Hi listeners, today we're covering a company
that built its name on viral smartphones and
a magic touch for creating every kind of smart
home appliance imaginable. We are of course talking
about Xiaomi. This company, which started far
from the automotive world, has just launched
its first two EV models and the result is stunning.
The Su7 sedan and the Y7 SUV have become one
of the most wanted and pre -ordered EVs in China.
It also made the fastest EV sports car in history
so far. This is Xiaomi EV. We're your hosts.
I'm Linda. I'm Pan. Welcome back to Ascent. Hello
listeners, welcome back to this episode of Ascent.
Welcome back everyone. In this episode, you'll
learn about Xiaomi EV, its recent EV creation,
Su7, Ultra, Yu7, and yes, that's the only right
way to pronounce it. I thought we were going
with the spelling, like the YU7 and SU7. Yeah,
SU7, that's right. We'll get to the naming conventions
in a bit. And who is... Lei Jun, this man who
is originally from a very small town in Hubei.
He's a CEO, by the way. Right. And built one
of the top cell phone companies in China. Why
did Lei Jun even wanted to build this EV company
from scratch? And what are the financial reasons
that he may have wanted to do that? Also, to
give you a little bit more context. This is our
second attempt to making this. Yeah, so you've
never heard an episode titled EVs of China because
we never released it. Why did we not release
it? We started with five companies in the EV
research for episode zero. Let's call it that.
And it was NIO, XPeng, Xiaomi, Li Auto, and BYD
and decided that... It was completely out of
control, the amount of research that we had to
do. And after that two -hour recording session,
we both felt like that our brains are both on
fire. And that was way too big. So this is the
second time of tackling this. We will get to
the other companies later on. But for this time,
we will just focus on Xiaomi. Yeah, our brains
are still on fire. Like controllable fire. Actually,
yes. It is not. Xiaomi EV is not to be underestimated.
The amount of research that we both have to put
into this to sort of reverse engineer how this
decision is being made is a lot of work. How
about we start with Lei Jun himself? Yes. The
history of the CEO. Lei Jun actually had a few
nicknames that people called him. I know in Chinese,
there's like Lei Bu Si after Steve Jobs. That's
the only one I know. And he was also called the
Elon Musk of China because since building EB,
he has gained that reputation. Yeah. He now dresses
like Elon too. Yeah, he does, right? He used
to dress like Steve Jobs and now he dresses like
Elon. Exactly. We wanted to explore whether he
was the real Tony Stark of China. And actually,
I think he can get to pretty close to that because
Lei Jun, if you translate that name into English.
It's Thunder and Army. Like, guys. I think it's
less of an Iron Man, but more of a Thor. Yeah,
yeah, yeah. So, yeah, he definitely belongs to
one of the... He's definitely an Avenger. A hero.
Yeah, definitely an Avenger. He also has quite
a solid followership on social media. I think
this is very similar to Elon Musk as well, but
for different reasons. Elon, because now that
he's more involved in government and he developed
crazier projects. But Lei Jun's Weibo, which
is the ex of China, and on Bilibili, which is
the YouTube of China, cumulatively, he has a
very large followership. He has about 5 .7 million
subscribers and 200 million views on the equivalent
of YouTube in China. So he's like the tech Kardashian
of China. Exactly. And he posts so many things
about the process of... this car is being made.
It's probably like 200 hours of Lei Jun talking
on the internet. Well, I'm not kidding. Like
I watch a lot of hours right now. I think after
this episode, I'm going to go for like a Lei
Jun detox. Like in my dreams, I have him on the
figures. Like talk to me about, oh, how to build
a product while he is posting so many things
on social media. He would also claim that he
is actually a big introvert. He is afraid of
social interaction. And when he is shooting videos
in the company or in the factories, he would
get nervous. And you can see it. His hand would
fidget. I can see that actually from his talks.
They're mostly scripted. Which is how introverts
do presentations. Speaking from personal experience.
We'll try our best to give you the financial
details, but in the meantime, also paint a more
3D picture of who Leijun is. So by the end of
the episode, you would maybe know more about
him as an entrepreneur, as someone who started
a huge venture, his personality. I will give
you a little spoiler. Needless to say, he is...
Extremely intelligent and capable. He's very
much of an engineer at heart. And he is sort
of a GOAT product manager. He is really crazy
about making products. What's a GOAT? Greatest
of all time. Oh, sorry. There's something new.
Should I say GOAT? Product manager GOAT. And
he's very ambitious and loves competition. Lei
Jun was born in... 1969. In a very small town
in Hubei called Xiantao, he had showed very early
interest in engineering, aka he likes to take
things apart and assemble them. I think we just
call it a kid. Yeah. Take things apart and can't
put it back. He is that kind of person, what
we would call in China, a study machine or a
study god. Most of the Silicon Valley CEOs, they
quit school to start their business. Like Steve
Jobs and Mark Zuckerberg. Lei Jun has a very
different approach. He didn't quit school. He
didn't quit school. But he finished his school
within two years. He finished undergrad within
two years. Right. That is similar. So instead
of quitting school, he still wants to get that
degree. And he just wanted to wrap things up
faster. So within two years of time, he got a
perfect score and graduated with a computer science
degree. And this is the 80s in China. The whole
computer science program only has about 15 computers
in total. And that's it. Right. Actually, sorry,
side track. My mom did computer science and they
didn't have personal computers back then. It
was like a big room. Yeah. You wear a hazmat
suit and then you staple like holes in. paper
and then you that's your input right so that
that's learning about computer science back in
the 70s and 80s and that's the condition where
you would start learning yeah and he's coding
is really good he taught himself most of the
programming and coding his work is featured in
the textbook for freshman students wow that's
how good his work is wow and also he loves gambling
too he plays poker a lot and his only excuse
is that if you're trained as a programmer then
you That must mean that you don't socialize enough.
Therefore, you need to socialize through... Gambling?
Gambling. Not encouraged. Not encouraged. And
you have to start playing cards as early as you
can. And the person who loses gets lunch for
everyone. So that's kind of his rules. That's
how he gets lunch at school. For me, this is
like semi -bullying. But he's very good at playing
poker. And he loves a big crowd around him. The
reason that he got so much into coding is through
a book that was published in the 70s, late 70s.
It's called The Fire in the Valley. The Birth
and Death of Personal Computer by Michael Swain
and Paul Freiberger. The book is roughly about,
so the 70s, well, the contemporaries were protesting
the computer as a tool. of dehumanization and
oppression because it just came out, right? It
was a big machine. A motley collection of college
dropouts, hippies and electronic fanatics were
engaged in something much more subversive. They
call it subversive. They're obsessed with the
idea of getting computers powered into their
own hand. They launched from their garages a
hobbyist movement that grew into a whole industry
and ultimately a social and technological revolution.
This is a nonfiction or fiction? It's a fiction
book. It is a nonfiction book documenting the
entirety of the first computer was created in
1964 or something. But it was about the first
decade of those who are the hippiest or those
who are the college drug house. The trailblazers
of the modern computer industry. Exactly, the
trailblazers. So he read that book and he was
made believe that The revolution of personal
computing is coming. He believes in that the
relationship between a person and a computing
machine will be the rest of the history for the
next couple of decades. And he bet it right.
So he really got inspired by this book. And then
I'll just make it very short. He started making
softwares when, you know, graduating from college
and after two years. This is early 90s, right?
Or the... 89, around that time. By the time that
he left Wuhan University, the savings that he's
got out of selling softwares that he made was
4 ,000 RMB, which is about $500. And then the
average GDP in China in 1989 was about $311 that
year. Wow. So he made a lot of money. That's
a lot of money in... Chinese standards back then.
Yeah, exactly. So he graduated and he was believing
that my future will forever be related to software
making. After he graduated from college, he started
a series of software ventures. We'll save you
a lot of time here because we would like to make
a separate episode just on Xiaomi itself. So
a lot of those are related to Xiaomi, but I'll
just sum it up for you here. He joined a company
that Qiu Bojun started and made a software WPS,
which is sort of the equivalent of Microsoft
at that time. The software that he had worked
on is called Pangu. That's the first attempt.
Work Office Collaboration Software. Oh, so not
the operating system, but the office software.
Right, right, right. The office software, right.
Did not work out completely. He recruited a lot
more engineers and worked on a separate version.
He didn't sell as many copies that he wanted
to. Very frustrated. Decided to go into the market
and find out why. Discovered that, oh, it was
way too advanced for market and it was way too
expensive. Because nobody paid for Microsoft
in China back then, right? Right. He was... Exactly.
Yeah, like people get pirated versions. Right,
right. Pirated versions. Personal computers were
just starting in China at the time. Do you remember
the year that you had a personal computer in
your room? 1995. But that's because my parents
are, you know, into the industry. Right. And
my family got our first computer in 1997, which
is around that time. But you're right. I don't
think anyone paid a lot of money for software.
No, we got like pirated. Sorry. Sorry, Microsoft.
But we were using pirated version all the way
until 2000. Sounds about right. So he realized
that if you want to be competing with the pirated
version of the software, you need to offer something
that is super easy to use and at a much cheaper
price. Attempt number two was exactly that software.
It's called Computer 101. 电脑入门 in Chinese. It
is basically a walkthrough for any beginner who
wants to use computer. How do you start? Because
computer was a new thing. That's very smart.
Yeah, I remember doing typing lessons and we
bought the program on typing lessons. There you
go. Yeah. The price that he'd offer the new software
was only a fraction. And then he, you know, proposed
a new direction to work on. Like, obviously,
that software was great, but it wasn't long lasting
enough. And also two other people enter the internet
market, which later became his competitor. One
is Ding Lei from NetEase. The other one is Ma
Huateng, Pony Ma from Tencent. Okay, so NetEase
is mainly gaming right now. And then Tencent
is just the owner of WeChat for context. Well,
I think obviously these two companies are on
the list for future discussions too. But these
are gigantic companies. Both of them are younger
than... So Lei Jun decided that, okay, how about
this? I compete in a slightly different way with
NetEase. So he started a gaming venture within
his company. Sword Heroes Fate, also called JX
Online, was the first generation of RPG gaming
in China. Attempt number three, very popular,
still exists today. A lot of different versions.
One of the largest MMORPGs. Really? Yeah. Still
exist. Okay, so that's not bad, right? And then
you get a lot of people like playing this who
are still paying money. Okay, not enough. Keep
on going. 1999, this 10 years after his first
attempt, he created this dictionary software
and I bet you have used it before because I've
been using it for a long time. What's it called?
金山死吧, Kingsoft Dictionary. Yeah. Kingsoft Dictionary
was attempt number four. This... Suffer itself
also sold a million copies. And towards the end
of his venture in Kingsoft, Lastbit was also
something that I have used. I'm not sure whether
you have used that before. It's zhouyou .com?
No, I haven't used it. It is the very early attempt
of e -commerce. Joyo .com was sold to Amazon
in 2004 with $75 million. Oh, it's the precursor
of Amazon .cn. Exactly. That's right. It was
the green, overall green layout. Yes, it was
a precursor to Amazon. Anyways, five products.
Five different attempts. He probably have made
a lot more things on that way. These are only
some of the more famous, more, you know, noticeable
ones. Exactly. Like in terms of revenue. Right.
Kingsoft finally went public in 2007. He was
the CEO for Kingsoft at the age of 29. Was he
part of the co -founding team? Did he own shares
or was he more like a product manager? He owned
shares. Up until today, I think he's still very
heavily affiliated with Kingsoft. The gaming
part and the non -gaming part. But you know,
Kingsoft isn't at the top. Today. In China today,
right? But it's still there. Yeah, he's still
there. And he knows that. And he feels deeply
bothered by this fact. He's a crazy smart guy.
You know, graduated computer science within two
years, right? Like at the top of everything,
like earned 4 ,000 before he left college. He
had a very emotional moment when Kingsoft went
public. And he said, when we worked on Bangu,
which is the... The Microsoft office. I recruited
some of the best engineers in China. The saddest
thing is that we worked all night and all day
on this thing for three and five years. And we
created this software that is so disliked by
the market. And I feel so sad and defeated. We
could have done something differently and achieved
so much more. And I asked myself, how did we
come to this? And he said everyone should go
to be a sales or promoter sometime in his life
to make minimum amount of money, but you will
learn so much. Right. And then the reason that
he said it is because up until 2007, the moment
that King Software was brought to public, the
most revenue generating bit and the profit making
bit for the company is the game. It's not the
software. Right. And he felt... quite sad as
a but he also produced the game right he does
but maybe it's not true to his heart he wants
to be an engineer he wants to be a product manager
but he doesn't want to be working on a game i'm
making a lot of profit on this thing that i don't
particularly like but i'm not making a lot of
profit on this thing that i really believe right
right believe is the keyword to Leijun. And if
you remember what else happened in 2007, first,
Apple launched iPhone. Second thing, Microsoft
also launches first smartphone back in the days.
I don't even know. It's too early. Like I didn't
have any phone. It's called Crossbow. Wrapping
up, Kingsoft was a very courageous attempt for
young Leijun. Imagine your 20s to your early
30s. You did so many things like that. Like just
about our age, he's already a CEO. And then on
to the next chapter. Even though he brought Kingsoft
to public, to IPO, he was not satisfied. It wasn't
his product. It's not his thing. Yeah. So he
decided, I must do something else. Yeah. And
here comes the second. large company that he
initiated. And this one, we all know what it
is. Xiaomi. Exactly. I had a question. I was
like, do we have anything in between Kingsoft
and Xiaomi? First of all, Xiaomi. So Linda, what
does Xiaomi mean in Chinese? Little rice. Little
rice. Or just rice. Or couscous, right? Little
rice. Wait, it's actually couscous. Oh my god.
But it also means little rice. It could be little
rice, it could be couscous. How cute is that,
right? Oh, because rice is da mi. Okay, sorry.
No one can really pronounce a word that starts
with X, right? Like, if you were to be looking
up a dictionary, the only word that you can...
that you will look at that start with an X, it's
xylophone. Xiaomi? It's very hard for the Western
market to pronounce that. So he had a partner
who was the UI and UX designer for Xiaomi's cell
phone later on. And his name is called Li Wanqiang,
who is also a veteran from Kingsoft that Legion
trusts very deeply. Li Wanqiang's dad. made a
couscous porridge and sent it to the office on
the day this company was registered and starting
to operate. This is such a wholesome story. And
then there is a photo documenting a group of
them, the early, the beginners who were in nowadays
Yinggu building in Zhongguancun and it was room
807. It was all of them in the same place. They
were standing around what we call a rice cooker.
And in that rice cooker is the couscous. It's
the birth of Xiaomi. It's the birth of Xiaomi.
Literally, Xiaomi was there. It was present.
Couscous was there. Imagine if the dad cooked
something else that day. Like, Xiaomi would have
been... Would have been like, I don't know, durian
or like whatever. Well, thankfully, it wasn't
that crazy. Thank you, dad. Yeah, thank you,
Li Wenqiang's dad for giving us such a great
story. So then, we'll shorten it. But we all
know about Xiaomi's story that the most famous
product that they've ever created is the product
that they've launched in 2011, which is Xiaomi's
first phone. And that phone, why was it so popular?
It was cheap. It was cheap, but comparing to
who it is cheap, right? 2010 was when iPhone
4S, also my first cell phone, smartphone, was
launched. iPhone 4S was prized at $4 ,988 RMB.
Like $800? Yeah, somewhere around that. And do
you know what is the annual GDP per person in
China in 2011? Okay, I'll just tell you. It's
about 5 ,700 US dollars and translate into 35K
RMB around that. So if you were to be buying
a phone, it is one seventh of your annual income.
But annual GDP is way higher than annual income.
For a typical country. Right, right, right. Yeah,
for sure. So I think it would have probably taken
you a few months to get your iPhone, like salary
to get your iPhone back then. Exactly, that's
right, that's right. What Xiaomi did was by putting
everything together and knowing that the wave
is here, like every single human being will be
using a small machine. And as a believer of that,
and also given the supply chain advantages, Leijun
built... a phone that was in direct competition
with iPhone. That phone was less than $2 ,000
quiet. It was $1 ,999. So less than half the
price of an Apple. Yes. A couple, $200, $300.
But with, I would say, 80 % of the functionalities.
Right. Yeah. Yeah. Actually, he's the first one
to tap into cheap Chinese manufacturing and scale
it to the world. And this is the same challenge
that he had encountered while selling the software.
If you don't bring your cost down, there will
be a million parroted versions just floating
around in the market. So you must develop something
that is... The mass will use it. The price will
be low. This is also at a period where China
doesn't know how to do branding yet. Because
I think China only learned to do branding after
Legion. Well, like in the past, let's say five
-ish years, like really after 2017, 18, when
you start seeing Chinese brands in the international
market. So back then it was a production house.
And production houses cannot offer premium price
products because they don't have the branding
power. So they need to keep the cost down. That's
right. That's right. And so what Xiaomi has done
is legitimized. the cell phone making supply
chain. Some of the cell phone makers really did
wonders for the Chinese cell phone manufacturing
business. Apple obviously is one, and Xiaomi
is another one. Anyways, the conclusion is, Lei
Jun's product making philosophy is, he doesn't
like selling a straw at a gold bricks price.
If he thinks that this is something that everyone
will be using in the future, then, scale economy,
I must find a way. so that more people can make
use of it. Yeah. Which correspond to the product
that he made later on, which is a Siri called
Redmi, which is an even cheaper phone that he
had made. He just tapped into a market that back
then the market leaders like Apple and Samsung
are not thinking about. And there wasn't another
brand or supplier that has the skill to do this.
Right. So it was a perfect niche in hindsight.
That isn't even a niche. It's like a mass market.
Right. He was ready. He picked it out. And in
his reflection after Kingsoft, he asked himself,
what did I miss such that I did not bring Kingsoft
the way that I wanted to? And then he realized
that, oh, I picked the wrong market. Yeah. Learning
from your past. Exactly. I must pick something
that will scale, that will have a demand. Therefore,
I jump onto it. And I ride the waves, which is
the correct way of doing business. And of course,
he started the business in eight years. This
time in eight years, 2018, Xiaomi went public.
And then the valuation was 200x the original
value. So it was impressive. Yeah. And you mentioned
that there were four different lines within Xiaomi,
right? Yes. Business lines. Yes. What are those?
So we have obviously the smartphone. And I'm
looking at, so we only have financial reporting
after 2018, after it went public. So smartphone
was the biggest segment back in 2018. Now it's
about still half of the annual revenue, but one
third of the gross income. And then it started
their IoT and lifestyle products. So that is
your Xiaomi. What else do we use? My Wi -Fi is
Xiaomi hardware. My humidifier is Xiaomi. My
alarm clock is Xiaomi. Small electronics. Yeah,
appliances. And that is now also a significant
part of their revenue. I think 30 % and then
about 30 % of their gross profit. And then they
have something called internet services, which
is less well -known. Most of it is advertising
money coming from Xiaomi cell phone or Xiaomi
TV. Even though it's only 11 % of their total
revenue share, it makes up for more in terms
of gross profit than the smartphone business.
That would make sense. Because the margin of
it is so low. It's kind of... And Lei Jun was...
so proud of that margin call right remember in
one of the earlier releases for xiaomi phone
he said that he will never exceed five percent
of profit margin i didn't know that but now it's
yeah on on the cell phone business yeah and he
made a promise he made a public promise to all
of those who are buying xiaomi's phones i think
that could be one of the reason why the cell
phone margin has to be so low yeah But this is
great. It brought him skill, but also a trap
that he always have to be constantly looking
for something that will bring more profit to
the company. Yeah. I didn't remember he said
5%, but that's interesting because currently
their gross... for cell phone is higher than
5%. But I think it's because they're doing this
mass market and there's a lot of economies of
scale. But guess how much margin they have for
internet services? I would say 40, 50%. 77. 77?
Yeah. What is in that service? It's mostly advertising,
right? So if you buy a Xiaomi phone, for example,
and then you'll see some ads. And from the advertisers,
they collect the money. But it's almost like,
yes, you have the hardware, but then it's an
accounting thing where you don't really count
the costs. Gotcha. So there's literally no cost.
Software services generally have a higher margin.
But this one, because they own the whole hardware
and ecosystem, it probably even lowers the cost
even more. So that's the three product lines,
smartphone, IoT, and lifestyle products, and
internet services. And then here's our last one,
which is the new business, Smart EV. This one,
they started reporting revenue only starting
from last year because that's when their first
car launched. And even within nine months of
the first sale of the SU7, in 2024, they generated
9 % of the total revenue. So 32 billion Chinese
yuan. business line in nine months. And their
gross margin is, I think, at 18 % the entire
year. But it's much higher if you look at more
recent numbers. That's their gross margin. They're
still making a loss because they're still investing
in R &D and whatnot. But it's amazing. It's amazing.
It's so fast. That brings us to a very interesting
observation that I've made about how Lei Jun
wants to run Xiaomi. First of all, he was born
in a really good time. where the internet was
booming. Internet related hardware is booming.
And then he absolutely recognized that and he
is completely aware of it. And he took advantage
of that, right? Like the market is there. And
then he himself, as an engineer, firmly believes
in that he wants to build something great. And
he wants to really understand the client's need.
And that was written down in one of the books
that he published in 2022. And he said, oh, befriend
with your users. He's all about customer feedback.
It's even to the point where his product managers
are like, please stop. We're not making this
change for 15 people. And he loves offering the
products or services at a very competitive price.
When he tells a story, Lei Junhe has above average
engineering level of storytelling techniques.
He's really good at it. And he's also very good
at making something complex quite simple. Simple
and straightforward because not all of his audience,
most of his audience doesn't have any engineering
background. So he managed to make... Like making
a car sound simple but sophisticated. Right,
yeah, for sure. That's something that he has.
Talent. Yeah, definitely a unique talent. Before
we dive into the EV bit, I want to start with
a few questions. All right. What was your impression
of all of Xiaomi's product before the EV? I would
say it's cheap, cheaper than average market.
I think they built a reputation around the fact
that they're selling at cost plus. And so for
the average consumer, you trust that they're
not making a huge profit when you're purchasing
their product. And their designs are usually
wide and simple, straightforward. So for someone
who's minimalist or for someone who... cares
more about the the cost and maybe just not so
much about the fancy schmancy like branding it
i'm i'm definitely their target audience yeah
like i bought a lot of xiaomi products around
the house yeah um knowing that they're good quality
good customer service and they won't overprice
right yeah i have very similar impressions on
xiaomi products minimalist not the loudest pieces
of gadgets that you will get, which is a plus.
If you like these kind of stuff, your brand loyalty
is there. Kind of like Muji, but electric appliances.
Exactly. While you mentioned that, I think it
also means that Xiaomi is associated with cost
efficiency. It's cheaper, but typically not the
most durable products that you will buy. What
you're thinking is, oh, if I were to be moving,
if I were to go somewhere else, I'm just going
to toss it. Because it's so cheap. Yeah. But
it's not the worst. Because within the whole
spectrum of what you can get in terms of hardware
in China, electronic hardware in China. You can
get really bad. There's stuff that, you know.
So Xiaomi has this minimum standard where it's
not going to break within the first two, three
years at least. But it's not. Obviously, it's
not like the highest quality. It's like if I'm
buying a vacuum cleaner, it's not a Dyson. Exactly.
But I'll buy it. Yeah, yeah, yeah. Value for
money. Value for money. Here's a question. In
year 2021, when Lei Jun, in March, standing on
a stage, declared that, hey guys, after very
thoughtful consideration, you know what? I'm
going to start building an EV. Yeah. I learned
that news much later on. And I'm like in my head.
Do you know what image I had in my head? I was
like, will it be like a minimalism white car?
A matte white TV. Just, just, just. Simple to
the core. I didn't know what to expect. But in
my mind, I was associating Leijun's statement
with, oh, it's going to be a very simple car,
cost -effective car. So what, right? You're not
the only one to ask that question. I heard an
interview for the Xiaomi designer recently. Oh,
he believed that. No, no. The interviewer asked
the designer, like, why wasn't the car white?
And the designer was like, are you crazy? Yeah.
Let's maybe break down the steps of how did Xiaomi
even make that decision? Or should I say Lei
Jun made the decision to make that EV? Because
we both think that this is the most interesting
bit of the whole story. You're making cell phones.
You're doing fine. You're selling a lot of phones.
You have different lines of phones for different
groups of people, for men, for women, for gamers,
for students. And you have tablets, you have
like TV screens, you have a lot of things going
on. Why of all a sudden, when your financial
report visibly looked okay, you decided that,
hey, I'm going to be starting making views. Yeah.
So I did do a lot of research on this. So the
public information that's available comes from
this 2014 speech. So Lei Jun does an annual speech,
kind of like a tech talk. And this the 2020,
sorry, not 2014, 2024 version was titled Courage.
And in his three minutes of his speech, he went
over exactly kind of the thought process of entering
the EV market. I'll give you the conclusion first,
which is somewhat misleading. But then here's
kind of the entire storyline. So the timeline
is he flashed a date, which is January 15, 2021
on the screen. And he said, I got a phone call
at 7 a .m. saying that you're being blacklisted
in the U .S. So that signaled that there's an
issue with potential future sales of Xiaomi phones
or Xiaomi products. And there was an emergency
board meeting that was called that day where
they made a decision to run a 70 or so day investment
on EV's feasibility. And then the announcement
was made on March 30th. Let me break down the
entirety of this story. January is the final
days of the Trump administration. He issued an
executive order in late 2020 where it says the
Department of Defense actually can put companies
on a blacklist if they think that there's ties
with the Chinese military. And this is called
the Communist Chinese Military Companies List,
CCMC. And this is a key detail because this was
not the same list that Huawei was on in 2019
that banned them effectively from getting US
chips or getting Google mobile services, which
include the Play Store. So that kind of killed
Huawei in the US. That's called the Department
of Commerce's entity list. The list that Xiaomi
got put on is called the Communist Chinese Military
Company list, which is from the Department of
Defense. This blacklist actually prohibits U
.S. investors such as Vanguard and BlackRock
from holding shares of Xiaomi. So after being
blacklisted, Xiaomi did two things. They, first
of all, immediately started to investigate the
feasibility of entering the EV market. And this
was widely publicized. He said there's 200 interviews,
75 -day investigation, he didn't sleep and whatnot.
At the same time, they also filed a lawsuit against
the U .S. government calling the DOD designation
unlawful. And so less than two months into the
lawsuit, which is on March 12th, still before
the EV announcement, the U .S. court granted
a preliminary injunction. What this is, is a
temporary order that essentially said, hold on,
we're putting a pause on your ban while we review
your evidence. And this is actually a major signal
that the court was siding with Xiaomi rather
than the DoD. And it's indicating that there
wasn't enough evidence to link Xiaomi with Chinese
military. It's a consumer product. It's not like
Huawei where, you know, 5G towers and whatnot,
right? So after three weeks of this ruling, is
when xiaomi officially announced its entry into
the ev business via the hong kong stock exchange
voluntary declaration okay then two months later
the dod dropped all the claims they dropped them
from the blacklist but me that's in may but back
in march they already know this is happening
they can't win the case because the preliminary
injunction was there so Going back to the 2024
speech, which is three months after the initial
car SU7 was launched, Lei Jun talked about the
serious events, right? And he didn't exactly
phrase the launch of the EV like I just... The
timeline that I just did? So he mentioned how
he started his speech with the huge sign of January
15, what happened on the PowerPoint presentation.
He recounted the emergency board meeting and
described how urgent it is. Specifically, he
mentioned that one board member asked. If you
cannot make smartphones, what will you do about
the 30 ,000 to 40 ,000 employees of Xiaomi? Oh,
my God. Are they not going to have a job, right?
And he also mentioned another board suggested,
perhaps you should think about making cars as
if they never thought about this before. And
so he concluded by the end of this meeting, all
the executives are in support of my EV venture
and that... I actually was the one that thought
that the risk was so big that I need to get into
this 70 -day investigation process. And after
the 70 days, they concluded, yes, it's a go.
But we know that by the end of the 70 days, they
knew at that point the blacklist wasn't going
to happen. I think. Okay. I mean, I can conclude
for certain, but this is my side of the story.
Even in his books, there was a paragraph that
was emphasizing on how did Xiaomi ended up on
that CCMC list. He mentioned that in 2019, Lei
Jun himself was awarded a prize by the MIIT,
which is the Ministry of Industry and Information
Technology of the PRC. That was perhaps one of
the reasons that how Xiaomi was being... briefly
put on the list of ccmc xiaomi was never actually
at the risk of again they're not on the entity
list so they never was at risk of losing smartphone
components right access like they they can still
get qualcomm chips right they can still work
with google to get the android operating system
and play store even if they maintained blacklist
status They can still do that. The real threat
is that there is a potential risk of stock price
collapsing because their stock is owned at that
point by a lot of US institutional investors.
But ironically, you know, if they had they been
on the list, right, not taken off. I love this
statement. Every single episode, Linda will have
had they. But if they were on the blacklist.
What would happen is their stock price tumbles.
It would have made the EV venture much harder,
not easier, because a fall in their stock price
would have dramatically increased the cost of
raising massive capital needed to fund the EV
investment. But what I do agree is that this
event did help them accelerate this decision.
It was becoming more urgent and geopolitical
risk is real. It's saying that, you know, it
will impact Xiaomi. It's not that they're completely
immune just because on the surface, they're not
a Huawei, right? Or they're not producing chips
or whatnot. But the fact that, you know, had
they never thought about this risk, I don't think
so because Huawei even happened in 2019. Have
they never thought about the fact that maybe
Trump or someone else would put them on some
kind of list to prevent them from selling smartphones?
You could see it coming. Yeah. So the EV is the
right decision. It's just the whole storyline
might be a little bit misleading. Yeah, that's
right. So what happened after they had made the
decision and made the release that, hey, I'm
going to make this phone? And in my mind, I was
also calculating. Man is 52 now. Yeah. Why would
you do that? Why would you have a new baby? In
the video, in the Courage video, he famously
mentioned that this is the last project that
I will do. Yes. And he famously said that I will
bet everything that I have. Yeah. There's so
much drama in that. So everyone, please go watch
the Courage TED Talk. It's so good. There's so
much drama. He also seemed a little stressed.
He is a little chubby at the time. Maybe it's
because of the stress. But he seemed a lot better
right now. Like you can see his... Oh, yeah.
Every single year he makes a different video
and then he looks very different. And you can
see like this is... My mental status. The mental
status. How the stock price will go. I was thinking
whether this decision was reasonable enough.
And here's my thinking process. Xiaomi is the
number three cell phone maker in the world. There's
Apple and Samsung. To be a really large cell
phone maker in the world right now, you're playing
a game of elimination. It's very Game of Thrones
-esque. And in China, you have to compete with
six other phone makers, Xiaomi included. And
that's Huawei, Oppo, Vivo, Honor, and Transient,
which is Infinix. You have phone makers that
covers the upper level, the mid -level, and then
the low -end type of phones. So inside of China,
it is very saturated. There are about 10 .4 billion
phones in the world. 70 % of the population are
unique phone users, which is about 5 .8 billion.
And the most developed countries are already
equipped. with a phone. So the part of the world
that doesn't have a phone is the developing countries.
And to sell phones to those countries, you're
not going to have a very high profit margin,
like AKA you're selling it to Africa, you're
selling it to other emerging markets. So for
example, Transient, Infinix Mobile is selling
in Africa, and they're selling it at a super
cheap price. To be able to continue on in the
mobile phone game, you will have to increasingly
manage your costs. You can't compete with Samsung
and Apple in terms of the high end. You have
to compete in the mid to low market. Here comes
another question. If you want to become an EV
seller, you also face quite a lot of competitions.
However, the market is really large. And we can
both see in the numbers that we put together.
BYD is selling at millions. of cars starting,
I think, in 2023. And it's officially hitting
the 4 million mark as of 2024. So BYD actually
ascended really fast. But all the other car manufacturers,
they're trying to find their value proposition
and trying to take up a fair share in that whole
mix. Xiaomi has probably observed that there
is still a lot of room in that game. Therefore,
it will be worth it for me to start participating
in right now. Yeah, I would say actually the
EV market is similar to the smartphone market
back in 2013, 14 maybe, is when you still have
a lot of players and not everyone has a smartphone
yet, right? So not everyone has an EV. In fact...
I think only 25 % of the global population, not
even 25, 25 % of new cars sold are EVs. So that's
not even near penetration. So any company has
a goal in EV compared to smartphones. Yeah. And
so the competitive landscape, I didn't go into
the details, but you can tell that there are
at least four groups of... contenders in that
game the first one is the completely new ev brands
that are coming from large tech companies and
for example there's neo there's xpeng there's
liado and then there's the the manufacturers
they're not internet they're not even internet
brands they're just like new tech brands yeah
completely new brands yeah and there are the
battery manufacturers The BYD, right? Yeah. And
then there are the phone companies who are trying
to make bigger phones with real. That's Huawei
and Xiaomi, right? And Apple tried and failed.
Yeah. Yeah, and then they failed. And finally,
there is the traditional car companies who are
trying to make sense of what's going on with
all the hype. Can I just still join the game?
Can I just replace my ICU with batteries? That's
right. The game has begun and then you have those
four groups of people in this. Here comes Xiaomi.
Lei Jun, he has always mentioned this similar
conclusion in different, either his interview
videos or in the car launches. His conclusion
is if you don't do EVs, someone else will and
someone else will take over your market share.
So the urgency is definitely there. Yeah. If
you don't do it now, you're losing out. Right.
Like if you don't go into it now, then don't
go into this. That's right. And he has... Three
beliefs that he had set out at the very beginning
out of like 14 years of making phones and starting
many, many companies. His conclusions are first,
90 % of the people who are in this game right
now might lose later on. So it's not a matter
of when you enter the game. It's a matter of
whether you can make it till the end. How long
do you survive? Exactly. Game of elimination.
There you go. And in this game, there are two
bits that you compete. Number one is the actual
electrification of a vehicle. Do you turn this
into a battery, an electric motor powered machine
versus a petrol powered machine? And then the
second bit is, how do you make this car a smart
car? As smart as your phone. That's the second
bit. And he said that he has significant more
confidence in the second bit than the first bit
because of experience making Xiaomi. and then
the third is lessons learned from xiaomi is if
you want a hardware to have longer lifetime then
you must invest in the core technologies early
on yeah which is why he had built the electric
motor himself, the V8, and also on the software
bit. They also hired somewhere around a thousand
people just to do the FSD. This is actually,
I don't want to interrupt, this is actually a
learning he had from his cell phone making days
where his initial plan was to have more dependency
on the suppliers. And in one of the years, I
think 2017 or 16, I can't remember exactly which
year, there was a hiccup in the supply. chain,
namely with the Korean OLED suppliers, both Samsung
and LG. And that played a huge role in his decision
in the investment in R &D for EV and the fact
that he has to control the core supply chain
components. That's right. Yeah. Yeah. Lessons
learned. Yeah. You can't be depending on someone
else. Learn from your mistakes. Exactly. He launched
another very important meeting and then he had
a discussion with the board. Most of the big
corporations, when they launch something innovative,
it often end up failing. In what way will Xiaomi
EV die? That was it. Yeah, that was it. Yeah,
that's it. I don't have to worry about it for
now. And his examples were, so Microsoft once
upon a time had a mobile phone service, had a
mobile phone smartphone product. We didn't even
heard of it. I mean, yeah. And Intel had a cell
phone chip service. and also did not end up yeah
yeah okay it wasn't it didn't survive it didn't
survive till today maybe but do we know about
it is it a core revenue generating like business
probably not yeah so be careful when you're innovating
What if Xiaomi EV died like any other bigger
companies, innovative projects? There is that
possibility. In what way? In high likelihood.
Right, high likelihood. And he discovered that
maybe there are three reasons that are preventing
the bigger corporations from having innovative
businesses. The first is you are too content
with your current title that you don't push forward.
You have experience in cell phone making, but
you have zero experience in EV. However, you
carry the name of Xiaomi. You feel content. You
stop making things right. Second is anything,
any experience that you have accumulated in the
past may not be useful in the new company. Like
this is the new company doesn't even have the
zero to one stage. So anything that's before
may not be useful for the new one. So past experience.
And the third one is that you have cognitive
dissonance into you don't understand the current
stage of your problem. You cannot identify in
car making how big this problem is and at what
level I should be responding to this problem.
Like as in you're not. fully formed in the car
industry in fact you don't know anything about
the car industry the car industry doesn't even
recognize you so basically if you're too full
of yourself you will fail yeah yeah well i think
reason one two three are all all the same yeah
all the same like you be modest yeah be modest
be modest was that identified he decided that
okay maybe we need to scratch everything that
we have before and just assemble a complete new
team and build a very rigorous PMF process, product
market fit process, to be able to actually make
this car. Here is how he built that car. Who
are the first group of people that he had hired
to build this car? Who are they? Ocean 17. There
are 16 people who migrated from Xiaomi, the corporate,
to Xiaomi EV. Got it. That's the 16 people already.
But I thought he said don't start. He started
from scratch. But those people are those who
have like HR experience, those who have finance
experience. Got it. Those have PR and internationalization
of marketing. So the mid -office folks are all
from Xiaomi. Exactly. There is one person that
was not directly hired from Xiaomi. This person
is poached from BMW. Oh, the designer. Exactly.
His name is Li Tianyuan. Sawyer Lee. Designer
for BMW i -Series, which is also an electric
vehicle series. He was working for BMW for about
10 years. The moment that Leijun announced that,
hey guys, I'm going to be making an EV. So he
was like, hey guys, I'm going to be coming back
to China to build this with you, buy BMW. So
it was a mutual feeling for each other that drew
himself to Xiaomi. I have a little bit more,
I guess, insight on this. I spoke to someone
who is in HR in the auto industry. Cool. And
he mentioned that actually for most of the new
EV companies, they had two types of people that
they need to hire. One is the designer who's
in control of the looks and feel of the car.
And then there's kind of the production side
of things. So for designers, most of them still
prefer to hire from abroad. So people who have
extensive experience in Germany or in the US
or in Japan and Korea. But for the production
side of things, because the SOP and everything
is so well established in China nowadays, they
can hire domestically. And so it's not a surprise
that Lei Jun chose to poach someone from BMW
or other manufacturing. What is surprising is
that this... guy he is only 35 years old so he's
not like well established in the market somewhat
established somewhat established but still quite
young in terms of someone who's leading this
project because we everyone had really high hopes
of this project never had had very high demands
for this project so for him to bet on someone
who's younger than expected it's a It feels like
the deep -seek hiring strategy where you believe
in someone, right? Yeah, you believe in someone.
When Sue7 was made in the first release, an American
designer, Chris Bangle, who is also the chief
designer for BMW Group, was invited. There was
a three -minute plug by him just endorsing how
great of a car it is. He still works at BMW?
He doesn't work for BMW anymore, but he had a
TEDx video. which is really fun. And it lays
out his design thinking, which is great cars
are art. He believes that cars convey feelings.
Cars are important tools of how we express ourselves
in daily lives. In total, to be able to complete
this project, Xiaomi hired about 6 ,000 people
with 100 folks. who are plugged from Xiaomi Corporate
and put into Xiaomi EB. Got it. So mostly new
hires, which reflects his start -from -scratch
mentality. Coming to the story of launching Su7.
The first car. The first car. So we're going
to call it Su7, right? Su7 is technically called
Su7. If you know the Chinese intonations. And
Su means speed. It's called Speed 7. Su 7. Okay.
But if you want to call it SU7. I'm looking at
YouTube and everyone's calling it SU7. But the
Chinese pronunciation, guys, is Su 7. Yeah, yeah,
yeah. It has nothing to do with Tesla Model S.
Yeah, not the same, not the same. The Tesla Mod
naming convention is SEXY. And then we all know
what that is. I actually didn't know about it
before you told me. Leijun had later reflected
that it has been incredibly difficult to make
a car. And one of a very specific challenge that
he had mentioned is... You're essentially bridging
three different groups of people together and
then they don't necessarily speak the same language.
First, it's the automakers. Second, it's the
cell phone makers. And third, the software makers.
If you have those three people working under
the same company, it'll take some time for the
three of them can actually work together. I can
imagine. Right? Not to mention if you hired someone
who is non -Chinese, that will add like a different
level of complexity on top of. the existing one
how do you create a framework such that car designers
cell phone designers and software designers can
both work together actually one thing we forgot
to mention is that he had to run this project
he has to head the project personally i think
for for the board to approve everything yeah
for sure and then he applied for the project
he led the project and he also applied for a
really large amount of money to run that project
right yeah the announcement said 10 billion chinese
yuan in the first year and then committing 10
billion us dollars which is about seven eight
times of that yeah in the next 10 years yeah
yeah yeah and he has used a lot of that existing
budget yeah yeah 60 70 of that already oh really
yeah okay yeah well some of them are like capex
and and stuff that he can recover like buying
the the land right buying the land and building
the factory probably cost a lot more exactly
but you just have to give it time till like later
on maybe you can amortize it for 20 years yeah
ramping it up ramping up the production cost.
In 2022, that's the year when he was just quietly
building the car. And 2023 is the year when the
car prototype was built. And then the car prototype
started to test run in different Chinese cities.
By the end of 2023, that's when he had organized
a small release within the auto press group.
And he had invited about a group of 2030 media
folks who are very much affiliated with the auto
industry. Most of them gave very negative feedback
about Su7. And they were saying that your product
is way too niche. Why do they call it niche?
Because by the time it was the end of 2023, everyone
who was in the game, like Huawei and Li Auto,
they were making SUVs. They were making bigger
cars. And why did they make SUVs? Because if
you were to be putting a battery pack in a car,
it takes up a lot of room. So if you were to
be making an SUV, it's easier to pack everything
together. But by then, the biggest seller, BYD,
was making sedans. To be able to compete in a
slightly different group was a mid -end, mid
to higher end of cars. A lot of people who at
that price point were making... And also SUVs,
you can naturally charge people a higher price.
Because they were at the 200 ,000 Chinese yuan
above category. Exactly. It was in between 200
and 300k category. Lei Jun decided that, okay,
so within this category, a lot of people were
finding it difficult to make a physical sedan
and to make it a good looking sedan. So he wants
to give it a shot. And his benchmark was... If
any car, if any EV that was able to sell in the
Chinese market monthly at 10K, that's the volume,
10 ,000 pieces of that EV, then that car would
be like a viral product. That car would be a
viral. That's a low goal for his... Right now,
they're currently selling at somewhere around
20 to 30K. Not there yet, but that's their goal
for the end of 2025. Right, right, right. They're
selling a lot more than that. Now that you know
you want to build a sedan. Within the 200 and
300K bracket, here are the classic questions
when you're doing PMF, which is first, who are
the primary users for your product? And second,
what problem do they have that is not resolved
with the current EVs? Number three, what can
your product do to solve the problem for them?
And last bit, will this product be both functionally
good and aesthetically pleasing? at the same
time. That's the typical PMF questions that you
would have. And after which I would think rounds
and rounds of audience research, Leijun decided
that with the first car, I am really going to
please the women buyers, which is very obvious
in the first press release. Not only did he intentionally
tailor the car for women, he had also tried to...
use his social media to engage more with the
female audience. In just about less than a year
time, his channel's female subscriber went up
from 3 .7 % to 22%. He only had 3 % before EV
launch? Yes. He had 3 .5%. No woman was watching
his videos up until right now. All because of
the UV protection blocking the car. We'll get
to that later. We'll get to that in a bit. But
so just a quick fact. I remember you talked about
the end of 2023 small scale media launch. Yeah.
So back then, Everyone in the car industry thought
this wasn't going to mass produce because Xiaomi
was targeting their car branding as the supercar,
as a sports car. Performance car. Performance
car. And nobody thought that that was a niche
market in China because people don't buy sports
cars. Like people buy road cars and like SUVs.
And so they didn't understand how Leijing can
turn a sports car imaging into mass market. That's
an excellent question. I think he really tried
to tackle that problem from a product manager
point of view. In his social media, he tried
very hard to almost to test out the public sentiment
to a sports slash performance cars. Every single
time, he gets a very positive feedback on the
videos that he has posted. And then you will
get positive feedback on, like in wintertime,
he did the winter testing on a frozen lake in
northeastern China. During the summer endurance
test, he went to the western part of China, like
in the middle of nowhere, there is a desert,
and he tested donating in a desert. Every single
time, people were leaving him a lot of comments
and say, oh, I look forward to the performance
of this car. So I think throughout his testing,
in between the end of 2023 and 2024, he posted
so many videos on his channel. To make the public
think that this is a performance car, this is
a supercar. Exactly. And then he didn't release
the price during the initial... tech talk presentation
that's right on purpose on purpose it was like
we were expecting a sports car category he was
trying to showcase which is so smart right you
were you were testing out and just showcasing
how great the performance is about this car in
every different place in china a few weeks before
the official launch he was still trying to test
out like how would people take this at what price
point at what range should i be offering this
the critique was very common and they all align
in a way that oh you want to target the female
audience you want to target those who are buying
the car for the first time but you're building
a performance vehicle how large do you think
that group is right like so nobody is going to
buy your car so that's the common critique how
did the media how did the auto industry get this
so wrong well i think the auto industry was maybe
it was a 50 50 right but the concern was was
real they thought it was gonna be like a 10 000
car market overall yeah well look at it now right
but legend still wants to target female in the
uh in the in the good for him yeah it's whether
and that he had segmented into two smaller groups
one is female individual who have enough money,
wants to buy a car for the first time. And second
is the female who is in the family because he
said specifically, in a family, men can have
the power to say which car they pick, but it's
the woman that holds the financial power. If
the woman likes the car, then she can point to
the man which car to buy. That's what he said.
So he really knows. They actually satisfy both
genders because it does have the performance
that a lot of men are looking for. Okay. So at
least now, we've narrowed down to, okay, we want
to build a city. and we want to build this for
the newer generation of car owners, perhaps a
lot younger, perhaps more women. What will that
car look like, right? Not white. A matte. His
previous product will give people the impression
that it's very bland and it's very basic, right?
But if you're building something for the women,
then you cannot. That's not going to be enough.
He said, in the past 140 years, All the good
looking designs have been designed. Everything
that you could have think of has been realized.
If I were to be building a new car, no matter
how well I design it, it's either going to have
the same face or going to have the same butt.
That's what he says. So funny. So he copied.
He asked himself, the choice is between do I
be classy or do I be edgy with a new car? If
you're being edgy for a new design, then... You're
originally targeting a very niche market and
then you're edgy. So it's maybe going to be even
smaller. You don't want to be designing a car
for the sake of a new car. So he decided that
maybe being classy is the way to go. So he borrowed
some of the design. Some may think. I get it.
A lot of cars look alike. But it has been criticized
as looking too much alike another car. He tried
his best to explain. when you want to be building
a classy, good -looking, charming sports car,
what's the one thing that you should be focusing
on? His answer is, and even for a good -looking
individual, it is the portion of the car. If
a person or if a car is good -looking, then that
car must have its proportion. There's a golden
ratio for car design. That's exactly right. In
the Su7 release, That happened in March 2024.
I watched the whole. Three hours. It was just
so long. Did you know how many times. I didn't
count actually. I watched it. He mentioned so
many times. Isn't it good looking. Isn't it good
looking? 好看吗? He called out so many times. There
are about 200 plus selling points in that particular
product. Every single thing has something to
it. It's the color, the texture, the hardware,
the software, the battery, the range. Oh my god,
there are so many of them. Even though I didn't
watch the entire thing, I did look up the specs
and stuff. purposely chose a three -hour time
slot even though the car launch could be 30 minutes
long they purposely did it three hours to make
sure they brief everyone on every single technical
and creative detail correct to make the audience
feel like they are part of this journey and to
make them understand as much be transparent as
possible and it played right into their target
audience's hearts yeah and you can hear the audience
like among them are some Like bros. Like fans.
Fans. He's like, yes, I want it. Give it to me.
You're going to hear them yelling. It's like,
I don't have a car driver's license, but I want
this. Yeah, but I want this. But I do have very
strong impressions on a few key selling points,
which are a lot of colors. Oh, yeah. Nine colors
of C7. Second of all. Yeah. There is a... A built
-in cell phone holder. Oh. Leijun also makes
fun of it. How can a cell phone maker not have
a place for cell phone in a car that it built?
Question. Does it only seal the Xiaomi phone
or can it seal another? I think it's a generic
one. Probably like every phone, every single
phone should be able to fit into that. And number
three, the very big one -piece ceiling that it
has. The glass ceiling that it has. It is...
one complete piece, very large piece of glass
with sunscreen to it. So for those of you who've
never been in China, sunscreen for the female
population is a big thing. It's a big thing.
It's a huge thing. Lei Jun is so proud of it.
And he mentioned that for Xiaomi Su 7 compared
with Tesla Model 3, if you put both of them,
under 38 degrees celsius right under the sun
for 1 .5 hours su7 would be 12 degrees cooler
than model 3 oh yeah and and it's sunscreen and
it's cooler like why not it's such a So this
is why it's been criticized by the auto industry
so much. Like, it's great. It's a cheap trick
kind of. But it's not cheap. It is a very thoughtful.
It's a very useful and thoughtful component of
the car. But the auto industry, you know, the
old style auto makers. The petrol boys. Right.
That's not what they're selling. They're selling
horsepower. They're selling engine. It's not.
Xiaomi does have a really good engine. Yeah.
But no one. ever thought about putting sunscreen
as your main selling point in in a car manufacturer
honestly the only thing that i had remembered
after that three hour release was the sunscreen
me too like it makes so much it went viral because
of the sunscreen yeah like who would have knew
yeah yeah and then the price of it it's still
cheaper with everything that's being put together
It is still 30k RMB cheaper than Tesla Model
3. But here comes my question too. Legion has
also invested in NIO and Li Auto. With the launch
of Su7, isn't this a little self -sabotaging
that you're blocking the other... You're your
competitor and the investor of two other car
companies. He actually mentioned that the CEO
of both these companies were in active support
of his decision to enter the EV industry, which
is surprising because Lei Jun also said he believes
90 % of the EV will be owned by the top five,
say, manufacturers. And so why would he? go into
an industry where he invested it into companies
already why don't you just put more money into
those two companies if you believe in the industry
rather than becoming a competitor again i think
there's a difference between smartphone and ev
industry in terms of the market penetration if
you look at the gas cars manufacturers right
now yes there is some concentration at the top
but it's definitely not like five takes all,
right? We can probably account for at least a
dozen manufacturing that are on top of their
games. And Toyota, who leads the market, gets
probably 10 % market share. Whereas if you think
Apple and Samsung probably together gets half
of the entire cell phone markets. So for NIO
and for Lee Auto, they are part of the auto industry.
They have background in the auto industry. So
for them, They actually believe in a pie for
everyone. Maybe not a pie for the 100 EV manufacturers
that are currently in the market in China right
now, but definitely the top dozen. Because even
if you look at the market position for the top
EV manufacturing, BYD, low -end, cheaper. Mass
market. Mass market. NIO is high -end battery
swapping user ecosystem. Li Auto is more for
performance. Extended range. Yeah, extended range.
Xpeng is for autonomous driving. They're kind
of the rival for the Tesla FSD. And then Huawei
is for they're also autonomous driving, but they're
more on the partnership model rather than the
manufacturing model. So everyone has their own
niche and everyone thought that the niche is
enough to sustain their own business. Because
for you to start making a profit, so the volume
for you to start making profit is actually quite
standard across all of these manufacturers, about
350 ,000 to 400 ,000 deliveries a year. And that
is not a lot if you think about the Chinese population
size. Not at all. Yeah, and so if I can start
making a profit at this volume, the market can
probably sustain at least 10 companies at this
volume without penetration. So I think one of
the reasons is that we can each have our own
niche. We can each... Safe place to start. Exactly.
Everyone can get something out of it. Exactly.
And then once they penetrate the Chinese market,
there's obviously the entire global market that
I think the Chinese EV manufacturer have their
eyes on now. Very much. So it's less competitive
than you think. So it is fair to see that different
competitors coming out of the Chinese market
and going global because the business model would
make sense. Yeah, and maybe it's a long -term
play where the Chinese manufacturers in three
to four years time, they will start targeting...
Europe, right? They're already started, but maybe
the ambition is to take over the global EV market.
And so maybe it's all of them together targeting
Renault or targeting Ford or Tesla. EV bros.
So it's just a start. The EV bros. Or the CIS.
Moving back to more products that's launched.
Have you ever wondered why they launched Su7
first? And then Su7 Ultra. And then Y7. No. Ultra.
Okay. Ultra is this performance electric monster.
I think that's the only right way to characterize
it. It's a real sports car. It's a real sports
car. Yeah. Do you know how heavy it weighs? No.
I don't even know. It's 2 .4 ton. It's two, three
times of... A typical ICE combustion engine.
Oh, wow. A sports car. And it's very heavy. Xiaomi
launched it in that order. Su7, Ultra, and U7.
It's like half a year, right? Su7, March, Ultra
somewhere in the fall. Ultra is October. October
2024. And then U7 or YU7. was in july july yes
it was july 2024 june july 2024 i think it was
the last no u7 was launched recently recently
yes 2025 oh sorry sorry 2025 yes 2025 yes all
right yeah okay so what is ultra ultra is an
absolute electric monster it is a collector items
for the auto fanatics out there yeah and we'll
just skip to the exciting part of ultra and why
it Distinguish yourself from other, whether it's
EV or sports car, because it's both of EV and
a sports car, which is unheard of. EV, sports
car. There's just so few of them. It's not even
a category, official category. I made you watch
that documentary. Yes. In 2024, October, Ultra
had its first run in the Nürburgring. It was
so long, the documentary. It is 45 minutes. If
you want to take a look at it, it is on billybilly
.com. In short, Xiaomi had the plan of test run
this car in Nürburgring, but they booked it in
January. They had no idea that October, Nürburgring
in Germany rains so much. That's why you can
book it because no one else wants to have that
time, right? And when you're in October, they
landed there right after the October holidays
in China. It typically ends on the 7th of October.
And on the 8th of October, both the car and the
whole team who wants to race the car are in the
Nürburgring waiting for some time that it will
clear up, that it won't rain. If it rains in
Nürburgring, then it becomes unraceable. Like
the track will be too wet. And it will be very
dangerous for the person who is driving the car.
So they waited and they waited. They waited until
October 18th. There was a brief moment where
it was clearing up, but two hours afterwards,
it started pouring again. So it was never a good
time. They even waited until the BYD team had...
Oh, BYD was there too. Yes, Xiaomi team. was
asking them whether I can take 20 minutes of
your slot if you have extra. BYD ended up not
having any extra time. Because it was raining
as well. Because the time was very limited. And
you don't want to be testing the car for one
round. You want to be testing it for several
rounds and see when the tire is warmer. Understandable.
So they waited and waited. And finally on 28th
of October, it cleared up. It was in the morning.
And they were able to finally run this 2 .4 ton,
very chubby baby Ultra. It was on the racetrack.
And to be honest, it wasn't completely dry. It
is still somewhat a little damp. This driver,
David Petard, who is a pro driver, only had 10
minutes. to drive and for 10 minutes on uber
green that was only good for one one lap that's
it one lap that's it if you want to finish as
a pro driver typically it takes about like six
seven minutes if you're a little crazier than
six minutes but if you want to play safe then
it will be seven minute and above it's just enough
to get to know the track like you can't make
any progress right right right so So he drove
for the first half of that lap. It was quite
gentle. But towards the second half of the lap,
you can visibly see that he's pushing the limits
a little bit. Maybe because the tires are warm
enough and he got used to the condition. And
he finished the whole lap at 6 minutes, 46 seconds,
8 .74. By October 28, 2024, Ultra was named the
fastest four -door... production vehicle yeah
one lap one lap track one lap only world record
yeah wow almost a year afterwards on april the
first not april first day it was a serious test
in 2025 xiaomi su7 ultra prototype completed
a second time the lap was completed at 6 minute
22 seconds 091 so 24 second gain 24 second gain.
That's right. All the numbers are officially
documented on the Neubergering record. As Top
Gear puts it, in June 2025, it is the fastest
electric production car. Wow. Yeah, it is the
fastest. In electric vehicles, only four cars
that completed the electric vehicle laps on Neubergering.
And from three different companies. One is Tesla.
One is Porsche. And the last one is Xiaomi. And
currently, Xiaomi's Su7 Ultra with track package
is the fastest out of all the electric vehicles.
So I think Li Jun did end up achieving what he
set out to achieve with the supercar category.
Like they're not just putting out, they can't
just put out Su7 thinking that, you know, I'm
going to label it as racing supercar and then
not have something. like this lap record to come
with it that's right that's right for the past
month we've just just been immersed in a world
of like auto sports and racing we watch something
every single weekend and we talk about this very
constantly so i guess to give everyone a little
bit more context also as a newly converted auto
fan like then still thanks to linda there are
typically two types of races in auto industry
right one is the sprint race where you compete
on speed And the other one is called the endurance
racing, where you compete. Can you last 24 hours
and still be in one piece? Yeah. Right? Yeah.
Right. Who drives the longest? Right. Who drives
the longest? Who drives the longest distance?
Yeah. So in the sprint racing, you would have
Formula One, NASCAR, AutoGP, and IndyCar. And
in the endurance race, the most famous one. Le
Mans? Exactly. That's right. Most of the cars
who were able to complete any one of those races
became the champion for that automaking company.
And that brought brand power to that company.
People don't want to just buy a regular car.
People want to buy, oh, what's produced in a
Ferrari. A race winner. Exactly, a race winner.
Oh, Porsche. Does that mean... They're going
to enter races? You're onto something. I would
logically assume that maybe that would be the
goal. I can't wait. I can't wait either. Please
put it on track. If you're interested in learning
more about how the halo effect, the race winning
car, brings glory to a production car, there
is a great movie as reference, which is... Ford
versus Ferrari. The one that we recently watched.
It's a great movie. By Christian Bale and Matt
Damon. That is when Ford company wants to really
increase its, not really production, but they
want to pivot to a new brand image. And by competing
with Ferrari gives them the new brand value.
And that's when the Ford GT40 was created right
and it was a movie about the le mans race wonderful
was so interesting the halo effect happened in
a lot of different companies so ford made mustang
and ford also has you know gt40 and a few other
gt cars and porsche has the regular porsche cars
where you can buy as a beginner there is also
the the Porsche 911, the Porsche 356, where they
won races and brought so much glory to the company
such that the entire brand increases in value
and everyone wants to get that car. And okay,
fun fact, very fun fact. Now that we've watched
F1 the movie for a couple of times, did you know?
A couple of times? No, a couple of times. Did
you know F1, the first car that showed up in
Daytona 24, that actual blue car that was being
raced. By Brad Pitt? By Brad Pitt. It was a Porsche
GT3R. It was an actual race car. Yeah. And then
the person who was handing that car to Sonny
Hayes was an actual car racer. Oh. Yeah. Oh,
so his teammates in the movie were actual racers.
Yes. Interesting. And he was an actual car racer.
Perfect. With an actual Porsche racing car, you
know, who... brought the car to Sonny Hayes.
Wow. Now that I've watched it for so many times,
I was finally able to connect it up. There's
a lot of actual racers in the movie. The motorsports
has been popular in the EU and in the US. And
Japan was kind of in that game as well. And now
finally, Xiaomi. Made it China relevant. Right.
Yeah. So I think that was it. I think there's
another reason where, so they decided to self
-invest the engine because of their learnings
in the smartphone. They need to actually make
their components, key components. Yeah. And Ultra,
Su7 Ultra was actually the perfect way to market
their hyper engine V8. Yeah. Yeah. It was saying
that with this engine, our horsepower is amazing.
It was 1 ,500 PS. That's 1 .5 times of Porsche
taken. In the ultra release meeting, Lei Jun
was also trying to be funny and trying to sell
the car. And he mentioned how much of a details
that he was trying to put into the car that he
was hoping that everyone can notice that. And
one of it is he mentioned, for those of you...
who buy a lot of sports cars, would know that
carbon fiber is a very expensive material in
the car. And for those of you who don't buy sports
cars, I now just told you. He showcased in 17
different places in this ultra car. I use carbon
fiber. But honestly, I think... Honestly, don't
all sports cars have carbon fiber? But here's
the thing, though. The battery pack is too heavy.
So it has to reduce weight where you can. And
that means you have to use a lot of carbon fiber.
So all the materials, it wasn't because of, oh,
I want to use it because it's luxurious, but
because I want to save weight. yeah such that
he has to use a carbon fiber and also he made
a very funny comment on the Pirelli tires he
was saying that for those of you who wants to
order you can order it now you have about like
whatever time before you can lock down your deals
and if you think that you want to you know just
upgrade your car a little bit we have the Pirelli
P Zero tires for you to order And when you're
driving to work with your P0 tires, who was going
to drive to work with some P0 tires just on a
regular street? I think he was trying to give
those who are in the performance or the racing
needs an option that you can upgrade it to a
racing tire. Yeah, last bit. On to U7, finally.
So the U7. Once again, YU7, right? Why is it
YU7? Naming convention comes first. YU7 is coming
from an expression. It's called 雨风而行, and it
roughly translates into, 雨风 is sitting on top
of the wind. It's back in the days how a god
would travel. Oh, like traveling on the cloud,
like Goku from... Something like that. This line
is from Zhuangzi. Which translates into a happy
journey or a carefree journey. He wants you to
have the feeling that traveling by Yuseven is
like sitting on top of the wind. It's so fast
and so smooth. And carefree. Come try our SUV.
That's kind of the brand image that he was trying
to... And it fits for a family car. The U7's
competitors are Model Y, Porsche, Macan. This
car was released recently and within three minutes
of the first release, 240 ,000 pieces of that
car was ordered. That's how much Tesla sold,
Model 3 sold for a year. For a year, right? Yeah.
In its peak in 2021. Right. So now the only problem
is whether they can actually deliver it. I guess
the last one quick comment that I want to ask
about U7 before we dive into the production and
delivery is U7 gives you a little bit of a surprise
as well. Now that the Ultra has completed the
sprint race, U7 completed a, not a Le Mans race,
but a Le Mans 24 -hour driving and charging.
Yes. I found the video. That video was released.
It was edited. it shows that one u7 testing car
completed a non -stop 24 -hour journey and it
was racing and charging and racing and charging
and then the car did not explode how is that
possible wait wait okay first of all cars don't
explode the battery will overheat right and if
the battery overheats i don't i've never been
running a car for 24 hours i don't know what
will happen if a car runs for 24 hours where
you continually exhaust and charge and exhaust
and charge typically if i do that to my phone
my mom would ask me to put the phone down so
But yes, that's surprising. First of all, their
position as the Model Y, which is kind of a small
SUV type of car, and it was targeted for families
with kids, just families in general. So I wasn't
expecting that it would go through the same marketing
as Ultra, which is targeting the sports enthusiasts.
The performance, yeah. And here's the funny thing.
A lot of people, I've watched a few... reviews
on Bilibili on how the Su7 owners and U7 owners,
even the Ultra owners, how they see their cars
and how they see the performance of their cars.
And it seems that some people have even said
that you can almost get all three of them. They
don't overlap with each other. An SUV for family,
for endurance and range. An Ultra just because
it's a crazy electronic monster that the performance
is so great. and very limited if you can even
get the car right and a su7 for daily commute
yeah so these three products are complementary
to each other they don't overlap a lot and i
had the rare chance of sitting in a su7 ultra
just about a couple weeks ago it was a complete
accident i was in i was in shenzhen visiting
my friends by the end of it My friend offered
that. Can I give you a lift home? I'm like, sure.
And walked into the garage. He's like, here comes
a... What a coincidence. Yeah, what a coincidence.
And... I was really surprised that you are, how
are you able to get it so fast, right? Yeah,
how? Yeah, he just got it early enough. Oh, okay.
We didn't try anything crazy, but he did demonstrate
in like the two second acceleration, the feeling
that you're sitting in a sports car, that's the
G -force that's against you. Yeah. It's quite
comfy, I have to say. But by only experience
for like five seconds, that's it. I mean, yeah.
It would have been a bit dangerous if you experienced
it for more than five seconds. I would not recommend
driving it at that speed at a non -racing convention.
If it's a regular commute, please drive very
safely. But for that particular experience, I'd
say it's a very comfortable car. About the deliveries
and concerns and numbers. Yes. Let's go. Okay,
I think we should take a step back right now
to just get a perspective of EV overall right
now. I'm using rough numbers, but the annual
global sales in terms of passenger vehicles,
this is not just EVs, every single passenger
vehicle. So your sedans, SUVs, it's about 75
million units per year. And China accounts for
one third of that, which is a lot, 25 million.
Right now in China, half of the new sales are
EVs. About half. So let's say 11, 12 million
of that. How many do you think are sold globally?
75 is like gas cars and EVs, right? Out of the
75, China accounts for 25, but about like less
than half of those are EVs. So that's 11. So
75, China 25, EV 11 in China. There's 50 million
that's outside of China. Out of those 50 million,
how much are EVs? 5 million -ish? 6 million.
Okay, okay. China is the single largest market
by far when it comes to EVs because 11 millions
are sold in China and 6 millions are sold everywhere
else. This is the importance of China as an EV
market. And this is how strong the demand is.
And this is... partially actually mainly because
of government support and so let's go back to
this 11 million figure which is the numbers of
ev sold in china last year which is xiaomi's
entire market where was xiaomi's share so out
of the 11 million byd took up in china i think
about two no their entire global is four four
something million so in china i think it's about
maybe two ish two three So they're the biggest
player, right? And this is how scattered the
Chinese market is because BYD as the biggest
player took up like maybe less than one third
and then everyone gets cuts. Everyone gets cuts.
Xiaomi only took up 1 .2%. Really? Minding that
they started... So two reasons for that. One
is the traditional automaker took a majority
of that. right byd plus uh your cherries your
saic they took out most of it because economies
of scale distributor whatnot yeah and all the
taxi drivers gets these cars uh so they get bulk
buying too most of them the new ev players like
lee otto neo xiaomi expo they're all under They're
way under 1 million. Li Auto is 526 ,000. And
then NIO, XPeng, and Xiaomi all get 150 -ish.
So Xiaomi's exact numbers is 136 ,854 that they
published. So let's say 140 ,000. That's only
1 .2 % of the market. To be completely fair though,
about 60 % of this 11 million, so about six something
million. are pure electric EV. The others are
hybrids. So technically they're competing in
the 6 million category. But even then, think
about the scale, right? Majority of those EVs
are mass market low end. Xiaomi competes in the
30 ,000 plus USD category. And that's already
a smaller segment. And within the segment, they
compete against more than, I would say, it's
technically more than 100, but I would think
their main competitors are about 20 or so. And
they get a part of that. When the SU7 was released
last year, it took nine months for them to generate
140 ,000 sales. And I think 80, about more than
half was ordered. With the YU7, you just mentioned
that 240 were ordered in the first day. We haven't
seen too much delivered yet. It's only 6 ,000
or so because it was just released last month.
But these numbers comparing to Tesla, currently
they're suppressing Tesla sales. However, Tesla
peaked in 2021. And at its peak, it's actually
slightly higher than Su7. But bear in mind that
Tesla actually started selling their EV much,
much earlier. Even in China, the first year of
the domestic Shanghai produced Tesla started
their first sale in 2019. So by no means this
is like low in terms of sales numbers, but it
is right now in its first year on par with Tesla.
Right. And this is only their first year. And
it surpassed all of its immediate competitors,
like NEO. With the total order, I think it surpassed
both XPeng and Li Auto. This is way beyond everyone's
expectations, even beyond Lei Jun's expectations,
I would believe. They have three years to do
this, right? And so if you had you planned your
capacity correctly, you should be able to deliver
your cars according to your sales, right? In
the grand scheme of things, they're not big,
but they're the fastest rising. Nobody expected
them to go into their first year to produce or
to sell this many cars. Because NIO and XPeng
has been in this industry for years and their
sales in mid 2025 today are not as high. So they
are, in fact, the largest, the fastest growing
one. And the 150 ,000 or 140 ,000 I just mentioned,
it's up to December last year, right? Nine months
in, it's just the SU7s, including... maybe two
months into the ultra production the u7 because
it's a family car you get three times as much
interest in terms of the initial order so so
we're expecting a that 150 number yeah to multiply
or to triple uh this year yeah i mentioned that
xiaomi didn't expect this no And how do we know
that? The factory wasn't large enough. So right
now, I think if you order a car, you have to
wait for one year. And this is like hashtag going
on on Weibo. That's like, give me my car. Something
along the lines of where's my car? Like how long
do I have to wait? Obviously, the sales and the
order went wildly beyond everyone's expectation.
When they initially planned their factories,
it was in Beijing. They signed a special deal.
They planned two factories. Both of them had
an initial capacity of 150 ,000 deliveries a
year. The first one started production last year
when SU -7 was launched. This is March. By June,
three months later, they realized it's not going
to work. 150 ,000 is not going to cut it. So
they started double shifting. So instead of having
eight -hour shifts, shut down the factory and
then come back next. They started doing two 8
-hour shifts, and obviously you can do this in
China. They started two 8 -hour shifts to increase
the capacity, not up to 300 ,000, because you
still have downtime in between. You don't want
to work your machinery too hard. But officially,
they claim that it's from 150 ,000 capacity,
it increased to 2 ,400. Wow. It's one factory.
Second factory, same plant capacity. now doubles
and the second factory actually was only i don't
know if they they probably only started production
this month sounds about right yeah and so and
so xiaomi if you look at their financial statement
they moved up their projection for capacity from
300 000 or delivery from 300 000 to 350 000 because
of this all kind of unexpected shift and that
Forced them to think about all the things they
can do to increase production last minute. And
rumor, actually confirmed rumor, that one of
their subsidiaries just purchased an extra piece
of land nearby the two factories. Meaning that
they are planning to start construction on the
third factory. Wow. Yeah. That's so fast. Exactly.
And I've seen on the Bilibili. every 76 seconds
a car can be manufactured and it is 100 automated
As in there's minimum human that's needed. However,
the machines do need downtime and maintenance.
We've tried to reserve spots to go and see the
factories ourselves. But even the factory itself
is very overbooked. Yeah, the tourists are overbooked
because everyone wants to see how it's made.
Actually, they initially only planned two sessions
a week. And then they had to increase it to a
daily. Two sessions daily, plus extra sessions
on the weekends, extra tours on the weekends.
To accommodate all people. And still we couldn't
book a time two weeks in. Just to show you the
popularity that it has. Exactly. With the two
factories, with the double shift, they can technically
produce 500 ,000 units a year. And this is anticipated
number by the end of this year. So in comparison,
Tesla in Shanghai. So Tesla produce about 1 .8
million units a year. So way beyond Xiaomi's
unit production, obviously, because they've been
in the market longer and they're selling globally,
right? Half of those are produced in Shanghai.
So 900 ,000 units. Xiaomi's production capacity
right now is already at, well, not exactly, but
let's say end of this year, they should be at
500 per year. versus 900 in tesla out of the
900 probably only two -third of that is sold
in china so their expected annual sales volume
will match tesla in their second year of business
with two sk use if You know, the production goes
all right. Double shift, 150 per shift. So that
times that by four. So 500 should be something
that they can commit to. And then with the third
factory. So also the speed of which they complete
the factory construction. Every year, there's
a new factory so far. So if that's the production
rate. And sales continue to go up and they release
a unit reaching Tesla level. It's just a matter
of time and it's maybe two, three years. Yeah.
Yeah. So that's why we think it ascended. It
did. And it's stock price too, if you look at
it. In the history of EV making in China, I think
we can definitely say they're a success. Just
for... How a short amount of time and how much
that they were able to complete. Lei Jun at 52
-year -old starting a new venture. And in three
years, he actually ended somewhere. And one other
thing I want to talk about is profitability.
Because Lei Jun mentioned that he's willing to
put up money for, I think it was five years.
before making a profit. This is already very
fast for car manufacturing because the amount
of R &D and news distribution down costs is very
high. And so they didn't take money from VCs
because Xiaomi as a cell phone manufacturer had
huge large cash reserves. So they could afford
this whole venture by themselves. But they're
also under a lot of... pressure to deliver profit
as soon as possible um and my expectations right
now and there's this magic number in china ev
making in the market level that they're in or
in in in the car in the premium ev cars if you
make 350 000 cars and if your costs are at par
with market you should be able to make a profit
and Xpeng has delivered that. For Xiaomi right
now, if you look at the current trajectory, oh,
sorry, Li Auto has delivered that. It's the first,
this type of EV to generate a profit. Xiaomi
can probably do it by end of this year, but because
it ramps up production, right? So I think the
first year Xiaomi will report a profit will be
actually 2026. And it probably reaches profitability
by end of this year. Right. So... It's really
fast. Really fast because there's only two manufacturers.
The new type of manufacturers, one is Li Auto.
The other one is called Leap Motor. Yeah. Ling
Pao Zi Chou. Either your volume goes up and you
hit scales of production, 350 ,000, or... you
have some level of vertical integration. So you
own the battery making or you own components.
So Leap Motor actually achieved profit at 300k,
so a bit lower than the 350, let's say magic
number, because they do have some vertical integration
going on. And Xiaomi, I feel like it's, and they've
done it in years. So for Xiaomi to do it in a
year and a half is also... creating a record
in the fastest automaker to EV maker to produce
a profitability. And they actually achieved it
in two different ways. BYD is also absolutely
generating revenue, but they're in a different
category. They're in the lower cost category.
Now that we know what went on in the past four,
five years, what do you think is going to happen
in the future? Oh my God. Million dollar question.
Yeah. I have another piece of evidence, which
I think is a very good start of what could be
the direction of the future for Xiaomi EV. I
think very positively of this venture. I know
this is relatively controversial. I think people,
at least the traditional manufacturers, are thinking
that, oh, how could you be doing something? You're
just copycatting. This is not even a serious
motor. And the production level is so low. But
Lei Jun himself? wants to aim for a goal that's
very high up there like not within reach he wants
to be the number five top five top five so at
least four million units automakers in the world
right like this is crazy like you're a cell phone
manufacturer you're But I mean, when he went
into cell phone manufacturing, he didn't think
I'm going to be the top three either, right?
Or I mean, maybe he did, but it was a miracle.
It was a, yeah, it was unintended, but it was
a, he really was very good at making hardware
products and he will continue to do that. And
he has a track record of demonstrating that.
Also, very interestingly, are you a GT game Gran
Turismo player? You're not. Okay. Here's another
surprise. My love is limited to F1. Ultra is
the only Chinese car that is featured in Gran
Turismo 7. No. Yes. And this was launched in
June. So just two months ago. And so what is,
okay, what is this GT game? Does Xiaomi have
to pay GT to get in? I don't. think that they
have to i do think this is i don't know for sure
but i think the designer for gt highly approves
the car so gt is a series of it's basically a
racing video game that is developed it was released
in playstation games something special about
gt is it is intended to emulate the not just
the appearance but the physical performance of
the vehicle as well so in the game you will actually
experience what's it like to be turning that
car cornering like driving on curbs um so if
you can't get a xiaomi car delivered to your
house because of the order backlog you can buy
the gt3 or gt isn't that a very smart way of
getting your worldwide fans now everyone at least
who plays gt seven can see and feel what's it
like to be driving on a simulator and su7 ultra
actually this relates to kind of my view for
the future which is at some point right because
china is the first one to really adopt the first
major country to really adopt ev they have to
turn to the global market at some point and the
estimate is that by 2017 is with when xiaomi
might be thinking about global penetration. I'm
ready. So it's interesting how, you know, they're
almost layering, putting in the pre -work even
now to make this happen. And you know who else
really loves Xiaomi outside of China? Outside
of China? Yeah. Wait, a person or a company?
A person, but he's a CEO of a company. Oh, who
would that be? The CEO of Ford, Jim Farley. He
talks about how he loves his Xiaomi Su7 extensively
in the media. Right? For an auto manufacturer
to talk about another auto manufacturer in praise.
Wow. That's pretty high praise. Right. And props
to Ford. Ford is actually, as a company, they
visited China looking at the EV industry. And
they're actually the second largest EV manufacturer
in the US next... after tesla but i mean tesla
is way up here so ford did a trip to china and
they looked at all the manufacturing they went
to buid and they went to catl which is a battery
manufacturer and they realized that us is behind
and they're not afraid to talk about these you
know so they went on us media saying that the
chinese battery technology is way more advanced
we need to bring it to the us They actually got
a little bit of backlash because of the geopolitical
tension, but they ended up negotiating somehow
to open up a factory in Michigan for the latest
technology in battery manufacturing called the
lithium -ion phosphate battery with CATL. So
CEO Jim Farley managed in that trip to, I guess,
get his hands onto a Xiaomi Su 7, brought it
back. to the u .s drove it for six months loved
it didn't want to give it up i don't know what
like there's no follow -up story um but yeah
no he went on tv saying how good it is and how
much he enjoyed the experience yeah and how how
much uh how much we need to acknowledge that
china is ahead in this perspective yeah yeah
high praise exactly yeah And so the founder of
the GT7 game, GT game, Kazunori Yamaguchi, also
had a test drive in Beijing with the Xiaomi car.
With that very limited experience, he also enjoyed
the feeling as well. In the game release, one
of the ultra product manager, Xiaowen, she mentioned,
made it very official that in the next year,
Xiaomi EV is going to foster A thousand racing
driver for high performance. And company employees
included. Wow. So if you want to get a race driver's
license. Xiaomi would pay for it? Xiaomi would
pay for it. Xiaomi, are you hiring? Another very
attractive onboarding package. That's crazy.
You could be, you know, getting the driver's
license and maybe decide later whether you want
to stay with you. But just all in all, I think
they're pretty ahead of how they want to be attracting
talents and the way they're building cars. Leijun
really seemed to enjoy, thoroughly enjoy this
process of making the EV. He himself test drove
about 170 plus cars borrowed from colleagues
or... Just also like the cars that he had bought
personally. He got a racing license as well.
Test drove the car in winter, in summer, in different
weathers, in different locations. And in the
press release, he was able to confidently and
competently talks about all the small details
of a good performance car. That's pretty transformative.
He had fun. Yeah, I think you have to really
love something to devote your time and energy
to it and making it a success. And he has demonstrated
that openly to the public, which is actually
one of the key reasons why the Xiaomi EVs so
far are perceived so well in the market. despite
some negative media attention with a crash recently.
But the amount of energy and the amount of love
that he has expressed in this project through
all his social media is definitely out there
and very much visible. I think with the release
of the Xiaomi EV, the performance car, more racing
tracks inside of China. will start to attract
more people who are within the ultra club or
within the EV performance league. For the first
time ever in China, people don't want to damage
their pocket or pay extreme amount of money for
a performance vehicle. We'll finally now get
the chance to get a car and to maybe enter that
space. So maybe, I don't know, 10 years down
the line. We'll have more people who drive in
Le Mans who are Chinese. I don't know. That would
be awesome. That would be awesome. More people
maybe entering like F1, other performers. I don't
know. I think so. I think this is definitely
a good start. I don't know how much this one
car will, you know, but I think that a mix of
things will happen to push the Chinese auto industry
forward. And my wildest dream, maybe in the year
2027, and I've told this to a friend in Leijun's
investing firm, Shunwei Capital. I just casually
joked with her and I said, maybe one day, Su7
or like one of the Xiaomi cars, Xiaomi EVs will
be featured in Fast and Furious. You don't know.
Never know. It's possible. It might be the first
EV. Might be the first EV. Yeah, no, definitely.
Looking forward to the future of Xiaomi EV. Yeah.
Look forward to that, guys. And that's a wrap
on a nearly two -hour episode. If you made it
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