudest pieces
00:32:05.279 --> 00:32:07.960
of gadgets that you will get, which is a plus.
00:32:08.079 --> 00:32:12.539
If you like these kind of stuff, your brand loyalty
00:32:12.539 --> 00:32:15.779
is there. Kind of like Muji, but electric appliances.
00:32:15.819 --> 00:32:19.819
Exactly. While you mentioned that, I think it
00:32:19.819 --> 00:32:23.039
also means that Xiaomi is associated with cost
00:32:23.039 --> 00:32:28.240
efficiency. It's cheaper, but typically not the
00:32:28.240 --> 00:32:32.240
most durable products that you will buy. What
00:32:32.240 --> 00:32:34.119
you're thinking is, oh, if I were to be moving,
00:32:34.319 --> 00:32:35.980
if I were to go somewhere else, I'm just going
00:32:35.980 --> 00:32:39.319
to toss it. Because it's so cheap. Yeah. But
00:32:39.319 --> 00:32:41.920
it's not the worst. Because within the whole
00:32:41.920 --> 00:32:44.299
spectrum of what you can get in terms of hardware
00:32:44.299 --> 00:32:45.960
in China, electronic hardware in China. You can
00:32:45.960 --> 00:32:48.019
get really bad. There's stuff that, you know.
00:32:48.099 --> 00:32:52.019
So Xiaomi has this minimum standard where it's
00:32:52.019 --> 00:32:54.559
not going to break within the first two, three
00:32:54.559 --> 00:32:57.710
years at least. But it's not. Obviously, it's
00:32:57.710 --> 00:32:59.710
not like the highest quality. It's like if I'm
00:32:59.710 --> 00:33:02.490
buying a vacuum cleaner, it's not a Dyson. Exactly.
00:33:02.650 --> 00:33:05.529
But I'll buy it. Yeah, yeah, yeah. Value for
00:33:05.529 --> 00:33:09.089
money. Value for money. Here's a question. In
00:33:09.089 --> 00:33:13.210
year 2021, when Lei Jun, in March, standing on
00:33:13.210 --> 00:33:16.849
a stage, declared that, hey guys, after very
00:33:16.849 --> 00:33:18.690
thoughtful consideration, you know what? I'm
00:33:18.690 --> 00:33:22.009
going to start building an EV. Yeah. I learned
00:33:22.009 --> 00:33:25.190
that news much later on. And I'm like in my head.
00:33:25.269 --> 00:33:27.269
Do you know what image I had in my head? I was
00:33:27.269 --> 00:33:30.289
like, will it be like a minimalism white car?
00:33:30.369 --> 00:33:35.019
A matte white TV. Just, just, just. Simple to
00:33:35.019 --> 00:33:38.480
the core. I didn't know what to expect. But in
00:33:38.480 --> 00:33:40.960
my mind, I was associating Leijun's statement
00:33:40.960 --> 00:33:42.720
with, oh, it's going to be a very simple car,
00:33:42.799 --> 00:33:45.839
cost -effective car. So what, right? You're not
00:33:45.839 --> 00:33:48.019
the only one to ask that question. I heard an
00:33:48.019 --> 00:33:51.980
interview for the Xiaomi designer recently. Oh,
00:33:52.000 --> 00:33:54.259
he believed that. No, no. The interviewer asked
00:33:54.259 --> 00:33:56.339
the designer, like, why wasn't the car white?
00:33:56.500 --> 00:33:59.980
And the designer was like, are you crazy? Yeah.
00:34:02.490 --> 00:34:07.609
Let's maybe break down the steps of how did Xiaomi
00:34:07.609 --> 00:34:10.530
even make that decision? Or should I say Lei
00:34:10.530 --> 00:34:13.230
Jun made the decision to make that EV? Because
00:34:13.230 --> 00:34:15.590
we both think that this is the most interesting
00:34:15.590 --> 00:34:18.230
bit of the whole story. You're making cell phones.
00:34:18.309 --> 00:34:20.670
You're doing fine. You're selling a lot of phones.
00:34:20.829 --> 00:34:23.230
You have different lines of phones for different
00:34:23.230 --> 00:34:25.469
groups of people, for men, for women, for gamers,
00:34:25.590 --> 00:34:28.699
for students. And you have tablets, you have
00:34:28.699 --> 00:34:30.500
like TV screens, you have a lot of things going
00:34:30.500 --> 00:34:33.320
on. Why of all a sudden, when your financial
00:34:33.320 --> 00:34:38.019
report visibly looked okay, you decided that,
00:34:38.059 --> 00:34:39.920
hey, I'm going to be starting making views. Yeah.
00:34:40.800 --> 00:34:46.219
So I did do a lot of research on this. So the
00:34:46.219 --> 00:34:50.099
public information that's available comes from
00:34:50.099 --> 00:34:53.519
this 2014 speech. So Lei Jun does an annual speech,
00:34:53.780 --> 00:34:57.920
kind of like a tech talk. And this the 2020,
00:34:58.079 --> 00:35:02.840
sorry, not 2014, 2024 version was titled Courage.
00:35:03.059 --> 00:35:07.139
And in his three minutes of his speech, he went
00:35:07.139 --> 00:35:10.360
over exactly kind of the thought process of entering
00:35:10.360 --> 00:35:14.340
the EV market. I'll give you the conclusion first,
00:35:14.400 --> 00:35:16.860
which is somewhat misleading. But then here's
00:35:16.860 --> 00:35:19.360
kind of the entire storyline. So the timeline
00:35:19.360 --> 00:35:23.280
is he flashed a date, which is January 15, 2021
00:35:23.280 --> 00:35:26.809
on the screen. And he said, I got a phone call
00:35:26.809 --> 00:35:29.690
at 7 a .m. saying that you're being blacklisted
00:35:29.690 --> 00:35:33.869
in the U .S. So that signaled that there's an
00:35:33.869 --> 00:35:37.550
issue with potential future sales of Xiaomi phones
00:35:37.550 --> 00:35:41.130
or Xiaomi products. And there was an emergency
00:35:41.130 --> 00:35:43.690
board meeting that was called that day where
00:35:43.690 --> 00:35:48.510
they made a decision to run a 70 or so day investment
00:35:48.510 --> 00:35:53.500
on EV's feasibility. And then the announcement
00:35:53.500 --> 00:35:57.139
was made on March 30th. Let me break down the
00:35:57.139 --> 00:36:02.019
entirety of this story. January is the final
00:36:02.019 --> 00:36:06.000
days of the Trump administration. He issued an
00:36:06.000 --> 00:36:09.900
executive order in late 2020 where it says the
00:36:09.900 --> 00:36:13.619
Department of Defense actually can put companies
00:36:13.619 --> 00:36:16.139
on a blacklist if they think that there's ties
00:36:16.139 --> 00:36:20.159
with the Chinese military. And this is called
00:36:20.159 --> 00:36:22.900
the Communist Chinese Military Companies List,
00:36:22.980 --> 00:36:27.800
CCMC. And this is a key detail because this was
00:36:27.800 --> 00:36:31.860
not the same list that Huawei was on in 2019
00:36:31.860 --> 00:36:35.219
that banned them effectively from getting US
00:36:35.219 --> 00:36:38.420
chips or getting Google mobile services, which
00:36:38.420 --> 00:36:40.420
include the Play Store. So that kind of killed
00:36:40.420 --> 00:36:43.460
Huawei in the US. That's called the Department
00:36:43.460 --> 00:36:46.969
of Commerce's entity list. The list that Xiaomi
00:36:46.969 --> 00:36:49.630
got put on is called the Communist Chinese Military
00:36:49.630 --> 00:36:51.949
Company list, which is from the Department of
00:36:51.949 --> 00:36:56.989
Defense. This blacklist actually prohibits U
00:36:56.989 --> 00:37:00.389
.S. investors such as Vanguard and BlackRock
00:37:00.389 --> 00:37:05.769
from holding shares of Xiaomi. So after being
00:37:05.769 --> 00:37:09.889
blacklisted, Xiaomi did two things. They, first
00:37:09.889 --> 00:37:12.389
of all, immediately started to investigate the
00:37:12.389 --> 00:37:15.739
feasibility of entering the EV market. And this
00:37:15.739 --> 00:37:18.940
was widely publicized. He said there's 200 interviews,
00:37:19.219 --> 00:37:21.920
75 -day investigation, he didn't sleep and whatnot.
00:37:22.460 --> 00:37:25.480
At the same time, they also filed a lawsuit against
00:37:25.480 --> 00:37:28.699
the U .S. government calling the DOD designation
00:37:28.699 --> 00:37:32.679
unlawful. And so less than two months into the
00:37:32.679 --> 00:37:35.739
lawsuit, which is on March 12th, still before
00:37:35.739 --> 00:37:39.159
the EV announcement, the U .S. court granted
00:37:39.159 --> 00:37:42.400
a preliminary injunction. What this is, is a
00:37:42.400 --> 00:37:45.389
temporary order that essentially said, hold on,
00:37:45.409 --> 00:37:48.550
we're putting a pause on your ban while we review
00:37:48.550 --> 00:37:51.610
your evidence. And this is actually a major signal
00:37:51.610 --> 00:37:54.050
that the court was siding with Xiaomi rather
00:37:54.050 --> 00:37:57.469
than the DoD. And it's indicating that there
00:37:57.469 --> 00:38:00.469
wasn't enough evidence to link Xiaomi with Chinese
00:38:00.469 --> 00:38:03.949
military. It's a consumer product. It's not like
00:38:03.949 --> 00:38:06.070
Huawei where, you know, 5G towers and whatnot,
00:38:06.269 --> 00:38:11.610
right? So after three weeks of this ruling, is
00:38:11.610 --> 00:38:14.070
when xiaomi officially announced its entry into
00:38:14.070 --> 00:38:17.849
the ev business via the hong kong stock exchange
00:38:17.849 --> 00:38:23.590
voluntary declaration okay then two months later
00:38:23.590 --> 00:38:28.190
the dod dropped all the claims they dropped them
00:38:28.190 --> 00:38:30.650
from the blacklist but me that's in may but back
00:38:30.650 --> 00:38:32.289
in march they already know this is happening
00:38:32.289 --> 00:38:34.570
they can't win the case because the preliminary
00:38:34.570 --> 00:38:40.460
injunction was there so Going back to the 2024
00:38:40.460 --> 00:38:43.900
speech, which is three months after the initial
00:38:43.900 --> 00:38:47.119
car SU7 was launched, Lei Jun talked about the
00:38:47.119 --> 00:38:51.820
serious events, right? And he didn't exactly
00:38:51.820 --> 00:38:55.880
phrase the launch of the EV like I just... The
00:38:55.880 --> 00:38:59.119
timeline that I just did? So he mentioned how
00:38:59.119 --> 00:39:02.579
he started his speech with the huge sign of January
00:39:02.579 --> 00:39:04.659
15, what happened on the PowerPoint presentation.
00:39:05.420 --> 00:39:08.659
He recounted the emergency board meeting and
00:39:08.659 --> 00:39:11.199
described how urgent it is. Specifically, he
00:39:11.199 --> 00:39:14.710
mentioned that one board member asked. If you
00:39:14.710 --> 00:39:17.630
cannot make smartphones, what will you do about
00:39:17.630 --> 00:39:20.590
the 30 ,000 to 40 ,000 employees of Xiaomi? Oh,
00:39:20.590 --> 00:39:23.809
my God. Are they not going to have a job, right?
00:39:23.989 --> 00:39:26.809
And he also mentioned another board suggested,
00:39:27.150 --> 00:39:30.110
perhaps you should think about making cars as
00:39:30.110 --> 00:39:34.670
if they never thought about this before. And
00:39:34.670 --> 00:39:37.969
so he concluded by the end of this meeting, all
00:39:37.969 --> 00:39:40.929
the executives are in support of my EV venture
00:39:40.929 --> 00:39:44.489
and that... I actually was the one that thought
00:39:44.489 --> 00:39:46.949
that the risk was so big that I need to get into
00:39:46.949 --> 00:39:51.190
this 70 -day investigation process. And after
00:39:51.190 --> 00:39:53.449
the 70 days, they concluded, yes, it's a go.
00:39:53.570 --> 00:39:56.050
But we know that by the end of the 70 days, they
00:39:56.050 --> 00:39:59.409
knew at that point the blacklist wasn't going
00:39:59.409 --> 00:40:03.090
to happen. I think. Okay. I mean, I can conclude
00:40:03.090 --> 00:40:05.909
for certain, but this is my side of the story.
00:40:06.429 --> 00:40:10.349
Even in his books, there was a paragraph that
00:40:10.349 --> 00:40:14.550
was emphasizing on how did Xiaomi ended up on
00:40:14.550 --> 00:40:20.309
that CCMC list. He mentioned that in 2019, Lei
00:40:20.309 --> 00:40:25.750
Jun himself was awarded a prize by the MIIT,
00:40:25.849 --> 00:40:27.809
which is the Ministry of Industry and Information
00:40:27.809 --> 00:40:32.010
Technology of the PRC. That was perhaps one of
00:40:32.010 --> 00:40:36.960
the reasons that how Xiaomi was being... briefly
00:40:36.960 --> 00:40:40.000
put on the list of ccmc xiaomi was never actually
00:40:40.000 --> 00:40:43.420
at the risk of again they're not on the entity
00:40:43.420 --> 00:40:47.619
list so they never was at risk of losing smartphone
00:40:47.619 --> 00:40:51.159
components right access like they they can still
00:40:51.159 --> 00:40:53.539
get qualcomm chips right they can still work
00:40:53.539 --> 00:40:55.679
with google to get the android operating system
00:40:55.679 --> 00:40:59.679
and play store even if they maintained blacklist
00:40:59.679 --> 00:41:02.769
status They can still do that. The real threat
00:41:02.769 --> 00:41:06.849
is that there is a potential risk of stock price
00:41:06.849 --> 00:41:09.889
collapsing because their stock is owned at that
00:41:09.889 --> 00:41:13.090
point by a lot of US institutional investors.
00:41:13.730 --> 00:41:17.230
But ironically, you know, if they had they been
00:41:17.230 --> 00:41:20.369
on the list, right, not taken off. I love this
00:41:20.369 --> 00:41:23.650
statement. Every single episode, Linda will have
00:41:23.650 --> 00:41:28.710
had they. But if they were on the blacklist.
00:41:29.340 --> 00:41:32.539
What would happen is their stock price tumbles.
00:41:32.619 --> 00:41:35.539
It would have made the EV venture much harder,
00:41:35.719 --> 00:41:39.539
not easier, because a fall in their stock price
00:41:39.539 --> 00:41:42.360
would have dramatically increased the cost of
00:41:42.360 --> 00:41:46.340
raising massive capital needed to fund the EV
00:41:46.340 --> 00:41:49.480
investment. But what I do agree is that this
00:41:49.480 --> 00:41:51.619
event did help them accelerate this decision.
00:41:51.820 --> 00:41:54.539
It was becoming more urgent and geopolitical
00:41:54.539 --> 00:41:56.940
risk is real. It's saying that, you know, it
00:41:56.940 --> 00:41:59.699
will impact Xiaomi. It's not that they're completely
00:41:59.699 --> 00:42:03.679
immune just because on the surface, they're not
00:42:03.679 --> 00:42:06.639
a Huawei, right? Or they're not producing chips
00:42:06.639 --> 00:42:10.780
or whatnot. But the fact that, you know, had
00:42:10.780 --> 00:42:14.059
they never thought about this risk, I don't think
00:42:14.059 --> 00:42:18.090
so because Huawei even happened in 2019. Have
00:42:18.090 --> 00:42:20.309
they never thought about the fact that maybe
00:42:20.309 --> 00:42:23.210
Trump or someone else would put them on some
00:42:23.210 --> 00:42:26.030
kind of list to prevent them from selling smartphones?
00:42:26.230 --> 00:42:30.070
You could see it coming. Yeah. So the EV is the
00:42:30.070 --> 00:42:32.030
right decision. It's just the whole storyline
00:42:32.030 --> 00:42:34.650
might be a little bit misleading. Yeah, that's
00:42:34.650 --> 00:42:38.570
right. So what happened after they had made the
00:42:38.570 --> 00:42:40.630
decision and made the release that, hey, I'm
00:42:40.630 --> 00:42:43.530
going to make this phone? And in my mind, I was
00:42:43.530 --> 00:42:48.539
also calculating. Man is 52 now. Yeah. Why would
00:42:48.539 --> 00:42:52.900
you do that? Why would you have a new baby? In
00:42:52.900 --> 00:42:57.440
the video, in the Courage video, he famously
00:42:57.440 --> 00:43:00.099
mentioned that this is the last project that
00:43:00.099 --> 00:43:03.039
I will do. Yes. And he famously said that I will
00:43:03.039 --> 00:43:05.699
bet everything that I have. Yeah. There's so
00:43:05.699 --> 00:43:08.340
much drama in that. So everyone, please go watch
00:43:08.340 --> 00:43:10.860
the Courage TED Talk. It's so good. There's so
00:43:10.860 --> 00:43:14.280
much drama. He also seemed a little stressed.
00:43:14.519 --> 00:43:16.639
He is a little chubby at the time. Maybe it's
00:43:16.639 --> 00:43:18.960
because of the stress. But he seemed a lot better
00:43:18.960 --> 00:43:20.739
right now. Like you can see his... Oh, yeah.
00:43:20.840 --> 00:43:22.559
Every single year he makes a different video
00:43:22.559 --> 00:43:24.760
and then he looks very different. And you can
00:43:24.760 --> 00:43:27.659
see like this is... My mental status. The mental
00:43:27.659 --> 00:43:32.139
status. How the stock price will go. I was thinking
00:43:32.139 --> 00:43:35.059
whether this decision was reasonable enough.
00:43:35.440 --> 00:43:38.159
And here's my thinking process. Xiaomi is the
00:43:38.159 --> 00:43:41.369
number three cell phone maker in the world. There's
00:43:41.369 --> 00:43:45.429
Apple and Samsung. To be a really large cell
00:43:45.429 --> 00:43:47.710
phone maker in the world right now, you're playing
00:43:47.710 --> 00:43:51.230
a game of elimination. It's very Game of Thrones
00:43:51.230 --> 00:43:55.230
-esque. And in China, you have to compete with
00:43:55.230 --> 00:43:59.030
six other phone makers, Xiaomi included. And
00:43:59.030 --> 00:44:01.869
that's Huawei, Oppo, Vivo, Honor, and Transient,
00:44:01.929 --> 00:44:05.039
which is Infinix. You have phone makers that
00:44:05.039 --> 00:44:08.900
covers the upper level, the mid -level, and then
00:44:08.900 --> 00:44:13.360
the low -end type of phones. So inside of China,
00:44:13.460 --> 00:44:17.179
it is very saturated. There are about 10 .4 billion
00:44:17.179 --> 00:44:21.880
phones in the world. 70 % of the population are
00:44:21.880 --> 00:44:26.239
unique phone users, which is about 5 .8 billion.
00:44:26.679 --> 00:44:30.159
And the most developed countries are already
00:44:30.159 --> 00:44:33.650
equipped. with a phone. So the part of the world
00:44:33.650 --> 00:44:38.489
that doesn't have a phone is the developing countries.
00:44:38.750 --> 00:44:42.150
And to sell phones to those countries, you're
00:44:42.150 --> 00:44:45.070
not going to have a very high profit margin,
00:44:45.110 --> 00:44:47.210
like AKA you're selling it to Africa, you're
00:44:47.210 --> 00:44:50.349
selling it to other emerging markets. So for
00:44:50.349 --> 00:44:53.969
example, Transient, Infinix Mobile is selling
00:44:53.969 --> 00:44:56.389
in Africa, and they're selling it at a super
00:44:56.389 --> 00:44:59.369
cheap price. To be able to continue on in the
00:44:59.369 --> 00:45:02.119
mobile phone game, you will have to increasingly
00:45:02.119 --> 00:45:05.440
manage your costs. You can't compete with Samsung
00:45:05.440 --> 00:45:07.719
and Apple in terms of the high end. You have
00:45:07.719 --> 00:45:10.119
to compete in the mid to low market. Here comes
00:45:10.119 --> 00:45:13.239
another question. If you want to become an EV
00:45:13.239 --> 00:45:18.000
seller, you also face quite a lot of competitions.
00:45:18.280 --> 00:45:22.400
However, the market is really large. And we can
00:45:22.400 --> 00:45:25.280
both see in the numbers that we put together.
00:45:25.980 --> 00:45:30.119
BYD is selling at millions. of cars starting,
00:45:30.239 --> 00:45:33.880
I think, in 2023. And it's officially hitting
00:45:33.880 --> 00:45:38.840
the 4 million mark as of 2024. So BYD actually
00:45:38.840 --> 00:45:42.139
ascended really fast. But all the other car manufacturers,
00:45:42.380 --> 00:45:44.639
they're trying to find their value proposition
00:45:44.639 --> 00:45:48.679
and trying to take up a fair share in that whole
00:45:48.679 --> 00:45:52.920
mix. Xiaomi has probably observed that there
00:45:52.920 --> 00:45:56.360
is still a lot of room in that game. Therefore,
00:45:56.539 --> 00:45:59.059
it will be worth it for me to start participating
00:45:59.059 --> 00:46:01.880
in right now. Yeah, I would say actually the
00:46:01.880 --> 00:46:05.539
EV market is similar to the smartphone market
00:46:05.539 --> 00:46:11.280
back in 2013, 14 maybe, is when you still have
00:46:11.280 --> 00:46:15.019
a lot of players and not everyone has a smartphone
00:46:15.019 --> 00:46:18.659
yet, right? So not everyone has an EV. In fact...
00:46:19.079 --> 00:46:22.619
I think only 25 % of the global population, not
00:46:22.619 --> 00:46:28.420
even 25, 25 % of new cars sold are EVs. So that's
00:46:28.420 --> 00:46:32.719
not even near penetration. So any company has
00:46:32.719 --> 00:46:37.719
a goal in EV compared to smartphones. Yeah. And
00:46:37.719 --> 00:46:40.980
so the competitive landscape, I didn't go into
00:46:40.980 --> 00:46:43.320
the details, but you can tell that there are
00:46:43.320 --> 00:46:47.099
at least four groups of... contenders in that
00:46:47.099 --> 00:46:51.340
game the first one is the completely new ev brands
00:46:51.340 --> 00:46:53.960
that are coming from large tech companies and
00:46:53.960 --> 00:46:57.440
for example there's neo there's xpeng there's
00:46:57.440 --> 00:47:00.480
liado and then there's the the manufacturers
00:47:00.480 --> 00:47:02.280
they're not internet they're not even internet
00:47:02.280 --> 00:47:04.739
brands they're just like new tech brands yeah
00:47:04.739 --> 00:47:06.980
completely new brands yeah and there are the
00:47:06.980 --> 00:47:10.530
battery manufacturers The BYD, right? Yeah. And
00:47:10.530 --> 00:47:12.889
then there are the phone companies who are trying
00:47:12.889 --> 00:47:15.409
to make bigger phones with real. That's Huawei
00:47:15.409 --> 00:47:17.489
and Xiaomi, right? And Apple tried and failed.
00:47:17.769 --> 00:47:21.230
Yeah. Yeah, and then they failed. And finally,
00:47:21.309 --> 00:47:23.710
there is the traditional car companies who are
00:47:23.710 --> 00:47:25.570
trying to make sense of what's going on with
00:47:25.570 --> 00:47:27.170
all the hype. Can I just still join the game?
00:47:27.269 --> 00:47:32.250
Can I just replace my ICU with batteries? That's
00:47:32.250 --> 00:47:36.269
right. The game has begun and then you have those
00:47:36.269 --> 00:47:39.190
four groups of people in this. Here comes Xiaomi.
00:47:39.349 --> 00:47:43.469
Lei Jun, he has always mentioned this similar
00:47:43.469 --> 00:47:45.829
conclusion in different, either his interview
00:47:45.829 --> 00:47:50.070
videos or in the car launches. His conclusion
00:47:50.070 --> 00:47:53.110
is if you don't do EVs, someone else will and
00:47:53.110 --> 00:47:54.829
someone else will take over your market share.
00:47:55.070 --> 00:47:57.809
So the urgency is definitely there. Yeah. If
00:47:57.809 --> 00:47:59.829
you don't do it now, you're losing out. Right.
00:48:00.130 --> 00:48:02.469
Like if you don't go into it now, then don't
00:48:02.469 --> 00:48:05.130
go into this. That's right. And he has... Three
00:48:05.130 --> 00:48:07.969
beliefs that he had set out at the very beginning
00:48:07.969 --> 00:48:10.789
out of like 14 years of making phones and starting
00:48:10.789 --> 00:48:13.570
many, many companies. His conclusions are first,
00:48:13.829 --> 00:48:17.050
90 % of the people who are in this game right
00:48:17.050 --> 00:48:21.469
now might lose later on. So it's not a matter
00:48:21.469 --> 00:48:24.630
of when you enter the game. It's a matter of
00:48:24.630 --> 00:48:26.449
whether you can make it till the end. How long
00:48:26.449 --> 00:48:29.150
do you survive? Exactly. Game of elimination.
00:48:29.230 --> 00:48:32.989
There you go. And in this game, there are two
00:48:32.989 --> 00:48:36.409
bits that you compete. Number one is the actual
00:48:36.409 --> 00:48:39.090
electrification of a vehicle. Do you turn this
00:48:39.090 --> 00:48:42.869
into a battery, an electric motor powered machine
00:48:42.869 --> 00:48:45.150
versus a petrol powered machine? And then the
00:48:45.150 --> 00:48:48.190
second bit is, how do you make this car a smart
00:48:48.190 --> 00:48:51.849
car? As smart as your phone. That's the second
00:48:51.849 --> 00:48:55.090
bit. And he said that he has significant more
00:48:55.090 --> 00:48:57.530
confidence in the second bit than the first bit
00:48:57.530 --> 00:49:00.539
because of experience making Xiaomi. and then
00:49:00.539 --> 00:49:03.480
the third is lessons learned from xiaomi is if
00:49:03.480 --> 00:49:07.559
you want a hardware to have longer lifetime then
00:49:07.559 --> 00:49:10.840
you must invest in the core technologies early
00:49:10.840 --> 00:49:14.960
on yeah which is why he had built the electric
00:49:14.960 --> 00:49:18.139
motor himself, the V8, and also on the software
00:49:18.139 --> 00:49:21.079
bit. They also hired somewhere around a thousand
00:49:21.079 --> 00:49:24.360
people just to do the FSD. This is actually,
00:49:24.460 --> 00:49:25.980
I don't want to interrupt, this is actually a
00:49:25.980 --> 00:49:27.860
learning he had from his cell phone making days
00:49:27.860 --> 00:49:32.239
where his initial plan was to have more dependency
00:49:32.239 --> 00:49:36.139
on the suppliers. And in one of the years, I
00:49:36.139 --> 00:49:39.940
think 2017 or 16, I can't remember exactly which
00:49:39.940 --> 00:49:43.579
year, there was a hiccup in the supply. chain,
00:49:43.860 --> 00:49:48.619
namely with the Korean OLED suppliers, both Samsung
00:49:48.619 --> 00:49:53.260
and LG. And that played a huge role in his decision
00:49:53.260 --> 00:49:57.380
in the investment in R &D for EV and the fact
00:49:57.380 --> 00:50:00.920
that he has to control the core supply chain
00:50:00.920 --> 00:50:03.860
components. That's right. Yeah. Yeah. Lessons
00:50:03.860 --> 00:50:05.880
learned. Yeah. You can't be depending on someone
00:50:05.880 --> 00:50:08.739
else. Learn from your mistakes. Exactly. He launched
00:50:08.739 --> 00:50:10.780
another very important meeting and then he had
00:50:10.780 --> 00:50:13.719
a discussion with the board. Most of the big
00:50:13.719 --> 00:50:15.440
corporations, when they launch something innovative,
00:50:15.800 --> 00:50:19.340
it often end up failing. In what way will Xiaomi
00:50:19.340 --> 00:50:22.280
EV die? That was it. Yeah, that was it. Yeah,
00:50:22.300 --> 00:50:25.059
that's it. I don't have to worry about it for
00:50:25.059 --> 00:50:28.280
now. And his examples were, so Microsoft once
00:50:28.280 --> 00:50:30.440
upon a time had a mobile phone service, had a
00:50:30.440 --> 00:50:34.139
mobile phone smartphone product. We didn't even
00:50:34.139 --> 00:50:39.400
heard of it. I mean, yeah. And Intel had a cell
00:50:39.400 --> 00:50:43.500
phone chip service. and also did not end up yeah
00:50:43.500 --> 00:50:47.480
yeah okay it wasn't it didn't survive it didn't
00:50:47.480 --> 00:50:49.960
survive till today maybe but do we know about
00:50:49.960 --> 00:50:52.719
it is it a core revenue generating like business
00:50:52.719 --> 00:50:56.719
probably not yeah so be careful when you're innovating
00:50:57.949 --> 00:51:02.809
What if Xiaomi EV died like any other bigger
00:51:02.809 --> 00:51:05.570
companies, innovative projects? There is that
00:51:05.570 --> 00:51:08.030
possibility. In what way? In high likelihood.
00:51:08.289 --> 00:51:11.369
Right, high likelihood. And he discovered that
00:51:11.369 --> 00:51:14.210
maybe there are three reasons that are preventing
00:51:14.210 --> 00:51:16.949
the bigger corporations from having innovative
00:51:16.949 --> 00:51:21.949
businesses. The first is you are too content
00:51:21.949 --> 00:51:26.349
with your current title that you don't push forward.
00:51:26.840 --> 00:51:29.239
You have experience in cell phone making, but
00:51:29.239 --> 00:51:31.699
you have zero experience in EV. However, you
00:51:31.699 --> 00:51:34.559
carry the name of Xiaomi. You feel content. You
00:51:34.559 --> 00:51:39.139
stop making things right. Second is anything,
00:51:39.340 --> 00:51:41.519
any experience that you have accumulated in the
00:51:41.519 --> 00:51:44.659
past may not be useful in the new company. Like
00:51:44.659 --> 00:51:47.139
this is the new company doesn't even have the
00:51:47.139 --> 00:51:50.179
zero to one stage. So anything that's before
00:51:50.179 --> 00:51:54.699
may not be useful for the new one. So past experience.
00:51:55.369 --> 00:51:57.949
And the third one is that you have cognitive
00:51:57.949 --> 00:52:03.989
dissonance into you don't understand the current
00:52:03.989 --> 00:52:07.949
stage of your problem. You cannot identify in
00:52:07.949 --> 00:52:11.429
car making how big this problem is and at what
00:52:11.429 --> 00:52:13.690
level I should be responding to this problem.
00:52:13.809 --> 00:52:16.639
Like as in you're not. fully formed in the car
00:52:16.639 --> 00:52:18.420
industry in fact you don't know anything about
00:52:18.420 --> 00:52:20.280
the car industry the car industry doesn't even
00:52:20.280 --> 00:52:22.420
recognize you so basically if you're too full
00:52:22.420 --> 00:52:24.980
of yourself you will fail yeah yeah well i think
00:52:24.980 --> 00:52:27.699
reason one two three are all all the same yeah
00:52:27.699 --> 00:52:30.480
all the same like you be modest yeah be modest
00:52:30.480 --> 00:52:34.980
be modest was that identified he decided that
00:52:34.980 --> 00:52:39.320
okay maybe we need to scratch everything that
00:52:39.320 --> 00:52:42.400
we have before and just assemble a complete new
00:52:42.400 --> 00:52:47.559
team and build a very rigorous PMF process, product
00:52:47.559 --> 00:52:51.440
market fit process, to be able to actually make
00:52:51.440 --> 00:52:55.760
this car. Here is how he built that car. Who
00:52:55.760 --> 00:52:58.920
are the first group of people that he had hired
00:52:58.920 --> 00:53:04.920
to build this car? Who are they? Ocean 17. There
00:53:04.920 --> 00:53:10.380
are 16 people who migrated from Xiaomi, the corporate,
00:53:10.639 --> 00:53:14.949
to Xiaomi EV. Got it. That's the 16 people already.
00:53:15.190 --> 00:53:16.829
But I thought he said don't start. He started
00:53:16.829 --> 00:53:19.989
from scratch. But those people are those who
00:53:19.989 --> 00:53:23.110
have like HR experience, those who have finance
00:53:23.110 --> 00:53:28.170
experience. Got it. Those have PR and internationalization
00:53:28.170 --> 00:53:32.170
of marketing. So the mid -office folks are all
00:53:32.170 --> 00:53:35.670
from Xiaomi. Exactly. There is one person that
00:53:35.670 --> 00:53:39.269
was not directly hired from Xiaomi. This person
00:53:39.269 --> 00:53:42.840
is poached from BMW. Oh, the designer. Exactly.
00:53:42.960 --> 00:53:45.969
His name is Li Tianyuan. Sawyer Lee. Designer
00:53:45.969 --> 00:53:51.070
for BMW i -Series, which is also an electric
00:53:51.070 --> 00:53:54.929
vehicle series. He was working for BMW for about
00:53:54.929 --> 00:53:58.090
10 years. The moment that Leijun announced that,
00:53:58.150 --> 00:54:00.550
hey guys, I'm going to be making an EV. So he
00:54:00.550 --> 00:54:02.289
was like, hey guys, I'm going to be coming back
00:54:02.289 --> 00:54:05.809
to China to build this with you, buy BMW. So
00:54:05.809 --> 00:54:09.849
it was a mutual feeling for each other that drew
00:54:09.849 --> 00:54:12.989
himself to Xiaomi. I have a little bit more,
00:54:13.030 --> 00:54:15.659
I guess, insight on this. I spoke to someone
00:54:15.659 --> 00:54:18.719
who is in HR in the auto industry. Cool. And
00:54:18.719 --> 00:54:21.940
he mentioned that actually for most of the new
00:54:21.940 --> 00:54:25.139
EV companies, they had two types of people that
00:54:25.139 --> 00:54:27.960
they need to hire. One is the designer who's
00:54:27.960 --> 00:54:30.440
in control of the looks and feel of the car.
00:54:30.559 --> 00:54:33.239
And then there's kind of the production side
00:54:33.239 --> 00:54:37.019
of things. So for designers, most of them still
00:54:37.019 --> 00:54:40.050
prefer to hire from abroad. So people who have
00:54:40.050 --> 00:54:43.630
extensive experience in Germany or in the US
00:54:43.630 --> 00:54:46.690
or in Japan and Korea. But for the production
00:54:46.690 --> 00:54:49.550
side of things, because the SOP and everything
00:54:49.550 --> 00:54:52.429
is so well established in China nowadays, they
00:54:52.429 --> 00:54:55.829
can hire domestically. And so it's not a surprise
00:54:55.829 --> 00:55:01.030
that Lei Jun chose to poach someone from BMW
00:55:01.030 --> 00:55:04.230
or other manufacturing. What is surprising is
00:55:04.230 --> 00:55:09.199
that this... guy he is only 35 years old so he's
00:55:09.199 --> 00:55:12.179
not like well established in the market somewhat
00:55:12.179 --> 00:55:14.260
established somewhat established but still quite
00:55:14.260 --> 00:55:16.760
young in terms of someone who's leading this
00:55:16.760 --> 00:55:20.380
project because we everyone had really high hopes
00:55:20.380 --> 00:55:23.260
of this project never had had very high demands
00:55:23.260 --> 00:55:25.840
for this project so for him to bet on someone
00:55:25.840 --> 00:55:31.250
who's younger than expected it's a It feels like
00:55:31.250 --> 00:55:33.530
the deep -seek hiring strategy where you believe
00:55:33.530 --> 00:55:35.849
in someone, right? Yeah, you believe in someone.
00:55:35.969 --> 00:55:41.210
When Sue7 was made in the first release, an American
00:55:41.210 --> 00:55:44.730
designer, Chris Bangle, who is also the chief
00:55:44.730 --> 00:55:47.389
designer for BMW Group, was invited. There was
00:55:47.389 --> 00:55:50.690
a three -minute plug by him just endorsing how
00:55:50.690 --> 00:55:53.090
great of a car it is. He still works at BMW?
00:55:53.550 --> 00:55:56.789
He doesn't work for BMW anymore, but he had a
00:55:56.789 --> 00:56:00.440
TEDx video. which is really fun. And it lays
00:56:00.440 --> 00:56:03.519
out his design thinking, which is great cars
00:56:03.519 --> 00:56:08.940
are art. He believes that cars convey feelings.
00:56:09.780 --> 00:56:14.280
Cars are important tools of how we express ourselves
00:56:14.280 --> 00:56:18.039
in daily lives. In total, to be able to complete
00:56:18.039 --> 00:56:23.539
this project, Xiaomi hired about 6 ,000 people
00:56:23.539 --> 00:56:28.369
with 100 folks. who are plugged from Xiaomi Corporate
00:56:28.369 --> 00:56:32.650
and put into Xiaomi EB. Got it. So mostly new
00:56:32.650 --> 00:56:35.010
hires, which reflects his start -from -scratch
00:56:35.010 --> 00:56:39.769
mentality. Coming to the story of launching Su7.
00:56:39.969 --> 00:56:42.769
The first car. The first car. So we're going
00:56:42.769 --> 00:56:47.130
to call it Su7, right? Su7 is technically called
00:56:47.130 --> 00:56:51.139
Su7. If you know the Chinese intonations. And
00:56:51.139 --> 00:56:54.840
Su means speed. It's called Speed 7. Su 7. Okay.
00:56:55.320 --> 00:56:57.179
But if you want to call it SU7. I'm looking at
00:56:57.179 --> 00:57:00.079
YouTube and everyone's calling it SU7. But the
00:57:00.079 --> 00:57:04.219
Chinese pronunciation, guys, is Su 7. Yeah, yeah,
00:57:04.280 --> 00:57:06.960
yeah. It has nothing to do with Tesla Model S.
00:57:07.260 --> 00:57:09.760
Yeah, not the same, not the same. The Tesla Mod
00:57:09.760 --> 00:57:12.539
naming convention is SEXY. And then we all know
00:57:12.539 --> 00:57:15.579
what that is. I actually didn't know about it
00:57:15.579 --> 00:57:19.860
before you told me. Leijun had later reflected
00:57:19.860 --> 00:57:22.619
that it has been incredibly difficult to make
00:57:22.619 --> 00:57:25.519
a car. And one of a very specific challenge that
00:57:25.519 --> 00:57:28.579
he had mentioned is... You're essentially bridging
00:57:28.579 --> 00:57:30.820
three different groups of people together and
00:57:30.820 --> 00:57:32.599
then they don't necessarily speak the same language.
00:57:32.780 --> 00:57:36.079
First, it's the automakers. Second, it's the
00:57:36.079 --> 00:57:39.179
cell phone makers. And third, the software makers.
00:57:39.420 --> 00:57:41.960
If you have those three people working under
00:57:41.960 --> 00:57:44.280
the same company, it'll take some time for the
00:57:44.280 --> 00:57:46.099
three of them can actually work together. I can
00:57:46.099 --> 00:57:49.179
imagine. Right? Not to mention if you hired someone
00:57:49.179 --> 00:57:51.840
who is non -Chinese, that will add like a different
00:57:51.840 --> 00:57:54.800
level of complexity on top of. the existing one
00:57:54.800 --> 00:57:58.260
how do you create a framework such that car designers
00:57:58.260 --> 00:58:00.900
cell phone designers and software designers can
00:58:00.900 --> 00:58:02.900
both work together actually one thing we forgot
00:58:02.900 --> 00:58:06.480
to mention is that he had to run this project
00:58:06.480 --> 00:58:09.039
he has to head the project personally i think
00:58:09.039 --> 00:58:11.320
for for the board to approve everything yeah
00:58:11.320 --> 00:58:13.099
for sure and then he applied for the project
00:58:13.099 --> 00:58:15.800
he led the project and he also applied for a
00:58:15.800 --> 00:58:18.320
really large amount of money to run that project
00:58:18.320 --> 00:58:22.119
right yeah the announcement said 10 billion chinese
00:58:22.119 --> 00:58:25.500
yuan in the first year and then committing 10
00:58:25.500 --> 00:58:28.800
billion us dollars which is about seven eight
00:58:28.800 --> 00:58:31.699
times of that yeah in the next 10 years yeah
00:58:31.699 --> 00:58:35.960
yeah yeah and he has used a lot of that existing
00:58:35.960 --> 00:58:39.679
budget yeah yeah 60 70 of that already oh really
00:58:39.679 --> 00:58:42.780
yeah okay yeah well some of them are like capex
00:58:42.780 --> 00:58:45.280
and and stuff that he can recover like buying
00:58:45.280 --> 00:58:47.760
the the land right buying the land and building
00:58:47.760 --> 00:58:49.599
the factory probably cost a lot more exactly
00:58:49.599 --> 00:58:53.019
but you just have to give it time till like later
00:58:53.019 --> 00:58:55.719
on maybe you can amortize it for 20 years yeah
00:58:55.719 --> 00:58:58.599
ramping it up ramping up the production cost.
00:58:58.719 --> 00:59:04.039
In 2022, that's the year when he was just quietly
00:59:04.039 --> 00:59:08.159
building the car. And 2023 is the year when the
00:59:08.159 --> 00:59:10.880
car prototype was built. And then the car prototype
00:59:10.880 --> 00:59:13.619
started to test run in different Chinese cities.
00:59:13.699 --> 00:59:18.139
By the end of 2023, that's when he had organized
00:59:18.139 --> 00:59:21.539
a small release within the auto press group.
00:59:22.010 --> 00:59:27.269
And he had invited about a group of 2030 media
00:59:27.269 --> 00:59:30.829
folks who are very much affiliated with the auto
00:59:30.829 --> 00:59:33.769
industry. Most of them gave very negative feedback
00:59:33.769 --> 00:59:38.230
about Su7. And they were saying that your product
00:59:38.230 --> 00:59:40.690
is way too niche. Why do they call it niche?
00:59:40.869 --> 00:59:44.750
Because by the time it was the end of 2023, everyone
00:59:44.750 --> 00:59:47.369
who was in the game, like Huawei and Li Auto,
00:59:47.610 --> 00:59:50.630
they were making SUVs. They were making bigger
00:59:50.630 --> 00:59:53.090
cars. And why did they make SUVs? Because if
00:59:53.090 --> 00:59:54.929
you were to be putting a battery pack in a car,
00:59:55.090 --> 00:59:57.710
it takes up a lot of room. So if you were to
00:59:57.710 --> 01:00:00.849
be making an SUV, it's easier to pack everything
01:00:00.849 --> 01:00:03.889
together. But by then, the biggest seller, BYD,
01:00:03.929 --> 01:00:06.429
was making sedans. To be able to compete in a
01:00:06.429 --> 01:00:09.389
slightly different group was a mid -end, mid
01:00:09.389 --> 01:00:12.949
to higher end of cars. A lot of people who at
01:00:12.949 --> 01:00:16.579
that price point were making... And also SUVs,
01:00:16.579 --> 01:00:18.239
you can naturally charge people a higher price.
01:00:18.300 --> 01:00:23.159
Because they were at the 200 ,000 Chinese yuan
01:00:23.159 --> 01:00:26.300
above category. Exactly. It was in between 200
01:00:26.300 --> 01:00:29.840
and 300k category. Lei Jun decided that, okay,
01:00:29.900 --> 01:00:32.219
so within this category, a lot of people were
01:00:32.219 --> 01:00:34.880
finding it difficult to make a physical sedan
01:00:34.880 --> 01:00:39.260
and to make it a good looking sedan. So he wants
01:00:39.260 --> 01:00:43.090
to give it a shot. And his benchmark was... If
01:00:43.090 --> 01:00:46.110
any car, if any EV that was able to sell in the
01:00:46.110 --> 01:00:49.909
Chinese market monthly at 10K, that's the volume,
01:00:50.070 --> 01:00:54.949
10 ,000 pieces of that EV, then that car would
01:00:54.949 --> 01:00:57.889
be like a viral product. That car would be a
01:00:57.889 --> 01:01:00.389
viral. That's a low goal for his... Right now,
01:01:00.469 --> 01:01:02.530
they're currently selling at somewhere around
01:01:02.530 --> 01:01:05.889
20 to 30K. Not there yet, but that's their goal
01:01:05.889 --> 01:01:08.110
for the end of 2025. Right, right, right. They're
01:01:08.110 --> 01:01:10.329
selling a lot more than that. Now that you know
01:01:10.329 --> 01:01:13.119
you want to build a sedan. Within the 200 and
01:01:13.119 --> 01:01:15.960
300K bracket, here are the classic questions
01:01:15.960 --> 01:01:20.360
when you're doing PMF, which is first, who are
01:01:20.360 --> 01:01:24.079
the primary users for your product? And second,
01:01:24.340 --> 01:01:26.980
what problem do they have that is not resolved
01:01:26.980 --> 01:01:31.119
with the current EVs? Number three, what can
01:01:31.119 --> 01:01:33.019
your product do to solve the problem for them?
01:01:33.139 --> 01:01:38.119
And last bit, will this product be both functionally
01:01:38.119 --> 01:01:42.210
good and aesthetically pleasing? at the same
01:01:42.210 --> 01:01:45.050
time. That's the typical PMF questions that you
01:01:45.050 --> 01:01:49.150
would have. And after which I would think rounds
01:01:49.150 --> 01:01:52.190
and rounds of audience research, Leijun decided
01:01:52.190 --> 01:01:55.630
that with the first car, I am really going to
01:01:55.630 --> 01:01:59.150
please the women buyers, which is very obvious
01:01:59.150 --> 01:02:03.789
in the first press release. Not only did he intentionally
01:02:03.789 --> 01:02:07.550
tailor the car for women, he had also tried to...
01:02:07.760 --> 01:02:10.519
use his social media to engage more with the
01:02:10.519 --> 01:02:14.239
female audience. In just about less than a year
01:02:14.239 --> 01:02:19.300
time, his channel's female subscriber went up
01:02:19.300 --> 01:02:27.539
from 3 .7 % to 22%. He only had 3 % before EV
01:02:27.539 --> 01:02:32.659
launch? Yes. He had 3 .5%. No woman was watching
01:02:32.659 --> 01:02:38.460
his videos up until right now. All because of
01:02:38.460 --> 01:02:41.559
the UV protection blocking the car. We'll get
01:02:41.559 --> 01:02:43.420
to that later. We'll get to that in a bit. But
01:02:43.420 --> 01:02:47.119
so just a quick fact. I remember you talked about
01:02:47.119 --> 01:02:53.280
the end of 2023 small scale media launch. Yeah.
01:02:53.699 --> 01:02:58.380
So back then, Everyone in the car industry thought
01:02:58.380 --> 01:03:03.179
this wasn't going to mass produce because Xiaomi
01:03:03.179 --> 01:03:07.460
was targeting their car branding as the supercar,
01:03:07.559 --> 01:03:09.800
as a sports car. Performance car. Performance
01:03:09.800 --> 01:03:12.119
car. And nobody thought that that was a niche
01:03:12.119 --> 01:03:14.380
market in China because people don't buy sports
01:03:14.380 --> 01:03:17.280
cars. Like people buy road cars and like SUVs.
01:03:17.280 --> 01:03:21.159
And so they didn't understand how Leijing can
01:03:21.159 --> 01:03:25.420
turn a sports car imaging into mass market. That's
01:03:25.420 --> 01:03:27.440
an excellent question. I think he really tried
01:03:27.440 --> 01:03:29.960
to tackle that problem from a product manager
01:03:29.960 --> 01:03:32.860
point of view. In his social media, he tried
01:03:32.860 --> 01:03:36.460
very hard to almost to test out the public sentiment
01:03:36.460 --> 01:03:40.440
to a sports slash performance cars. Every single
01:03:40.440 --> 01:03:43.420
time, he gets a very positive feedback on the
01:03:43.420 --> 01:03:45.880
videos that he has posted. And then you will
01:03:45.880 --> 01:03:49.300
get positive feedback on, like in wintertime,
01:03:49.320 --> 01:03:52.019
he did the winter testing on a frozen lake in
01:03:52.019 --> 01:03:54.719
northeastern China. During the summer endurance
01:03:54.719 --> 01:03:57.500
test, he went to the western part of China, like
01:03:57.500 --> 01:03:59.239
in the middle of nowhere, there is a desert,
01:03:59.340 --> 01:04:03.110
and he tested donating in a desert. Every single
01:04:03.110 --> 01:04:05.409
time, people were leaving him a lot of comments
01:04:05.409 --> 01:04:07.849
and say, oh, I look forward to the performance
01:04:07.849 --> 01:04:10.570
of this car. So I think throughout his testing,
01:04:10.730 --> 01:04:14.469
in between the end of 2023 and 2024, he posted
01:04:14.469 --> 01:04:17.150
so many videos on his channel. To make the public
01:04:17.150 --> 01:04:19.690
think that this is a performance car, this is
01:04:19.690 --> 01:04:22.550
a supercar. Exactly. And then he didn't release
01:04:22.550 --> 01:04:26.760
the price during the initial... tech talk presentation
01:04:26.760 --> 01:04:29.599
that's right on purpose on purpose it was like
01:04:29.599 --> 01:04:32.340
we were expecting a sports car category he was
01:04:32.340 --> 01:04:35.719
trying to showcase which is so smart right you
01:04:35.719 --> 01:04:37.760
were you were testing out and just showcasing
01:04:37.760 --> 01:04:40.239
how great the performance is about this car in
01:04:40.239 --> 01:04:43.519
every different place in china a few weeks before
01:04:43.519 --> 01:04:46.239
the official launch he was still trying to test
01:04:46.239 --> 01:04:49.480
out like how would people take this at what price
01:04:49.480 --> 01:04:51.719
point at what range should i be offering this
01:04:51.719 --> 01:04:56.730
the critique was very common and they all align
01:04:56.730 --> 01:04:59.389
in a way that oh you want to target the female
01:04:59.389 --> 01:05:01.630
audience you want to target those who are buying
01:05:01.630 --> 01:05:03.650
the car for the first time but you're building
01:05:03.650 --> 01:05:06.250
a performance vehicle how large do you think
01:05:06.250 --> 01:05:08.590
that group is right like so nobody is going to
01:05:08.590 --> 01:05:11.730
buy your car so that's the common critique how
01:05:11.730 --> 01:05:14.789
did the media how did the auto industry get this
01:05:14.789 --> 01:05:19.730
so wrong well i think the auto industry was maybe
01:05:19.730 --> 01:05:24.650
it was a 50 50 right but the concern was was
01:05:24.650 --> 01:05:28.210
real they thought it was gonna be like a 10 000
01:05:28.210 --> 01:05:32.809
car market overall yeah well look at it now right
01:05:32.809 --> 01:05:36.010
but legend still wants to target female in the
01:05:36.010 --> 01:05:38.969
uh in the in the good for him yeah it's whether
01:05:38.969 --> 01:05:42.030
and that he had segmented into two smaller groups
01:05:42.030 --> 01:05:45.280
one is female individual who have enough money,
01:05:45.380 --> 01:05:47.760
wants to buy a car for the first time. And second
01:05:47.760 --> 01:05:50.719
is the female who is in the family because he
01:05:50.719 --> 01:05:53.260
said specifically, in a family, men can have
01:05:53.260 --> 01:05:55.159
the power to say which car they pick, but it's
01:05:55.159 --> 01:05:57.679
the woman that holds the financial power. If
01:05:57.679 --> 01:05:59.539
the woman likes the car, then she can point to
01:05:59.539 --> 01:06:01.280
the man which car to buy. That's what he said.
01:06:01.440 --> 01:06:04.059
So he really knows. They actually satisfy both
01:06:04.059 --> 01:06:06.800
genders because it does have the performance
01:06:06.800 --> 01:06:10.920
that a lot of men are looking for. Okay. So at
01:06:10.920 --> 01:06:13.320
least now, we've narrowed down to, okay, we want
01:06:13.320 --> 01:06:16.239
to build a city. and we want to build this for
01:06:16.239 --> 01:06:18.820
the newer generation of car owners, perhaps a
01:06:18.820 --> 01:06:21.739
lot younger, perhaps more women. What will that
01:06:21.739 --> 01:06:27.440
car look like, right? Not white. A matte. His
01:06:27.440 --> 01:06:30.440
previous product will give people the impression
01:06:30.440 --> 01:06:34.019
that it's very bland and it's very basic, right?
01:06:34.079 --> 01:06:35.539
But if you're building something for the women,
01:06:35.699 --> 01:06:37.940
then you cannot. That's not going to be enough.
01:06:38.480 --> 01:06:42.719
He said, in the past 140 years, All the good
01:06:42.719 --> 01:06:46.219
looking designs have been designed. Everything
01:06:46.219 --> 01:06:49.099
that you could have think of has been realized.
01:06:49.760 --> 01:06:52.639
If I were to be building a new car, no matter
01:06:52.639 --> 01:06:55.179
how well I design it, it's either going to have
01:06:55.179 --> 01:06:57.699
the same face or going to have the same butt.
01:06:57.900 --> 01:07:02.079
That's what he says. So funny. So he copied.
01:07:02.440 --> 01:07:06.000
He asked himself, the choice is between do I
01:07:06.000 --> 01:07:09.159
be classy or do I be edgy with a new car? If
01:07:09.159 --> 01:07:12.119
you're being edgy for a new design, then... You're
01:07:12.119 --> 01:07:13.940
originally targeting a very niche market and
01:07:13.940 --> 01:07:16.539
then you're edgy. So it's maybe going to be even
01:07:16.539 --> 01:07:18.559
smaller. You don't want to be designing a car
01:07:18.559 --> 01:07:21.440
for the sake of a new car. So he decided that
01:07:21.440 --> 01:07:25.460
maybe being classy is the way to go. So he borrowed
01:07:25.460 --> 01:07:30.199
some of the design. Some may think. I get it.
01:07:30.199 --> 01:07:32.980
A lot of cars look alike. But it has been criticized
01:07:32.980 --> 01:07:36.840
as looking too much alike another car. He tried
01:07:36.840 --> 01:07:39.219
his best to explain. when you want to be building
01:07:39.219 --> 01:07:42.880
a classy, good -looking, charming sports car,
01:07:43.039 --> 01:07:46.380
what's the one thing that you should be focusing
01:07:46.380 --> 01:07:49.860
on? His answer is, and even for a good -looking
01:07:49.860 --> 01:07:53.920
individual, it is the portion of the car. If
01:07:53.920 --> 01:07:57.059
a person or if a car is good -looking, then that
01:07:57.059 --> 01:08:00.320
car must have its proportion. There's a golden
01:08:00.320 --> 01:08:03.820
ratio for car design. That's exactly right. In
01:08:03.820 --> 01:08:08.739
the Su7 release, That happened in March 2024.
01:08:09.179 --> 01:08:13.139
I watched the whole. Three hours. It was just
01:08:13.139 --> 01:08:16.779
so long. Did you know how many times. I didn't
01:08:16.779 --> 01:08:22.420
count actually. I watched it. He mentioned so
01:08:22.420 --> 01:08:26.140
many times. Isn't it good looking. Isn't it good
01:08:26.140 --> 01:08:29.640
looking? 好看吗? He called out so many times. There
01:08:29.640 --> 01:08:33.659
are about 200 plus selling points in that particular
01:08:33.659 --> 01:08:36.140
product. Every single thing has something to
01:08:36.140 --> 01:08:39.800
it. It's the color, the texture, the hardware,
01:08:40.119 --> 01:08:43.819
the software, the battery, the range. Oh my god,
01:08:43.859 --> 01:08:45.579
there are so many of them. Even though I didn't
01:08:45.579 --> 01:08:49.000
watch the entire thing, I did look up the specs
01:08:49.000 --> 01:08:53.010
and stuff. purposely chose a three -hour time
01:08:53.010 --> 01:08:55.409
slot even though the car launch could be 30 minutes
01:08:55.409 --> 01:08:58.810
long they purposely did it three hours to make
01:08:58.810 --> 01:09:01.409
sure they brief everyone on every single technical
01:09:01.409 --> 01:09:05.029
and creative detail correct to make the audience
01:09:05.029 --> 01:09:07.649
feel like they are part of this journey and to
01:09:07.649 --> 01:09:10.529
make them understand as much be transparent as
01:09:10.529 --> 01:09:14.130
possible and it played right into their target
01:09:14.130 --> 01:09:17.869
audience's hearts yeah and you can hear the audience
01:09:17.869 --> 01:09:21.619
like among them are some Like bros. Like fans.
01:09:21.760 --> 01:09:25.180
Fans. He's like, yes, I want it. Give it to me.
01:09:25.539 --> 01:09:27.100
You're going to hear them yelling. It's like,
01:09:27.100 --> 01:09:29.619
I don't have a car driver's license, but I want
01:09:29.619 --> 01:09:33.659
this. Yeah, but I want this. But I do have very
01:09:33.659 --> 01:09:37.279
strong impressions on a few key selling points,
01:09:37.399 --> 01:09:42.380
which are a lot of colors. Oh, yeah. Nine colors
01:09:42.380 --> 01:09:47.560
of C7. Second of all. Yeah. There is a... A built
01:09:47.560 --> 01:09:51.380
-in cell phone holder. Oh. Leijun also makes
01:09:51.380 --> 01:09:54.579
fun of it. How can a cell phone maker not have
01:09:54.579 --> 01:09:56.680
a place for cell phone in a car that it built?
01:09:57.159 --> 01:09:59.920
Question. Does it only seal the Xiaomi phone
01:09:59.920 --> 01:10:02.180
or can it seal another? I think it's a generic
01:10:02.180 --> 01:10:04.619
one. Probably like every phone, every single
01:10:04.619 --> 01:10:08.140
phone should be able to fit into that. And number
01:10:08.140 --> 01:10:12.760
three, the very big one -piece ceiling that it
01:10:12.760 --> 01:10:15.340
has. The glass ceiling that it has. It is...
01:10:15.609 --> 01:10:19.529
one complete piece, very large piece of glass
01:10:19.529 --> 01:10:24.529
with sunscreen to it. So for those of you who've
01:10:24.529 --> 01:10:29.109
never been in China, sunscreen for the female
01:10:29.109 --> 01:10:31.409
population is a big thing. It's a big thing.
01:10:31.470 --> 01:10:34.569
It's a huge thing. Lei Jun is so proud of it.
01:10:34.649 --> 01:10:40.010
And he mentioned that for Xiaomi Su 7 compared
01:10:40.010 --> 01:10:43.510
with Tesla Model 3, if you put both of them,
01:10:43.960 --> 01:10:47.340
under 38 degrees celsius right under the sun
01:10:47.340 --> 01:10:52.180
for 1 .5 hours su7 would be 12 degrees cooler
01:10:52.180 --> 01:10:56.859
than model 3 oh yeah and and it's sunscreen and
01:10:56.859 --> 01:11:00.609
it's cooler like why not it's such a So this
01:11:00.609 --> 01:11:02.710
is why it's been criticized by the auto industry
01:11:02.710 --> 01:11:05.890
so much. Like, it's great. It's a cheap trick
01:11:05.890 --> 01:11:08.189
kind of. But it's not cheap. It is a very thoughtful.
01:11:09.069 --> 01:11:11.670
It's a very useful and thoughtful component of
01:11:11.670 --> 01:11:14.829
the car. But the auto industry, you know, the
01:11:14.829 --> 01:11:18.189
old style auto makers. The petrol boys. Right.
01:11:18.909 --> 01:11:20.909
That's not what they're selling. They're selling
01:11:20.909 --> 01:11:22.890
horsepower. They're selling engine. It's not.
01:11:22.949 --> 01:11:24.890
Xiaomi does have a really good engine. Yeah.
01:11:25.130 --> 01:11:29.819
But no one. ever thought about putting sunscreen
01:11:29.819 --> 01:11:34.060
as your main selling point in in a car manufacturer
01:11:34.060 --> 01:11:36.359
honestly the only thing that i had remembered
01:11:36.359 --> 01:11:40.199
after that three hour release was the sunscreen
01:11:40.199 --> 01:11:43.439
me too like it makes so much it went viral because
01:11:43.439 --> 01:11:45.699
of the sunscreen yeah like who would have knew
01:11:45.699 --> 01:11:51.319
yeah yeah and then the price of it it's still
01:11:51.319 --> 01:11:54.380
cheaper with everything that's being put together
01:11:55.180 --> 01:11:58.739
It is still 30k RMB cheaper than Tesla Model
01:11:58.739 --> 01:12:03.060
3. But here comes my question too. Legion has
01:12:03.060 --> 01:12:09.060
also invested in NIO and Li Auto. With the launch
01:12:09.060 --> 01:12:13.000
of Su7, isn't this a little self -sabotaging
01:12:13.000 --> 01:12:15.760
that you're blocking the other... You're your
01:12:15.760 --> 01:12:18.239
competitor and the investor of two other car
01:12:18.239 --> 01:12:21.890
companies. He actually mentioned that the CEO
01:12:21.890 --> 01:12:24.590
of both these companies were in active support
01:12:24.590 --> 01:12:28.930
of his decision to enter the EV industry, which
01:12:28.930 --> 01:12:31.989
is surprising because Lei Jun also said he believes
01:12:31.989 --> 01:12:35.649
90 % of the EV will be owned by the top five,
01:12:35.770 --> 01:12:40.399
say, manufacturers. And so why would he? go into
01:12:40.399 --> 01:12:43.180
an industry where he invested it into companies
01:12:43.180 --> 01:12:45.539
already why don't you just put more money into
01:12:45.539 --> 01:12:47.800
those two companies if you believe in the industry
01:12:47.800 --> 01:12:51.180
rather than becoming a competitor again i think
01:12:51.180 --> 01:12:54.279
there's a difference between smartphone and ev
01:12:54.279 --> 01:12:58.819
industry in terms of the market penetration if
01:12:58.819 --> 01:13:02.140
you look at the gas cars manufacturers right
01:13:02.140 --> 01:13:06.260
now yes there is some concentration at the top
01:13:06.260 --> 01:13:10.859
but it's definitely not like five takes all,
01:13:10.979 --> 01:13:13.479
right? We can probably account for at least a
01:13:13.479 --> 01:13:15.520
dozen manufacturing that are on top of their
01:13:15.520 --> 01:13:18.720
games. And Toyota, who leads the market, gets
01:13:18.720 --> 01:13:21.659
probably 10 % market share. Whereas if you think
01:13:21.659 --> 01:13:23.600
Apple and Samsung probably together gets half
01:13:23.600 --> 01:13:27.279
of the entire cell phone markets. So for NIO
01:13:27.279 --> 01:13:31.279
and for Lee Auto, they are part of the auto industry.
01:13:32.039 --> 01:13:35.140
They have background in the auto industry. So
01:13:35.140 --> 01:13:38.319
for them, They actually believe in a pie for
01:13:38.319 --> 01:13:42.239
everyone. Maybe not a pie for the 100 EV manufacturers
01:13:42.239 --> 01:13:44.520
that are currently in the market in China right
01:13:44.520 --> 01:13:48.399
now, but definitely the top dozen. Because even
01:13:48.399 --> 01:13:51.659
if you look at the market position for the top
01:13:51.659 --> 01:13:57.000
EV manufacturing, BYD, low -end, cheaper. Mass
01:13:57.000 --> 01:14:02.100
market. Mass market. NIO is high -end battery
01:14:02.100 --> 01:14:05.899
swapping user ecosystem. Li Auto is more for
01:14:05.899 --> 01:14:07.859
performance. Extended range. Yeah, extended range.
01:14:08.380 --> 01:14:11.560
Xpeng is for autonomous driving. They're kind
01:14:11.560 --> 01:14:15.180
of the rival for the Tesla FSD. And then Huawei
01:14:15.180 --> 01:14:18.760
is for they're also autonomous driving, but they're
01:14:18.760 --> 01:14:20.560
more on the partnership model rather than the
01:14:20.560 --> 01:14:23.470
manufacturing model. So everyone has their own
01:14:23.470 --> 01:14:25.170
niche and everyone thought that the niche is
01:14:25.170 --> 01:14:28.510
enough to sustain their own business. Because
01:14:28.510 --> 01:14:32.470
for you to start making a profit, so the volume
01:14:32.470 --> 01:14:35.909
for you to start making profit is actually quite
01:14:35.909 --> 01:14:38.270
standard across all of these manufacturers, about
01:14:38.270 --> 01:14:43.409
350 ,000 to 400 ,000 deliveries a year. And that
01:14:43.409 --> 01:14:47.310
is not a lot if you think about the Chinese population
01:14:47.310 --> 01:14:51.100
size. Not at all. Yeah, and so if I can start
01:14:51.100 --> 01:14:56.079
making a profit at this volume, the market can
01:14:56.079 --> 01:14:58.159
probably sustain at least 10 companies at this
01:14:58.159 --> 01:15:02.060
volume without penetration. So I think one of
01:15:02.060 --> 01:15:04.899
the reasons is that we can each have our own
01:15:04.899 --> 01:15:09.119
niche. We can each... Safe place to start. Exactly.
01:15:09.359 --> 01:15:11.720
Everyone can get something out of it. Exactly.
01:15:11.720 --> 01:15:14.579
And then once they penetrate the Chinese market,
01:15:14.659 --> 01:15:17.479
there's obviously the entire global market that
01:15:17.479 --> 01:15:20.340
I think the Chinese EV manufacturer have their
01:15:20.340 --> 01:15:24.600
eyes on now. Very much. So it's less competitive
01:15:24.600 --> 01:15:29.260
than you think. So it is fair to see that different
01:15:29.260 --> 01:15:30.920
competitors coming out of the Chinese market
01:15:30.920 --> 01:15:33.739
and going global because the business model would
01:15:33.739 --> 01:15:35.760
make sense. Yeah, and maybe it's a long -term
01:15:35.760 --> 01:15:38.939
play where the Chinese manufacturers in three
01:15:38.939 --> 01:15:41.899
to four years time, they will start targeting...
01:15:42.489 --> 01:15:45.529
Europe, right? They're already started, but maybe
01:15:45.529 --> 01:15:49.210
the ambition is to take over the global EV market.
01:15:49.529 --> 01:15:52.489
And so maybe it's all of them together targeting
01:15:52.489 --> 01:15:57.609
Renault or targeting Ford or Tesla. EV bros.
01:15:57.670 --> 01:16:00.250
So it's just a start. The EV bros. Or the CIS.
01:16:00.710 --> 01:16:06.090
Moving back to more products that's launched.
01:16:06.329 --> 01:16:10.350
Have you ever wondered why they launched Su7
01:16:10.350 --> 01:16:15.260
first? And then Su7 Ultra. And then Y7. No. Ultra.
01:16:15.420 --> 01:16:21.500
Okay. Ultra is this performance electric monster.
01:16:21.659 --> 01:16:24.619
I think that's the only right way to characterize
01:16:24.619 --> 01:16:27.939
it. It's a real sports car. It's a real sports
01:16:27.939 --> 01:16:30.859
car. Yeah. Do you know how heavy it weighs? No.
01:16:31.000 --> 01:16:37.119
I don't even know. It's 2 .4 ton. It's two, three
01:16:37.119 --> 01:16:41.909
times of... A typical ICE combustion engine.
01:16:42.170 --> 01:16:46.529
Oh, wow. A sports car. And it's very heavy. Xiaomi
01:16:46.529 --> 01:16:51.409
launched it in that order. Su7, Ultra, and U7.
01:16:51.449 --> 01:16:55.229
It's like half a year, right? Su7, March, Ultra
01:16:55.229 --> 01:16:59.369
somewhere in the fall. Ultra is October. October
01:16:59.369 --> 01:17:04.149
2024. And then U7 or YU7. was in july july yes
01:17:04.149 --> 01:17:08.329
it was july 2024 june july 2024 i think it was
01:17:08.329 --> 01:17:10.810
the last no u7 was launched recently recently
01:17:10.810 --> 01:17:14.750
yes 2025 oh sorry sorry 2025 yes 2025 yes all
01:17:14.750 --> 01:17:18.430
right yeah okay so what is ultra ultra is an
01:17:18.430 --> 01:17:21.229
absolute electric monster it is a collector items
01:17:21.229 --> 01:17:25.069
for the auto fanatics out there yeah and we'll
01:17:25.069 --> 01:17:27.489
just skip to the exciting part of ultra and why
01:17:27.489 --> 01:17:30.319
it Distinguish yourself from other, whether it's
01:17:30.319 --> 01:17:34.800
EV or sports car, because it's both of EV and
01:17:34.800 --> 01:17:37.960
a sports car, which is unheard of. EV, sports
01:17:37.960 --> 01:17:40.460
car. There's just so few of them. It's not even
01:17:40.460 --> 01:17:43.380
a category, official category. I made you watch
01:17:43.380 --> 01:17:48.819
that documentary. Yes. In 2024, October, Ultra
01:17:48.819 --> 01:17:53.520
had its first run in the Nürburgring. It was
01:17:53.520 --> 01:17:56.800
so long, the documentary. It is 45 minutes. If
01:17:56.800 --> 01:17:58.960
you want to take a look at it, it is on billybilly
01:17:58.960 --> 01:18:04.180
.com. In short, Xiaomi had the plan of test run
01:18:04.180 --> 01:18:07.600
this car in Nürburgring, but they booked it in
01:18:07.600 --> 01:18:11.760
January. They had no idea that October, Nürburgring
01:18:11.760 --> 01:18:15.300
in Germany rains so much. That's why you can
01:18:15.300 --> 01:18:17.279
book it because no one else wants to have that
01:18:17.279 --> 01:18:20.520
time, right? And when you're in October, they
01:18:20.520 --> 01:18:23.279
landed there right after the October holidays
01:18:23.279 --> 01:18:26.739
in China. It typically ends on the 7th of October.
01:18:26.779 --> 01:18:30.300
And on the 8th of October, both the car and the
01:18:30.300 --> 01:18:32.739
whole team who wants to race the car are in the
01:18:32.739 --> 01:18:37.079
Nürburgring waiting for some time that it will
01:18:37.079 --> 01:18:40.439
clear up, that it won't rain. If it rains in
01:18:40.439 --> 01:18:43.140
Nürburgring, then it becomes unraceable. Like
01:18:43.140 --> 01:18:46.300
the track will be too wet. And it will be very
01:18:46.300 --> 01:18:48.399
dangerous for the person who is driving the car.
01:18:48.539 --> 01:18:51.439
So they waited and they waited. They waited until
01:18:51.439 --> 01:18:55.119
October 18th. There was a brief moment where
01:18:55.119 --> 01:18:57.180
it was clearing up, but two hours afterwards,
01:18:57.380 --> 01:18:59.899
it started pouring again. So it was never a good
01:18:59.899 --> 01:19:03.859
time. They even waited until the BYD team had...
01:19:03.859 --> 01:19:07.359
Oh, BYD was there too. Yes, Xiaomi team. was
01:19:07.359 --> 01:19:10.859
asking them whether I can take 20 minutes of
01:19:10.859 --> 01:19:14.119
your slot if you have extra. BYD ended up not
01:19:14.119 --> 01:19:16.500
having any extra time. Because it was raining
01:19:16.500 --> 01:19:19.560
as well. Because the time was very limited. And
01:19:19.560 --> 01:19:21.140
you don't want to be testing the car for one
01:19:21.140 --> 01:19:23.060
round. You want to be testing it for several
01:19:23.060 --> 01:19:27.340
rounds and see when the tire is warmer. Understandable.
01:19:27.739 --> 01:19:32.439
So they waited and waited. And finally on 28th
01:19:32.439 --> 01:19:35.979
of October, it cleared up. It was in the morning.
01:19:36.439 --> 01:19:40.579
And they were able to finally run this 2 .4 ton,
01:19:40.819 --> 01:19:44.460
very chubby baby Ultra. It was on the racetrack.
01:19:44.460 --> 01:19:46.800
And to be honest, it wasn't completely dry. It
01:19:46.800 --> 01:19:49.699
is still somewhat a little damp. This driver,
01:19:49.939 --> 01:19:54.539
David Petard, who is a pro driver, only had 10
01:19:54.539 --> 01:19:57.770
minutes. to drive and for 10 minutes on uber
01:19:57.770 --> 01:20:00.210
green that was only good for one one lap that's
01:20:00.210 --> 01:20:03.010
it one lap that's it if you want to finish as
01:20:03.010 --> 01:20:05.430
a pro driver typically it takes about like six
01:20:05.430 --> 01:20:07.810
seven minutes if you're a little crazier than
01:20:07.810 --> 01:20:10.310
six minutes but if you want to play safe then
01:20:10.310 --> 01:20:12.569
it will be seven minute and above it's just enough
01:20:12.569 --> 01:20:14.529
to get to know the track like you can't make
01:20:14.529 --> 01:20:18.050
any progress right right right so So he drove
01:20:18.050 --> 01:20:21.010
for the first half of that lap. It was quite
01:20:21.010 --> 01:20:22.949
gentle. But towards the second half of the lap,
01:20:23.010 --> 01:20:25.569
you can visibly see that he's pushing the limits
01:20:25.569 --> 01:20:27.989
a little bit. Maybe because the tires are warm
01:20:27.989 --> 01:20:30.289
enough and he got used to the condition. And
01:20:30.289 --> 01:20:34.409
he finished the whole lap at 6 minutes, 46 seconds,
01:20:34.590 --> 01:20:43.250
8 .74. By October 28, 2024, Ultra was named the
01:20:43.250 --> 01:20:48.819
fastest four -door... production vehicle yeah
01:20:48.819 --> 01:20:53.319
one lap one lap track one lap only world record
01:20:53.319 --> 01:20:58.180
yeah wow almost a year afterwards on april the
01:20:58.180 --> 01:21:01.079
first not april first day it was a serious test
01:21:01.079 --> 01:21:06.020
in 2025 xiaomi su7 ultra prototype completed
01:21:06.020 --> 01:21:10.659
a second time the lap was completed at 6 minute
01:21:10.659 --> 01:21:15.989
22 seconds 091 so 24 second gain 24 second gain.
01:21:16.069 --> 01:21:18.829
That's right. All the numbers are officially
01:21:18.829 --> 01:21:22.710
documented on the Neubergering record. As Top
01:21:22.710 --> 01:21:27.649
Gear puts it, in June 2025, it is the fastest
01:21:27.649 --> 01:21:31.550
electric production car. Wow. Yeah, it is the
01:21:31.550 --> 01:21:35.270
fastest. In electric vehicles, only four cars
01:21:35.270 --> 01:21:39.949
that completed the electric vehicle laps on Neubergering.
01:21:40.010 --> 01:21:43.390
And from three different companies. One is Tesla.
01:21:43.510 --> 01:21:46.659
One is Porsche. And the last one is Xiaomi. And
01:21:46.659 --> 01:21:51.000
currently, Xiaomi's Su7 Ultra with track package
01:21:51.000 --> 01:21:55.359
is the fastest out of all the electric vehicles.
01:21:55.560 --> 01:21:59.899
So I think Li Jun did end up achieving what he
01:21:59.899 --> 01:22:03.420
set out to achieve with the supercar category.
01:22:03.819 --> 01:22:05.699
Like they're not just putting out, they can't
01:22:05.699 --> 01:22:08.739
just put out Su7 thinking that, you know, I'm
01:22:08.739 --> 01:22:11.439
going to label it as racing supercar and then
01:22:11.439 --> 01:22:14.550
not have something. like this lap record to come
01:22:14.550 --> 01:22:16.750
with it that's right that's right for the past
01:22:16.750 --> 01:22:19.869
month we've just just been immersed in a world
01:22:19.869 --> 01:22:22.729
of like auto sports and racing we watch something
01:22:22.729 --> 01:22:24.750
every single weekend and we talk about this very
01:22:24.750 --> 01:22:26.789
constantly so i guess to give everyone a little
01:22:26.789 --> 01:22:29.649
bit more context also as a newly converted auto
01:22:29.649 --> 01:22:32.130
fan like then still thanks to linda there are
01:22:32.130 --> 01:22:34.970
typically two types of races in auto industry
01:22:34.970 --> 01:22:38.109
right one is the sprint race where you compete
01:22:38.109 --> 01:22:40.930
on speed And the other one is called the endurance
01:22:40.930 --> 01:22:45.029
racing, where you compete. Can you last 24 hours
01:22:45.029 --> 01:22:48.350
and still be in one piece? Yeah. Right? Yeah.
01:22:48.409 --> 01:22:50.489
Right. Who drives the longest? Right. Who drives
01:22:50.489 --> 01:22:52.050
the longest? Who drives the longest distance?
01:22:52.250 --> 01:22:55.689
Yeah. So in the sprint racing, you would have
01:22:55.689 --> 01:23:01.289
Formula One, NASCAR, AutoGP, and IndyCar. And
01:23:01.289 --> 01:23:05.369
in the endurance race, the most famous one. Le
01:23:05.369 --> 01:23:08.989
Mans? Exactly. That's right. Most of the cars
01:23:08.989 --> 01:23:13.449
who were able to complete any one of those races
01:23:13.449 --> 01:23:18.189
became the champion for that automaking company.
01:23:18.529 --> 01:23:22.810
And that brought brand power to that company.
01:23:23.050 --> 01:23:27.850
People don't want to just buy a regular car.
01:23:27.970 --> 01:23:30.409
People want to buy, oh, what's produced in a
01:23:30.409 --> 01:23:32.489
Ferrari. A race winner. Exactly, a race winner.
01:23:32.590 --> 01:23:35.390
Oh, Porsche. Does that mean... They're going
01:23:35.390 --> 01:23:39.909
to enter races? You're onto something. I would
01:23:39.909 --> 01:23:44.229
logically assume that maybe that would be the
01:23:44.229 --> 01:23:46.670
goal. I can't wait. I can't wait either. Please
01:23:46.670 --> 01:23:49.510
put it on track. If you're interested in learning
01:23:49.510 --> 01:23:55.050
more about how the halo effect, the race winning
01:23:55.050 --> 01:23:58.770
car, brings glory to a production car, there
01:23:58.770 --> 01:24:01.850
is a great movie as reference, which is... Ford
01:24:01.850 --> 01:24:06.050
versus Ferrari. The one that we recently watched.
01:24:06.090 --> 01:24:09.029
It's a great movie. By Christian Bale and Matt
01:24:09.029 --> 01:24:15.109
Damon. That is when Ford company wants to really
01:24:15.109 --> 01:24:19.850
increase its, not really production, but they
01:24:19.850 --> 01:24:24.970
want to pivot to a new brand image. And by competing
01:24:24.970 --> 01:24:27.729
with Ferrari gives them the new brand value.
01:24:27.909 --> 01:24:32.819
And that's when the Ford GT40 was created right
01:24:32.819 --> 01:24:38.699
and it was a movie about the le mans race wonderful
01:24:38.699 --> 01:24:44.000
was so interesting the halo effect happened in
01:24:44.000 --> 01:24:47.359
a lot of different companies so ford made mustang
01:24:47.359 --> 01:24:50.579
and ford also has you know gt40 and a few other
01:24:50.579 --> 01:24:55.100
gt cars and porsche has the regular porsche cars
01:24:55.100 --> 01:24:56.859
where you can buy as a beginner there is also
01:24:56.859 --> 01:25:01.800
the the Porsche 911, the Porsche 356, where they
01:25:01.800 --> 01:25:05.680
won races and brought so much glory to the company
01:25:05.680 --> 01:25:07.979
such that the entire brand increases in value
01:25:07.979 --> 01:25:11.140
and everyone wants to get that car. And okay,
01:25:11.199 --> 01:25:14.340
fun fact, very fun fact. Now that we've watched
01:25:14.340 --> 01:25:17.199
F1 the movie for a couple of times, did you know?
01:25:17.380 --> 01:25:19.260
A couple of times? No, a couple of times. Did
01:25:19.260 --> 01:25:24.000
you know F1, the first car that showed up in
01:25:24.000 --> 01:25:28.789
Daytona 24, that actual blue car that was being
01:25:28.789 --> 01:25:32.750
raced. By Brad Pitt? By Brad Pitt. It was a Porsche
01:25:32.750 --> 01:25:36.909
GT3R. It was an actual race car. Yeah. And then
01:25:36.909 --> 01:25:40.090
the person who was handing that car to Sonny
01:25:40.090 --> 01:25:44.850
Hayes was an actual car racer. Oh. Yeah. Oh,
01:25:44.909 --> 01:25:47.369
so his teammates in the movie were actual racers.
01:25:47.369 --> 01:25:50.569
Yes. Interesting. And he was an actual car racer.
01:25:50.789 --> 01:25:53.970
Perfect. With an actual Porsche racing car, you
01:25:53.970 --> 01:25:55.920
know, who... brought the car to Sonny Hayes.
01:25:56.300 --> 01:25:58.880
Wow. Now that I've watched it for so many times,
01:25:58.920 --> 01:26:00.100
I was finally able to connect it up. There's
01:26:00.100 --> 01:26:02.779
a lot of actual racers in the movie. The motorsports
01:26:02.779 --> 01:26:07.159
has been popular in the EU and in the US. And
01:26:07.159 --> 01:26:09.779
Japan was kind of in that game as well. And now
01:26:09.779 --> 01:26:14.100
finally, Xiaomi. Made it China relevant. Right.
01:26:14.319 --> 01:26:16.119
Yeah. So I think that was it. I think there's
01:26:16.119 --> 01:26:19.439
another reason where, so they decided to self
01:26:19.439 --> 01:26:22.800
-invest the engine because of their learnings
01:26:22.800 --> 01:26:24.399
in the smartphone. They need to actually make
01:26:24.399 --> 01:26:28.119
their components, key components. Yeah. And Ultra,
01:26:28.359 --> 01:26:32.359
Su7 Ultra was actually the perfect way to market
01:26:32.359 --> 01:26:36.899
their hyper engine V8. Yeah. Yeah. It was saying
01:26:36.899 --> 01:26:40.220
that with this engine, our horsepower is amazing.
01:26:40.800 --> 01:26:47.939
It was 1 ,500 PS. That's 1 .5 times of Porsche
01:26:47.939 --> 01:26:52.180
taken. In the ultra release meeting, Lei Jun
01:26:52.180 --> 01:26:54.380
was also trying to be funny and trying to sell
01:26:54.380 --> 01:26:58.239
the car. And he mentioned how much of a details
01:26:58.239 --> 01:27:01.300
that he was trying to put into the car that he
01:27:01.300 --> 01:27:03.840
was hoping that everyone can notice that. And
01:27:03.840 --> 01:27:06.920
one of it is he mentioned, for those of you...
01:27:07.199 --> 01:27:10.920
who buy a lot of sports cars, would know that
01:27:10.920 --> 01:27:14.180
carbon fiber is a very expensive material in
01:27:14.180 --> 01:27:16.319
the car. And for those of you who don't buy sports
01:27:16.319 --> 01:27:21.739
cars, I now just told you. He showcased in 17
01:27:21.739 --> 01:27:26.819
different places in this ultra car. I use carbon
01:27:26.819 --> 01:27:28.680
fiber. But honestly, I think... Honestly, don't
01:27:28.680 --> 01:27:31.279
all sports cars have carbon fiber? But here's
01:27:31.279 --> 01:27:33.079
the thing, though. The battery pack is too heavy.
01:27:33.180 --> 01:27:35.840
So it has to reduce weight where you can. And
01:27:35.840 --> 01:27:37.439
that means you have to use a lot of carbon fiber.
01:27:37.739 --> 01:27:40.539
So all the materials, it wasn't because of, oh,
01:27:40.579 --> 01:27:42.199
I want to use it because it's luxurious, but
01:27:42.199 --> 01:27:45.699
because I want to save weight. yeah such that
01:27:45.699 --> 01:27:48.199
he has to use a carbon fiber and also he made
01:27:48.199 --> 01:27:51.579
a very funny comment on the Pirelli tires he
01:27:51.579 --> 01:27:53.279
was saying that for those of you who wants to
01:27:53.279 --> 01:27:56.000
order you can order it now you have about like
01:27:56.000 --> 01:27:58.399
whatever time before you can lock down your deals
01:27:58.399 --> 01:28:02.319
and if you think that you want to you know just
01:28:02.319 --> 01:28:05.000
upgrade your car a little bit we have the Pirelli
01:28:05.000 --> 01:28:08.479
P Zero tires for you to order And when you're
01:28:08.479 --> 01:28:11.100
driving to work with your P0 tires, who was going
01:28:11.100 --> 01:28:13.760
to drive to work with some P0 tires just on a
01:28:13.760 --> 01:28:17.680
regular street? I think he was trying to give
01:28:17.680 --> 01:28:20.340
those who are in the performance or the racing
01:28:20.340 --> 01:28:23.859
needs an option that you can upgrade it to a
01:28:23.859 --> 01:28:30.060
racing tire. Yeah, last bit. On to U7, finally.
01:28:30.220 --> 01:28:35.619
So the U7. Once again, YU7, right? Why is it
01:28:35.619 --> 01:28:39.539
YU7? Naming convention comes first. YU7 is coming
01:28:39.539 --> 01:28:44.899
from an expression. It's called 雨风而行, and it
01:28:44.899 --> 01:28:48.539
roughly translates into, 雨风 is sitting on top
01:28:48.539 --> 01:28:52.060
of the wind. It's back in the days how a god
01:28:52.060 --> 01:28:55.899
would travel. Oh, like traveling on the cloud,
01:28:56.000 --> 01:29:00.340
like Goku from... Something like that. This line
01:29:00.340 --> 01:29:04.579
is from Zhuangzi. Which translates into a happy
01:29:04.579 --> 01:29:06.840
journey or a carefree journey. He wants you to
01:29:06.840 --> 01:29:10.760
have the feeling that traveling by Yuseven is
01:29:10.760 --> 01:29:13.199
like sitting on top of the wind. It's so fast
01:29:13.199 --> 01:29:17.840
and so smooth. And carefree. Come try our SUV.
01:29:18.279 --> 01:29:20.479
That's kind of the brand image that he was trying
01:29:20.479 --> 01:29:24.770
to... And it fits for a family car. The U7's
01:29:24.770 --> 01:29:29.789
competitors are Model Y, Porsche, Macan. This
01:29:29.789 --> 01:29:33.510
car was released recently and within three minutes
01:29:33.510 --> 01:29:41.010
of the first release, 240 ,000 pieces of that
01:29:41.010 --> 01:29:46.510
car was ordered. That's how much Tesla sold,
01:29:46.609 --> 01:29:48.850
Model 3 sold for a year. For a year, right? Yeah.
01:29:49.409 --> 01:29:53.640
In its peak in 2021. Right. So now the only problem
01:29:53.640 --> 01:29:55.800
is whether they can actually deliver it. I guess
01:29:55.800 --> 01:29:58.420
the last one quick comment that I want to ask
01:29:58.420 --> 01:30:00.380
about U7 before we dive into the production and
01:30:00.380 --> 01:30:03.199
delivery is U7 gives you a little bit of a surprise
01:30:03.199 --> 01:30:05.699
as well. Now that the Ultra has completed the
01:30:05.699 --> 01:30:10.000
sprint race, U7 completed a, not a Le Mans race,
01:30:10.220 --> 01:30:12.880
but a Le Mans 24 -hour driving and charging.
01:30:13.060 --> 01:30:15.859
Yes. I found the video. That video was released.
01:30:16.100 --> 01:30:21.090
It was edited. it shows that one u7 testing car
01:30:21.090 --> 01:30:26.970
completed a non -stop 24 -hour journey and it
01:30:26.970 --> 01:30:30.989
was racing and charging and racing and charging
01:30:30.989 --> 01:30:34.079
and then the car did not explode how is that
01:30:34.079 --> 01:30:37.619
possible wait wait okay first of all cars don't
01:30:37.619 --> 01:30:41.220
explode the battery will overheat right and if
01:30:41.220 --> 01:30:44.640
the battery overheats i don't i've never been
01:30:44.640 --> 01:30:47.520
running a car for 24 hours i don't know what
01:30:47.520 --> 01:30:50.800
will happen if a car runs for 24 hours where
01:30:50.800 --> 01:30:53.340
you continually exhaust and charge and exhaust
01:30:53.340 --> 01:30:55.899
and charge typically if i do that to my phone
01:30:55.899 --> 01:30:59.319
my mom would ask me to put the phone down so
01:31:00.250 --> 01:31:02.529
But yes, that's surprising. First of all, their
01:31:02.529 --> 01:31:06.949
position as the Model Y, which is kind of a small
01:31:06.949 --> 01:31:11.189
SUV type of car, and it was targeted for families
01:31:11.189 --> 01:31:15.689
with kids, just families in general. So I wasn't
01:31:15.689 --> 01:31:17.829
expecting that it would go through the same marketing
01:31:17.829 --> 01:31:22.470
as Ultra, which is targeting the sports enthusiasts.
01:31:23.130 --> 01:31:26.109
The performance, yeah. And here's the funny thing.
01:31:26.149 --> 01:31:29.319
A lot of people, I've watched a few... reviews
01:31:29.319 --> 01:31:35.100
on Bilibili on how the Su7 owners and U7 owners,
01:31:35.159 --> 01:31:37.720
even the Ultra owners, how they see their cars
01:31:37.720 --> 01:31:40.539
and how they see the performance of their cars.
01:31:40.739 --> 01:31:43.560
And it seems that some people have even said
01:31:43.560 --> 01:31:46.539
that you can almost get all three of them. They
01:31:46.539 --> 01:31:49.279
don't overlap with each other. An SUV for family,
01:31:49.340 --> 01:31:52.859
for endurance and range. An Ultra just because
01:31:52.859 --> 01:31:56.699
it's a crazy electronic monster that the performance
01:31:56.699 --> 01:31:59.890
is so great. and very limited if you can even
01:31:59.890 --> 01:32:03.050
get the car right and a su7 for daily commute
01:32:03.050 --> 01:32:06.069
yeah so these three products are complementary
01:32:06.069 --> 01:32:09.409
to each other they don't overlap a lot and i
01:32:09.409 --> 01:32:13.029
had the rare chance of sitting in a su7 ultra
01:32:13.029 --> 01:32:16.770
just about a couple weeks ago it was a complete
01:32:16.770 --> 01:32:18.949
accident i was in i was in shenzhen visiting
01:32:18.949 --> 01:32:22.310
my friends by the end of it My friend offered
01:32:22.310 --> 01:32:24.210
that. Can I give you a lift home? I'm like, sure.
01:32:24.390 --> 01:32:27.210
And walked into the garage. He's like, here comes
01:32:27.210 --> 01:32:30.010
a... What a coincidence. Yeah, what a coincidence.
01:32:30.350 --> 01:32:33.659
And... I was really surprised that you are, how
01:32:33.659 --> 01:32:36.119
are you able to get it so fast, right? Yeah,
01:32:36.119 --> 01:32:39.359
how? Yeah, he just got it early enough. Oh, okay.
01:32:39.460 --> 01:32:43.260
We didn't try anything crazy, but he did demonstrate
01:32:43.260 --> 01:32:47.600
in like the two second acceleration, the feeling
01:32:47.600 --> 01:32:50.260
that you're sitting in a sports car, that's the
01:32:50.260 --> 01:32:53.020
G -force that's against you. Yeah. It's quite
01:32:53.020 --> 01:32:55.260
comfy, I have to say. But by only experience
01:32:55.260 --> 01:32:57.760
for like five seconds, that's it. I mean, yeah.
01:32:59.439 --> 01:33:02.039
It would have been a bit dangerous if you experienced
01:33:02.039 --> 01:33:04.279
it for more than five seconds. I would not recommend
01:33:04.279 --> 01:33:09.199
driving it at that speed at a non -racing convention.
01:33:09.560 --> 01:33:12.420
If it's a regular commute, please drive very
01:33:12.420 --> 01:33:15.239
safely. But for that particular experience, I'd
01:33:15.239 --> 01:33:19.520
say it's a very comfortable car. About the deliveries
01:33:19.520 --> 01:33:23.210
and concerns and numbers. Yes. Let's go. Okay,
01:33:23.270 --> 01:33:24.949
I think we should take a step back right now
01:33:24.949 --> 01:33:27.470
to just get a perspective of EV overall right
01:33:27.470 --> 01:33:29.869
now. I'm using rough numbers, but the annual
01:33:29.869 --> 01:33:32.829
global sales in terms of passenger vehicles,
01:33:32.970 --> 01:33:35.670
this is not just EVs, every single passenger
01:33:35.670 --> 01:33:40.130
vehicle. So your sedans, SUVs, it's about 75
01:33:40.130 --> 01:33:44.949
million units per year. And China accounts for
01:33:44.949 --> 01:33:48.149
one third of that, which is a lot, 25 million.
01:33:48.949 --> 01:33:51.289
Right now in China, half of the new sales are
01:33:51.289 --> 01:33:56.140
EVs. About half. So let's say 11, 12 million
01:33:56.140 --> 01:34:00.699
of that. How many do you think are sold globally?
01:34:01.399 --> 01:34:05.460
75 is like gas cars and EVs, right? Out of the
01:34:05.460 --> 01:34:09.880
75, China accounts for 25, but about like less
01:34:09.880 --> 01:34:13.600
than half of those are EVs. So that's 11. So
01:34:13.600 --> 01:34:18.140
75, China 25, EV 11 in China. There's 50 million
01:34:18.140 --> 01:34:20.500
that's outside of China. Out of those 50 million,
01:34:20.600 --> 01:34:24.479
how much are EVs? 5 million -ish? 6 million.
01:34:24.680 --> 01:34:29.180
Okay, okay. China is the single largest market
01:34:29.180 --> 01:34:32.699
by far when it comes to EVs because 11 millions
01:34:32.699 --> 01:34:35.680
are sold in China and 6 millions are sold everywhere
01:34:35.680 --> 01:34:39.539
else. This is the importance of China as an EV
01:34:39.539 --> 01:34:43.920
market. And this is how strong the demand is.
01:34:44.039 --> 01:34:46.579
And this is... partially actually mainly because
01:34:46.579 --> 01:34:49.100
of government support and so let's go back to
01:34:49.100 --> 01:34:51.939
this 11 million figure which is the numbers of
01:34:51.939 --> 01:34:54.659
ev sold in china last year which is xiaomi's
01:34:54.659 --> 01:35:00.420
entire market where was xiaomi's share so out
01:35:00.420 --> 01:35:04.000
of the 11 million byd took up in china i think
01:35:04.000 --> 01:35:06.460
about two no their entire global is four four
01:35:06.460 --> 01:35:08.340
something million so in china i think it's about
01:35:08.340 --> 01:35:12.590
maybe two ish two three So they're the biggest
01:35:12.590 --> 01:35:15.430
player, right? And this is how scattered the
01:35:15.430 --> 01:35:17.630
Chinese market is because BYD as the biggest
01:35:17.630 --> 01:35:20.289
player took up like maybe less than one third
01:35:20.289 --> 01:35:23.810
and then everyone gets cuts. Everyone gets cuts.
01:35:24.329 --> 01:35:29.170
Xiaomi only took up 1 .2%. Really? Minding that
01:35:29.170 --> 01:35:32.229
they started... So two reasons for that. One
01:35:32.229 --> 01:35:35.529
is the traditional automaker took a majority
01:35:35.529 --> 01:35:39.739
of that. right byd plus uh your cherries your
01:35:39.739 --> 01:35:43.140
saic they took out most of it because economies
01:35:43.140 --> 01:35:46.279
of scale distributor whatnot yeah and all the
01:35:46.279 --> 01:35:49.500
taxi drivers gets these cars uh so they get bulk
01:35:49.500 --> 01:35:54.000
buying too most of them the new ev players like
01:35:54.000 --> 01:35:59.829
lee otto neo xiaomi expo they're all under They're
01:35:59.829 --> 01:36:05.869
way under 1 million. Li Auto is 526 ,000. And
01:36:05.869 --> 01:36:10.010
then NIO, XPeng, and Xiaomi all get 150 -ish.
01:36:10.289 --> 01:36:15.170
So Xiaomi's exact numbers is 136 ,854 that they
01:36:15.170 --> 01:36:19.569
published. So let's say 140 ,000. That's only
01:36:19.569 --> 01:36:22.970
1 .2 % of the market. To be completely fair though,
01:36:23.010 --> 01:36:27.810
about 60 % of this 11 million, so about six something
01:36:27.810 --> 01:36:32.569
million. are pure electric EV. The others are
01:36:32.569 --> 01:36:34.689
hybrids. So technically they're competing in
01:36:34.689 --> 01:36:38.149
the 6 million category. But even then, think
01:36:38.149 --> 01:36:43.529
about the scale, right? Majority of those EVs
01:36:43.529 --> 01:36:47.729
are mass market low end. Xiaomi competes in the
01:36:47.729 --> 01:36:53.989
30 ,000 plus USD category. And that's already
01:36:53.989 --> 01:36:57.310
a smaller segment. And within the segment, they
01:36:57.310 --> 01:37:01.989
compete against more than, I would say, it's
01:37:01.989 --> 01:37:04.149
technically more than 100, but I would think
01:37:04.149 --> 01:37:07.750
their main competitors are about 20 or so. And
01:37:07.750 --> 01:37:11.689
they get a part of that. When the SU7 was released
01:37:11.689 --> 01:37:14.250
last year, it took nine months for them to generate
01:37:14.250 --> 01:37:21.869
140 ,000 sales. And I think 80, about more than
01:37:21.869 --> 01:37:26.479
half was ordered. With the YU7, you just mentioned
01:37:26.479 --> 01:37:30.100
that 240 were ordered in the first day. We haven't
01:37:30.100 --> 01:37:32.439
seen too much delivered yet. It's only 6 ,000
01:37:32.439 --> 01:37:34.420
or so because it was just released last month.
01:37:35.159 --> 01:37:41.279
But these numbers comparing to Tesla, currently
01:37:41.279 --> 01:37:44.279
they're suppressing Tesla sales. However, Tesla
01:37:44.279 --> 01:37:49.479
peaked in 2021. And at its peak, it's actually
01:37:49.479 --> 01:37:52.199
slightly higher than Su7. But bear in mind that
01:37:52.199 --> 01:37:55.380
Tesla actually started selling their EV much,
01:37:55.399 --> 01:37:59.460
much earlier. Even in China, the first year of
01:37:59.460 --> 01:38:02.960
the domestic Shanghai produced Tesla started
01:38:02.960 --> 01:38:08.619
their first sale in 2019. So by no means this
01:38:08.619 --> 01:38:10.800
is like low in terms of sales numbers, but it
01:38:10.800 --> 01:38:13.579
is right now in its first year on par with Tesla.
01:38:14.020 --> 01:38:17.119
Right. And this is only their first year. And
01:38:17.119 --> 01:38:22.000
it surpassed all of its immediate competitors,
01:38:22.119 --> 01:38:29.079
like NEO. With the total order, I think it surpassed
01:38:29.079 --> 01:38:36.180
both XPeng and Li Auto. This is way beyond everyone's
01:38:36.180 --> 01:38:39.239
expectations, even beyond Lei Jun's expectations,
01:38:39.539 --> 01:38:42.619
I would believe. They have three years to do
01:38:42.619 --> 01:38:45.779
this, right? And so if you had you planned your
01:38:45.779 --> 01:38:50.420
capacity correctly, you should be able to deliver
01:38:50.420 --> 01:38:55.000
your cars according to your sales, right? In
01:38:55.000 --> 01:38:57.000
the grand scheme of things, they're not big,
01:38:57.119 --> 01:38:59.479
but they're the fastest rising. Nobody expected
01:38:59.479 --> 01:39:04.039
them to go into their first year to produce or
01:39:04.039 --> 01:39:08.149
to sell this many cars. Because NIO and XPeng
01:39:08.149 --> 01:39:12.029
has been in this industry for years and their
01:39:12.029 --> 01:39:17.449
sales in mid 2025 today are not as high. So they
01:39:17.449 --> 01:39:21.829
are, in fact, the largest, the fastest growing
01:39:21.829 --> 01:39:26.729
one. And the 150 ,000 or 140 ,000 I just mentioned,
01:39:26.869 --> 01:39:30.550
it's up to December last year, right? Nine months
01:39:30.550 --> 01:39:35.420
in, it's just the SU7s, including... maybe two
01:39:35.420 --> 01:39:39.500
months into the ultra production the u7 because
01:39:39.500 --> 01:39:43.640
it's a family car you get three times as much
01:39:43.640 --> 01:39:46.359
interest in terms of the initial order so so
01:39:46.359 --> 01:39:51.000
we're expecting a that 150 number yeah to multiply
01:39:51.000 --> 01:39:55.979
or to triple uh this year yeah i mentioned that
01:39:55.979 --> 01:39:59.979
xiaomi didn't expect this no And how do we know
01:39:59.979 --> 01:40:04.659
that? The factory wasn't large enough. So right
01:40:04.659 --> 01:40:06.420
now, I think if you order a car, you have to
01:40:06.420 --> 01:40:08.779
wait for one year. And this is like hashtag going
01:40:08.779 --> 01:40:12.659
on on Weibo. That's like, give me my car. Something
01:40:12.659 --> 01:40:15.079
along the lines of where's my car? Like how long
01:40:15.079 --> 01:40:17.659
do I have to wait? Obviously, the sales and the
01:40:17.659 --> 01:40:19.880
order went wildly beyond everyone's expectation.
01:40:20.579 --> 01:40:22.939
When they initially planned their factories,
01:40:23.140 --> 01:40:25.220
it was in Beijing. They signed a special deal.
01:40:25.560 --> 01:40:28.680
They planned two factories. Both of them had
01:40:28.680 --> 01:40:32.079
an initial capacity of 150 ,000 deliveries a
01:40:32.079 --> 01:40:35.659
year. The first one started production last year
01:40:35.659 --> 01:40:41.579
when SU -7 was launched. This is March. By June,
01:40:41.880 --> 01:40:44.619
three months later, they realized it's not going
01:40:44.619 --> 01:40:48.039
to work. 150 ,000 is not going to cut it. So
01:40:48.039 --> 01:40:51.640
they started double shifting. So instead of having
01:40:51.640 --> 01:40:53.680
eight -hour shifts, shut down the factory and
01:40:53.680 --> 01:40:57.039
then come back next. They started doing two 8
01:40:57.039 --> 01:40:58.680
-hour shifts, and obviously you can do this in
01:40:58.680 --> 01:41:01.939
China. They started two 8 -hour shifts to increase
01:41:01.939 --> 01:41:06.180
the capacity, not up to 300 ,000, because you
01:41:06.180 --> 01:41:08.000
still have downtime in between. You don't want
01:41:08.000 --> 01:41:10.539
to work your machinery too hard. But officially,
01:41:10.600 --> 01:41:14.479
they claim that it's from 150 ,000 capacity,
01:41:14.840 --> 01:41:18.920
it increased to 2 ,400. Wow. It's one factory.
01:41:19.279 --> 01:41:23.600
Second factory, same plant capacity. now doubles
01:41:23.600 --> 01:41:27.020
and the second factory actually was only i don't
01:41:27.020 --> 01:41:29.380
know if they they probably only started production
01:41:29.380 --> 01:41:33.159
this month sounds about right yeah and so and
01:41:33.159 --> 01:41:36.819
so xiaomi if you look at their financial statement
01:41:36.819 --> 01:41:39.899
they moved up their projection for capacity from
01:41:39.899 --> 01:41:45.000
300 000 or delivery from 300 000 to 350 000 because
01:41:45.000 --> 01:41:48.279
of this all kind of unexpected shift and that
01:41:48.840 --> 01:41:51.439
Forced them to think about all the things they
01:41:51.439 --> 01:41:54.420
can do to increase production last minute. And
01:41:54.420 --> 01:41:59.859
rumor, actually confirmed rumor, that one of
01:41:59.859 --> 01:42:02.239
their subsidiaries just purchased an extra piece
01:42:02.239 --> 01:42:05.840
of land nearby the two factories. Meaning that
01:42:05.840 --> 01:42:08.819
they are planning to start construction on the
01:42:08.819 --> 01:42:12.159
third factory. Wow. Yeah. That's so fast. Exactly.
01:42:12.180 --> 01:42:18.340
And I've seen on the Bilibili. every 76 seconds
01:42:18.340 --> 01:42:23.000
a car can be manufactured and it is 100 automated
01:42:23.869 --> 01:42:26.569
As in there's minimum human that's needed. However,
01:42:26.750 --> 01:42:29.590
the machines do need downtime and maintenance.
01:42:30.170 --> 01:42:34.329
We've tried to reserve spots to go and see the
01:42:34.329 --> 01:42:36.670
factories ourselves. But even the factory itself
01:42:36.670 --> 01:42:41.569
is very overbooked. Yeah, the tourists are overbooked
01:42:41.569 --> 01:42:43.409
because everyone wants to see how it's made.
01:42:43.909 --> 01:42:48.310
Actually, they initially only planned two sessions
01:42:48.310 --> 01:42:52.829
a week. And then they had to increase it to a
01:42:52.829 --> 01:42:56.800
daily. Two sessions daily, plus extra sessions
01:42:56.800 --> 01:42:59.279
on the weekends, extra tours on the weekends.
01:42:59.399 --> 01:43:01.159
To accommodate all people. And still we couldn't
01:43:01.159 --> 01:43:05.260
book a time two weeks in. Just to show you the
01:43:05.260 --> 01:43:09.340
popularity that it has. Exactly. With the two
01:43:09.340 --> 01:43:12.300
factories, with the double shift, they can technically
01:43:12.300 --> 01:43:16.640
produce 500 ,000 units a year. And this is anticipated
01:43:16.640 --> 01:43:20.300
number by the end of this year. So in comparison,
01:43:20.680 --> 01:43:25.800
Tesla in Shanghai. So Tesla produce about 1 .8
01:43:25.800 --> 01:43:30.140
million units a year. So way beyond Xiaomi's
01:43:30.140 --> 01:43:32.579
unit production, obviously, because they've been
01:43:32.579 --> 01:43:34.399
in the market longer and they're selling globally,
01:43:34.600 --> 01:43:37.060
right? Half of those are produced in Shanghai.
01:43:37.180 --> 01:43:41.300
So 900 ,000 units. Xiaomi's production capacity
01:43:41.300 --> 01:43:45.319
right now is already at, well, not exactly, but
01:43:45.319 --> 01:43:46.720
let's say end of this year, they should be at
01:43:46.720 --> 01:43:52.380
500 per year. versus 900 in tesla out of the
01:43:52.380 --> 01:43:55.399
900 probably only two -third of that is sold
01:43:55.399 --> 01:44:00.579
in china so their expected annual sales volume
01:44:00.579 --> 01:44:04.319
will match tesla in their second year of business
01:44:04.319 --> 01:44:09.270
with two sk use if You know, the production goes
01:44:09.270 --> 01:44:12.710
all right. Double shift, 150 per shift. So that
01:44:12.710 --> 01:44:15.590
times that by four. So 500 should be something
01:44:15.590 --> 01:44:19.109
that they can commit to. And then with the third
01:44:19.109 --> 01:44:22.850
factory. So also the speed of which they complete
01:44:22.850 --> 01:44:26.750
the factory construction. Every year, there's
01:44:26.750 --> 01:44:31.329
a new factory so far. So if that's the production
01:44:31.329 --> 01:44:35.680
rate. And sales continue to go up and they release
01:44:35.680 --> 01:44:39.600
a unit reaching Tesla level. It's just a matter
01:44:39.600 --> 01:44:43.460
of time and it's maybe two, three years. Yeah.
01:44:43.579 --> 01:44:47.100
Yeah. So that's why we think it ascended. It
01:44:47.100 --> 01:44:50.460
did. And it's stock price too, if you look at
01:44:50.460 --> 01:44:56.060
it. In the history of EV making in China, I think
01:44:56.060 --> 01:44:59.619
we can definitely say they're a success. Just
01:44:59.619 --> 01:45:05.399
for... How a short amount of time and how much
01:45:05.399 --> 01:45:09.359
that they were able to complete. Lei Jun at 52
01:45:09.359 --> 01:45:12.840
-year -old starting a new venture. And in three
01:45:12.840 --> 01:45:16.039
years, he actually ended somewhere. And one other
01:45:16.039 --> 01:45:17.859
thing I want to talk about is profitability.
01:45:19.180 --> 01:45:22.140
Because Lei Jun mentioned that he's willing to
01:45:22.140 --> 01:45:24.659
put up money for, I think it was five years.
01:45:25.719 --> 01:45:28.340
before making a profit. This is already very
01:45:28.340 --> 01:45:30.880
fast for car manufacturing because the amount
01:45:30.880 --> 01:45:34.680
of R &D and news distribution down costs is very
01:45:34.680 --> 01:45:40.460
high. And so they didn't take money from VCs
01:45:40.460 --> 01:45:44.420
because Xiaomi as a cell phone manufacturer had
01:45:44.420 --> 01:45:48.079
huge large cash reserves. So they could afford
01:45:48.079 --> 01:45:50.760
this whole venture by themselves. But they're
01:45:50.760 --> 01:45:53.920
also under a lot of... pressure to deliver profit
01:45:53.920 --> 01:45:57.840
as soon as possible um and my expectations right
01:45:57.840 --> 01:46:00.539
now and there's this magic number in china ev
01:46:00.539 --> 01:46:04.220
making in the market level that they're in or
01:46:04.220 --> 01:46:09.640
in in in the car in the premium ev cars if you
01:46:09.640 --> 01:46:16.479
make 350 000 cars and if your costs are at par
01:46:16.479 --> 01:46:18.500
with market you should be able to make a profit
01:46:18.500 --> 01:46:25.449
and Xpeng has delivered that. For Xiaomi right
01:46:25.449 --> 01:46:30.250
now, if you look at the current trajectory, oh,
01:46:30.270 --> 01:46:32.869
sorry, Li Auto has delivered that. It's the first,
01:46:32.909 --> 01:46:38.170
this type of EV to generate a profit. Xiaomi
01:46:38.170 --> 01:46:41.109
can probably do it by end of this year, but because
01:46:41.109 --> 01:46:44.149
it ramps up production, right? So I think the
01:46:44.149 --> 01:46:46.850
first year Xiaomi will report a profit will be
01:46:46.850 --> 01:46:51.340
actually 2026. And it probably reaches profitability
01:46:51.340 --> 01:46:55.840
by end of this year. Right. So... It's really
01:46:55.840 --> 01:46:59.779
fast. Really fast because there's only two manufacturers.
01:47:00.079 --> 01:47:03.420
The new type of manufacturers, one is Li Auto.
01:47:03.779 --> 01:47:07.640
The other one is called Leap Motor. Yeah. Ling
01:47:07.640 --> 01:47:12.640
Pao Zi Chou. Either your volume goes up and you
01:47:12.640 --> 01:47:16.550
hit scales of production, 350 ,000, or... you
01:47:16.550 --> 01:47:19.229
have some level of vertical integration. So you
01:47:19.229 --> 01:47:21.789
own the battery making or you own components.
01:47:21.890 --> 01:47:28.329
So Leap Motor actually achieved profit at 300k,
01:47:28.390 --> 01:47:31.050
so a bit lower than the 350, let's say magic
01:47:31.050 --> 01:47:33.449
number, because they do have some vertical integration
01:47:33.449 --> 01:47:37.470
going on. And Xiaomi, I feel like it's, and they've
01:47:37.470 --> 01:47:40.310
done it in years. So for Xiaomi to do it in a
01:47:40.310 --> 01:47:42.689
year and a half is also... creating a record
01:47:42.689 --> 01:47:47.310
in the fastest automaker to EV maker to produce
01:47:47.310 --> 01:47:50.470
a profitability. And they actually achieved it
01:47:50.470 --> 01:47:53.689
in two different ways. BYD is also absolutely
01:47:53.689 --> 01:47:55.590
generating revenue, but they're in a different
01:47:55.590 --> 01:47:58.310
category. They're in the lower cost category.
01:47:58.789 --> 01:48:04.289
Now that we know what went on in the past four,
01:48:04.390 --> 01:48:07.510
five years, what do you think is going to happen
01:48:07.510 --> 01:48:10.649
in the future? Oh my God. Million dollar question.
01:48:10.869 --> 01:48:13.689
Yeah. I have another piece of evidence, which
01:48:13.689 --> 01:48:16.529
I think is a very good start of what could be
01:48:16.529 --> 01:48:20.670
the direction of the future for Xiaomi EV. I
01:48:20.670 --> 01:48:24.170
think very positively of this venture. I know
01:48:24.170 --> 01:48:26.869
this is relatively controversial. I think people,
01:48:27.029 --> 01:48:29.970
at least the traditional manufacturers, are thinking
01:48:29.970 --> 01:48:32.189
that, oh, how could you be doing something? You're
01:48:32.189 --> 01:48:35.029
just copycatting. This is not even a serious
01:48:35.029 --> 01:48:37.789
motor. And the production level is so low. But
01:48:37.789 --> 01:48:42.800
Lei Jun himself? wants to aim for a goal that's
01:48:42.800 --> 01:48:47.159
very high up there like not within reach he wants
01:48:47.159 --> 01:48:50.699
to be the number five top five top five so at
01:48:50.699 --> 01:48:52.939
least four million units automakers in the world
01:48:52.939 --> 01:48:56.039
right like this is crazy like you're a cell phone
01:48:56.039 --> 01:48:58.840
manufacturer you're But I mean, when he went
01:48:58.840 --> 01:49:01.039
into cell phone manufacturing, he didn't think
01:49:01.039 --> 01:49:02.720
I'm going to be the top three either, right?
01:49:02.840 --> 01:49:06.600
Or I mean, maybe he did, but it was a miracle.
01:49:06.819 --> 01:49:10.560
It was a, yeah, it was unintended, but it was
01:49:10.560 --> 01:49:16.739
a, he really was very good at making hardware
01:49:16.739 --> 01:49:18.979
products and he will continue to do that. And
01:49:18.979 --> 01:49:20.779
he has a track record of demonstrating that.
01:49:21.779 --> 01:49:25.500
Also, very interestingly, are you a GT game Gran
01:49:25.500 --> 01:49:28.869
Turismo player? You're not. Okay. Here's another
01:49:28.869 --> 01:49:32.989
surprise. My love is limited to F1. Ultra is
01:49:32.989 --> 01:49:38.989
the only Chinese car that is featured in Gran
01:49:38.989 --> 01:49:43.670
Turismo 7. No. Yes. And this was launched in
01:49:43.670 --> 01:49:48.869
June. So just two months ago. And so what is,
01:49:48.909 --> 01:49:50.489
okay, what is this GT game? Does Xiaomi have
01:49:50.489 --> 01:49:55.939
to pay GT to get in? I don't. think that they
01:49:55.939 --> 01:49:59.479
have to i do think this is i don't know for sure
01:49:59.479 --> 01:50:04.939
but i think the designer for gt highly approves
01:50:04.939 --> 01:50:08.979
the car so gt is a series of it's basically a
01:50:08.979 --> 01:50:12.420
racing video game that is developed it was released
01:50:12.420 --> 01:50:15.199
in playstation games something special about
01:50:15.199 --> 01:50:19.319
gt is it is intended to emulate the not just
01:50:19.319 --> 01:50:23.520
the appearance but the physical performance of
01:50:23.520 --> 01:50:26.199
the vehicle as well so in the game you will actually
01:50:26.199 --> 01:50:28.500
experience what's it like to be turning that
01:50:28.500 --> 01:50:33.100
car cornering like driving on curbs um so if
01:50:33.100 --> 01:50:35.279
you can't get a xiaomi car delivered to your
01:50:35.279 --> 01:50:37.439
house because of the order backlog you can buy
01:50:37.439 --> 01:50:42.500
the gt3 or gt isn't that a very smart way of
01:50:42.500 --> 01:50:47.399
getting your worldwide fans now everyone at least
01:50:47.399 --> 01:50:53.760
who plays gt seven can see and feel what's it
01:50:53.760 --> 01:50:57.579
like to be driving on a simulator and su7 ultra
01:50:57.579 --> 01:51:00.680
actually this relates to kind of my view for
01:51:00.680 --> 01:51:03.420
the future which is at some point right because
01:51:03.420 --> 01:51:06.279
china is the first one to really adopt the first
01:51:06.279 --> 01:51:09.800
major country to really adopt ev they have to
01:51:09.800 --> 01:51:13.520
turn to the global market at some point and the
01:51:13.520 --> 01:51:17.300
estimate is that by 2017 is with when xiaomi
01:51:18.159 --> 01:51:21.960
might be thinking about global penetration. I'm
01:51:21.960 --> 01:51:26.960
ready. So it's interesting how, you know, they're
01:51:26.960 --> 01:51:31.239
almost layering, putting in the pre -work even
01:51:31.239 --> 01:51:35.840
now to make this happen. And you know who else
01:51:35.840 --> 01:51:39.220
really loves Xiaomi outside of China? Outside
01:51:39.220 --> 01:51:41.180
of China? Yeah. Wait, a person or a company?
01:51:41.199 --> 01:51:44.399
A person, but he's a CEO of a company. Oh, who
01:51:44.399 --> 01:51:48.439
would that be? The CEO of Ford, Jim Farley. He
01:51:48.439 --> 01:51:53.300
talks about how he loves his Xiaomi Su7 extensively
01:51:53.300 --> 01:51:57.260
in the media. Right? For an auto manufacturer
01:51:57.260 --> 01:52:00.819
to talk about another auto manufacturer in praise.
01:52:01.220 --> 01:52:04.380
Wow. That's pretty high praise. Right. And props
01:52:04.380 --> 01:52:07.199
to Ford. Ford is actually, as a company, they
01:52:07.199 --> 01:52:09.779
visited China looking at the EV industry. And
01:52:09.779 --> 01:52:12.000
they're actually the second largest EV manufacturer
01:52:12.000 --> 01:52:16.060
in the US next... after tesla but i mean tesla
01:52:16.060 --> 01:52:21.640
is way up here so ford did a trip to china and
01:52:21.640 --> 01:52:23.800
they looked at all the manufacturing they went
01:52:23.800 --> 01:52:27.260
to buid and they went to catl which is a battery
01:52:27.260 --> 01:52:31.159
manufacturer and they realized that us is behind
01:52:31.159 --> 01:52:34.979
and they're not afraid to talk about these you
01:52:34.979 --> 01:52:38.640
know so they went on us media saying that the
01:52:38.640 --> 01:52:40.899
chinese battery technology is way more advanced
01:52:40.899 --> 01:52:44.340
we need to bring it to the us They actually got
01:52:44.340 --> 01:52:47.020
a little bit of backlash because of the geopolitical
01:52:47.020 --> 01:52:49.439
tension, but they ended up negotiating somehow
01:52:49.439 --> 01:52:52.819
to open up a factory in Michigan for the latest
01:52:52.819 --> 01:52:57.279
technology in battery manufacturing called the
01:52:57.279 --> 01:53:02.159
lithium -ion phosphate battery with CATL. So
01:53:02.159 --> 01:53:08.359
CEO Jim Farley managed in that trip to, I guess,
01:53:08.380 --> 01:53:11.960
get his hands onto a Xiaomi Su 7, brought it
01:53:11.960 --> 01:53:15.659
back. to the u .s drove it for six months loved
01:53:15.659 --> 01:53:18.319
it didn't want to give it up i don't know what
01:53:18.319 --> 01:53:22.039
like there's no follow -up story um but yeah
01:53:22.039 --> 01:53:24.619
no he went on tv saying how good it is and how
01:53:24.619 --> 01:53:27.579
much he enjoyed the experience yeah and how how
01:53:27.579 --> 01:53:30.420
much uh how much we need to acknowledge that
01:53:30.420 --> 01:53:35.460
china is ahead in this perspective yeah yeah
01:53:35.460 --> 01:53:42.449
high praise exactly yeah And so the founder of
01:53:42.449 --> 01:53:46.210
the GT7 game, GT game, Kazunori Yamaguchi, also
01:53:46.210 --> 01:53:49.569
had a test drive in Beijing with the Xiaomi car.
01:53:49.750 --> 01:53:52.630
With that very limited experience, he also enjoyed
01:53:52.630 --> 01:53:56.909
the feeling as well. In the game release, one
01:53:56.909 --> 01:54:01.369
of the ultra product manager, Xiaowen, she mentioned,
01:54:01.449 --> 01:54:04.210
made it very official that in the next year,
01:54:04.630 --> 01:54:10.140
Xiaomi EV is going to foster A thousand racing
01:54:10.140 --> 01:54:15.500
driver for high performance. And company employees
01:54:15.500 --> 01:54:20.680
included. Wow. So if you want to get a race driver's
01:54:20.680 --> 01:54:22.840
license. Xiaomi would pay for it? Xiaomi would
01:54:22.840 --> 01:54:28.880
pay for it. Xiaomi, are you hiring? Another very
01:54:28.880 --> 01:54:32.430
attractive onboarding package. That's crazy.
01:54:32.649 --> 01:54:34.670
You could be, you know, getting the driver's
01:54:34.670 --> 01:54:37.829
license and maybe decide later whether you want
01:54:37.829 --> 01:54:39.750
to stay with you. But just all in all, I think
01:54:39.750 --> 01:54:42.729
they're pretty ahead of how they want to be attracting
01:54:42.729 --> 01:54:44.869
talents and the way they're building cars. Leijun
01:54:44.869 --> 01:54:47.430
really seemed to enjoy, thoroughly enjoy this
01:54:47.430 --> 01:54:51.329
process of making the EV. He himself test drove
01:54:51.329 --> 01:54:56.590
about 170 plus cars borrowed from colleagues
01:54:56.590 --> 01:55:00.289
or... Just also like the cars that he had bought
01:55:00.289 --> 01:55:05.510
personally. He got a racing license as well.
01:55:06.630 --> 01:55:11.289
Test drove the car in winter, in summer, in different
01:55:11.289 --> 01:55:15.829
weathers, in different locations. And in the
01:55:15.829 --> 01:55:19.029
press release, he was able to confidently and
01:55:19.029 --> 01:55:22.350
competently talks about all the small details
01:55:22.350 --> 01:55:27.100
of a good performance car. That's pretty transformative.
01:55:27.239 --> 01:55:29.220
He had fun. Yeah, I think you have to really
01:55:29.220 --> 01:55:33.319
love something to devote your time and energy
01:55:33.319 --> 01:55:36.779
to it and making it a success. And he has demonstrated
01:55:36.779 --> 01:55:39.680
that openly to the public, which is actually
01:55:39.680 --> 01:55:43.319
one of the key reasons why the Xiaomi EVs so
01:55:43.319 --> 01:55:47.329
far are perceived so well in the market. despite
01:55:47.329 --> 01:55:50.850
some negative media attention with a crash recently.
01:55:51.069 --> 01:55:54.750
But the amount of energy and the amount of love
01:55:54.750 --> 01:55:58.470
that he has expressed in this project through
01:55:58.470 --> 01:56:02.710
all his social media is definitely out there
01:56:02.710 --> 01:56:08.210
and very much visible. I think with the release
01:56:08.210 --> 01:56:13.010
of the Xiaomi EV, the performance car, more racing
01:56:13.010 --> 01:56:16.819
tracks inside of China. will start to attract
01:56:16.819 --> 01:56:20.579
more people who are within the ultra club or
01:56:20.579 --> 01:56:24.399
within the EV performance league. For the first
01:56:24.399 --> 01:56:28.939
time ever in China, people don't want to damage
01:56:28.939 --> 01:56:34.140
their pocket or pay extreme amount of money for
01:56:34.140 --> 01:56:36.159
a performance vehicle. We'll finally now get
01:56:36.159 --> 01:56:39.420
the chance to get a car and to maybe enter that
01:56:39.420 --> 01:56:42.199
space. So maybe, I don't know, 10 years down
01:56:42.199 --> 01:56:44.850
the line. We'll have more people who drive in
01:56:44.850 --> 01:56:47.850
Le Mans who are Chinese. I don't know. That would
01:56:47.850 --> 01:56:49.829
be awesome. That would be awesome. More people
01:56:49.829 --> 01:56:53.649
maybe entering like F1, other performers. I don't
01:56:53.649 --> 01:56:56.810
know. I think so. I think this is definitely
01:56:56.810 --> 01:57:00.449
a good start. I don't know how much this one
01:57:00.449 --> 01:57:03.810
car will, you know, but I think that a mix of
01:57:03.810 --> 01:57:07.409
things will happen to push the Chinese auto industry
01:57:07.409 --> 01:57:10.739
forward. And my wildest dream, maybe in the year
01:57:10.739 --> 01:57:14.979
2027, and I've told this to a friend in Leijun's
01:57:14.979 --> 01:57:19.300
investing firm, Shunwei Capital. I just casually
01:57:19.300 --> 01:57:23.420
joked with her and I said, maybe one day, Su7
01:57:23.420 --> 01:57:26.220
or like one of the Xiaomi cars, Xiaomi EVs will
01:57:26.220 --> 01:57:28.300
be featured in Fast and Furious. You don't know.
01:57:28.500 --> 01:57:30.500
Never know. It's possible. It might be the first
01:57:30.500 --> 01:57:34.399
EV. Might be the first EV. Yeah, no, definitely.
01:57:35.439 --> 01:57:39.279
Looking forward to the future of Xiaomi EV. Yeah.
01:57:39.640 --> 01:57:43.300
Look forward to that, guys. And that's a wrap
01:57:43.300 --> 01:57:46.079
on a nearly two -hour episode. If you made it
01:57:46.079 --> 01:57:48.600
this far, thank you for sticking with us. Whether
01:57:48.600 --> 01:57:50.760
you're deep in thought or just needed a companion
01:57:50.760 --> 01:57:53.340
for your commute, we like to think it was a bit
01:57:53.340 --> 01:57:56.239
of Yuan Fen or fate that brought you here. If
01:57:56.239 --> 01:57:57.960
you enjoyed the show, the best way to support
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us is by leaving a quick rating on Apple Podcasts
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or Spotify. It truly helps us grow. We'll see
01:58:04.260 --> 01:58:05.680
you in the next episode of Ascent.