WEBVTT

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Hi listeners, today we're covering a company

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that built its name on viral smartphones and

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a magic touch for creating every kind of smart

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home appliance imaginable. We are of course talking

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about Xiaomi. This company, which started far

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from the automotive world, has just launched

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its first two EV models and the result is stunning.

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The Su7 sedan and the Y7 SUV have become one

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of the most wanted and pre -ordered EVs in China.

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It also made the fastest EV sports car in history

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so far. This is Xiaomi EV. We're your hosts.

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I'm Linda. I'm Pan. Welcome back to Ascent. Hello

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listeners, welcome back to this episode of Ascent.

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Welcome back everyone. In this episode, you'll

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learn about Xiaomi EV, its recent EV creation,

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Su7, Ultra, Yu7, and yes, that's the only right

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way to pronounce it. I thought we were going

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with the spelling, like the YU7 and SU7. Yeah,

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SU7, that's right. We'll get to the naming conventions

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in a bit. And who is... Lei Jun, this man who

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is originally from a very small town in Hubei.

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He's a CEO, by the way. Right. And built one

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of the top cell phone companies in China. Why

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did Lei Jun even wanted to build this EV company

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from scratch? And what are the financial reasons

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that he may have wanted to do that? Also, to

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give you a little bit more context. This is our

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second attempt to making this. Yeah, so you've

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never heard an episode titled EVs of China because

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we never released it. Why did we not release

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it? We started with five companies in the EV

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research for episode zero. Let's call it that.

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And it was NIO, XPeng, Xiaomi, Li Auto, and BYD

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and decided that... It was completely out of

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control, the amount of research that we had to

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do. And after that two -hour recording session,

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we both felt like that our brains are both on

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fire. And that was way too big. So this is the

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second time of tackling this. We will get to

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the other companies later on. But for this time,

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we will just focus on Xiaomi. Yeah, our brains

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are still on fire. Like controllable fire. Actually,

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yes. It is not. Xiaomi EV is not to be underestimated.

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The amount of research that we both have to put

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into this to sort of reverse engineer how this

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decision is being made is a lot of work. How

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about we start with Lei Jun himself? Yes. The

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history of the CEO. Lei Jun actually had a few

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nicknames that people called him. I know in Chinese,

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there's like Lei Bu Si after Steve Jobs. That's

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the only one I know. And he was also called the

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Elon Musk of China because since building EB,

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he has gained that reputation. Yeah. He now dresses

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like Elon too. Yeah, he does, right? He used

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to dress like Steve Jobs and now he dresses like

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Elon. Exactly. We wanted to explore whether he

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was the real Tony Stark of China. And actually,

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I think he can get to pretty close to that because

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Lei Jun, if you translate that name into English.

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It's Thunder and Army. Like, guys. I think it's

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less of an Iron Man, but more of a Thor. Yeah,

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yeah, yeah. So, yeah, he definitely belongs to

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one of the... He's definitely an Avenger. A hero.

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Yeah, definitely an Avenger. He also has quite

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a solid followership on social media. I think

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this is very similar to Elon Musk as well, but

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for different reasons. Elon, because now that

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he's more involved in government and he developed

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crazier projects. But Lei Jun's Weibo, which

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is the ex of China, and on Bilibili, which is

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the YouTube of China, cumulatively, he has a

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very large followership. He has about 5 .7 million

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subscribers and 200 million views on the equivalent

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of YouTube in China. So he's like the tech Kardashian

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of China. Exactly. And he posts so many things

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about the process of... this car is being made.

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It's probably like 200 hours of Lei Jun talking

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on the internet. Well, I'm not kidding. Like

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I watch a lot of hours right now. I think after

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this episode, I'm going to go for like a Lei

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Jun detox. Like in my dreams, I have him on the

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figures. Like talk to me about, oh, how to build

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a product while he is posting so many things

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on social media. He would also claim that he

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is actually a big introvert. He is afraid of

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social interaction. And when he is shooting videos

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in the company or in the factories, he would

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get nervous. And you can see it. His hand would

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fidget. I can see that actually from his talks.

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They're mostly scripted. Which is how introverts

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do presentations. Speaking from personal experience.

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We'll try our best to give you the financial

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details, but in the meantime, also paint a more

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3D picture of who Leijun is. So by the end of

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the episode, you would maybe know more about

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him as an entrepreneur, as someone who started

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a huge venture, his personality. I will give

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you a little spoiler. Needless to say, he is...

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Extremely intelligent and capable. He's very

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much of an engineer at heart. And he is sort

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of a GOAT product manager. He is really crazy

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about making products. What's a GOAT? Greatest

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of all time. Oh, sorry. There's something new.

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Should I say GOAT? Product manager GOAT. And

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he's very ambitious and loves competition. Lei

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Jun was born in... 1969. In a very small town

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in Hubei called Xiantao, he had showed very early

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interest in engineering, aka he likes to take

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things apart and assemble them. I think we just

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call it a kid. Yeah. Take things apart and can't

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put it back. He is that kind of person, what

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we would call in China, a study machine or a

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study god. Most of the Silicon Valley CEOs, they

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quit school to start their business. Like Steve

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Jobs and Mark Zuckerberg. Lei Jun has a very

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different approach. He didn't quit school. He

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didn't quit school. But he finished his school

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within two years. He finished undergrad within

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two years. Right. That is similar. So instead

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of quitting school, he still wants to get that

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degree. And he just wanted to wrap things up

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faster. So within two years of time, he got a

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perfect score and graduated with a computer science

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degree. And this is the 80s in China. The whole

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computer science program only has about 15 computers

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in total. And that's it. Right. Actually, sorry,

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side track. My mom did computer science and they

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didn't have personal computers back then. It

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was like a big room. Yeah. You wear a hazmat

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suit and then you staple like holes in. paper

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and then you that's your input right so that

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that's learning about computer science back in

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the 70s and 80s and that's the condition where

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you would start learning yeah and he's coding

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is really good he taught himself most of the

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programming and coding his work is featured in

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the textbook for freshman students wow that's

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how good his work is wow and also he loves gambling

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too he plays poker a lot and his only excuse

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is that if you're trained as a programmer then

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you That must mean that you don't socialize enough.

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Therefore, you need to socialize through... Gambling?

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Gambling. Not encouraged. Not encouraged. And

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you have to start playing cards as early as you

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can. And the person who loses gets lunch for

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everyone. So that's kind of his rules. That's

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how he gets lunch at school. For me, this is

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like semi -bullying. But he's very good at playing

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poker. And he loves a big crowd around him. The

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reason that he got so much into coding is through

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a book that was published in the 70s, late 70s.

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It's called The Fire in the Valley. The Birth

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and Death of Personal Computer by Michael Swain

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and Paul Freiberger. The book is roughly about,

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so the 70s, well, the contemporaries were protesting

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the computer as a tool. of dehumanization and

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oppression because it just came out, right? It

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was a big machine. A motley collection of college

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dropouts, hippies and electronic fanatics were

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engaged in something much more subversive. They

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call it subversive. They're obsessed with the

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idea of getting computers powered into their

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own hand. They launched from their garages a

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hobbyist movement that grew into a whole industry

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and ultimately a social and technological revolution.

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This is a nonfiction or fiction? It's a fiction

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book. It is a nonfiction book documenting the

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entirety of the first computer was created in

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1964 or something. But it was about the first

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decade of those who are the hippiest or those

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who are the college drug house. The trailblazers

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of the modern computer industry. Exactly, the

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trailblazers. So he read that book and he was

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made believe that The revolution of personal

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computing is coming. He believes in that the

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relationship between a person and a computing

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machine will be the rest of the history for the

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next couple of decades. And he bet it right.

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So he really got inspired by this book. And then

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I'll just make it very short. He started making

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softwares when, you know, graduating from college

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and after two years. This is early 90s, right?

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Or the... 89, around that time. By the time that

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he left Wuhan University, the savings that he's

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got out of selling softwares that he made was

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4 ,000 RMB, which is about $500. And then the

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average GDP in China in 1989 was about $311 that

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year. Wow. So he made a lot of money. That's

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a lot of money in... Chinese standards back then.

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Yeah, exactly. So he graduated and he was believing

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that my future will forever be related to software

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making. After he graduated from college, he started

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a series of software ventures. We'll save you

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a lot of time here because we would like to make

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a separate episode just on Xiaomi itself. So

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a lot of those are related to Xiaomi, but I'll

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just sum it up for you here. He joined a company

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that Qiu Bojun started and made a software WPS,

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which is sort of the equivalent of Microsoft

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at that time. The software that he had worked

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on is called Pangu. That's the first attempt.

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Work Office Collaboration Software. Oh, so not

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the operating system, but the office software.

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Right, right, right. The office software, right.

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Did not work out completely. He recruited a lot

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more engineers and worked on a separate version.

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He didn't sell as many copies that he wanted

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to. Very frustrated. Decided to go into the market

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and find out why. Discovered that, oh, it was

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way too advanced for market and it was way too

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expensive. Because nobody paid for Microsoft

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in China back then, right? Right. He was... Exactly.

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Yeah, like people get pirated versions. Right,

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right. Pirated versions. Personal computers were

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just starting in China at the time. Do you remember

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the year that you had a personal computer in

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your room? 1995. But that's because my parents

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are, you know, into the industry. Right. And

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my family got our first computer in 1997, which

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is around that time. But you're right. I don't

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think anyone paid a lot of money for software.

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No, we got like pirated. Sorry. Sorry, Microsoft.

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But we were using pirated version all the way

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until 2000. Sounds about right. So he realized

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that if you want to be competing with the pirated

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version of the software, you need to offer something

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that is super easy to use and at a much cheaper

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price. Attempt number two was exactly that software.

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It's called Computer 101. 电脑入门 in Chinese. It

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is basically a walkthrough for any beginner who

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wants to use computer. How do you start? Because

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computer was a new thing. That's very smart.

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Yeah, I remember doing typing lessons and we

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bought the program on typing lessons. There you

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go. Yeah. The price that he'd offer the new software

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was only a fraction. And then he, you know, proposed

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a new direction to work on. Like, obviously,

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that software was great, but it wasn't long lasting

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enough. And also two other people enter the internet

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market, which later became his competitor. One

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is Ding Lei from NetEase. The other one is Ma

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Huateng, Pony Ma from Tencent. Okay, so NetEase

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is mainly gaming right now. And then Tencent

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is just the owner of WeChat for context. Well,

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I think obviously these two companies are on

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the list for future discussions too. But these

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are gigantic companies. Both of them are younger

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than... So Lei Jun decided that, okay, how about

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this? I compete in a slightly different way with

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NetEase. So he started a gaming venture within

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his company. Sword Heroes Fate, also called JX

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Online, was the first generation of RPG gaming

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in China. Attempt number three, very popular,

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still exists today. A lot of different versions.

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One of the largest MMORPGs. Really? Yeah. Still

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exist. Okay, so that's not bad, right? And then

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you get a lot of people like playing this who

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are still paying money. Okay, not enough. Keep

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on going. 1999, this 10 years after his first

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attempt, he created this dictionary software

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and I bet you have used it before because I've

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been using it for a long time. What's it called?

00:14:19.679 --> 00:14:24.120
金山死吧, Kingsoft Dictionary. Yeah. Kingsoft Dictionary

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was attempt number four. This... Suffer itself

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also sold a million copies. And towards the end

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of his venture in Kingsoft, Lastbit was also

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something that I have used. I'm not sure whether

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you have used that before. It's zhouyou .com?

00:14:40.970 --> 00:14:45.330
No, I haven't used it. It is the very early attempt

00:14:45.330 --> 00:14:49.909
of e -commerce. Joyo .com was sold to Amazon

00:14:49.909 --> 00:14:56.129
in 2004 with $75 million. Oh, it's the precursor

00:14:56.129 --> 00:14:58.690
of Amazon .cn. Exactly. That's right. It was

00:14:58.690 --> 00:15:01.450
the green, overall green layout. Yes, it was

00:15:01.450 --> 00:15:04.990
a precursor to Amazon. Anyways, five products.

00:15:05.230 --> 00:15:07.990
Five different attempts. He probably have made

00:15:07.990 --> 00:15:10.850
a lot more things on that way. These are only

00:15:10.850 --> 00:15:14.529
some of the more famous, more, you know, noticeable

00:15:14.529 --> 00:15:17.840
ones. Exactly. Like in terms of revenue. Right.

00:15:18.379 --> 00:15:22.840
Kingsoft finally went public in 2007. He was

00:15:22.840 --> 00:15:26.679
the CEO for Kingsoft at the age of 29. Was he

00:15:26.679 --> 00:15:28.879
part of the co -founding team? Did he own shares

00:15:28.879 --> 00:15:31.299
or was he more like a product manager? He owned

00:15:31.299 --> 00:15:34.019
shares. Up until today, I think he's still very

00:15:34.019 --> 00:15:36.419
heavily affiliated with Kingsoft. The gaming

00:15:36.419 --> 00:15:39.159
part and the non -gaming part. But you know,

00:15:39.179 --> 00:15:43.799
Kingsoft isn't at the top. Today. In China today,

00:15:43.940 --> 00:15:46.480
right? But it's still there. Yeah, he's still

00:15:46.480 --> 00:15:49.940
there. And he knows that. And he feels deeply

00:15:49.940 --> 00:15:53.659
bothered by this fact. He's a crazy smart guy.

00:15:53.899 --> 00:15:56.299
You know, graduated computer science within two

00:15:56.299 --> 00:15:58.159
years, right? Like at the top of everything,

00:15:58.299 --> 00:16:01.480
like earned 4 ,000 before he left college. He

00:16:01.480 --> 00:16:03.600
had a very emotional moment when Kingsoft went

00:16:03.600 --> 00:16:07.000
public. And he said, when we worked on Bangu,

00:16:07.080 --> 00:16:11.200
which is the... The Microsoft office. I recruited

00:16:11.200 --> 00:16:13.840
some of the best engineers in China. The saddest

00:16:13.840 --> 00:16:16.340
thing is that we worked all night and all day

00:16:16.340 --> 00:16:19.259
on this thing for three and five years. And we

00:16:19.259 --> 00:16:23.480
created this software that is so disliked by

00:16:23.480 --> 00:16:27.500
the market. And I feel so sad and defeated. We

00:16:27.500 --> 00:16:30.320
could have done something differently and achieved

00:16:30.320 --> 00:16:32.539
so much more. And I asked myself, how did we

00:16:32.539 --> 00:16:36.080
come to this? And he said everyone should go

00:16:36.080 --> 00:16:38.779
to be a sales or promoter sometime in his life

00:16:38.779 --> 00:16:42.039
to make minimum amount of money, but you will

00:16:42.039 --> 00:16:45.559
learn so much. Right. And then the reason that

00:16:45.559 --> 00:16:48.879
he said it is because up until 2007, the moment

00:16:48.879 --> 00:16:52.039
that King Software was brought to public, the

00:16:52.039 --> 00:16:54.720
most revenue generating bit and the profit making

00:16:54.720 --> 00:16:57.980
bit for the company is the game. It's not the

00:16:57.980 --> 00:17:01.820
software. Right. And he felt... quite sad as

00:17:01.820 --> 00:17:04.680
a but he also produced the game right he does

00:17:04.680 --> 00:17:08.400
but maybe it's not true to his heart he wants

00:17:08.400 --> 00:17:11.420
to be an engineer he wants to be a product manager

00:17:11.420 --> 00:17:13.680
but he doesn't want to be working on a game i'm

00:17:13.680 --> 00:17:16.859
making a lot of profit on this thing that i don't

00:17:16.859 --> 00:17:19.480
particularly like but i'm not making a lot of

00:17:19.480 --> 00:17:22.880
profit on this thing that i really believe right

00:17:22.880 --> 00:17:27.599
right believe is the keyword to Leijun. And if

00:17:27.599 --> 00:17:30.880
you remember what else happened in 2007, first,

00:17:31.059 --> 00:17:35.859
Apple launched iPhone. Second thing, Microsoft

00:17:35.859 --> 00:17:38.279
also launches first smartphone back in the days.

00:17:38.339 --> 00:17:41.500
I don't even know. It's too early. Like I didn't

00:17:41.500 --> 00:17:45.720
have any phone. It's called Crossbow. Wrapping

00:17:45.720 --> 00:17:51.940
up, Kingsoft was a very courageous attempt for

00:17:51.940 --> 00:17:56.380
young Leijun. Imagine your 20s to your early

00:17:56.380 --> 00:18:00.279
30s. You did so many things like that. Like just

00:18:00.279 --> 00:18:03.740
about our age, he's already a CEO. And then on

00:18:03.740 --> 00:18:07.640
to the next chapter. Even though he brought Kingsoft

00:18:07.640 --> 00:18:12.539
to public, to IPO, he was not satisfied. It wasn't

00:18:12.539 --> 00:18:15.339
his product. It's not his thing. Yeah. So he

00:18:15.339 --> 00:18:19.220
decided, I must do something else. Yeah. And

00:18:19.220 --> 00:18:24.900
here comes the second. large company that he

00:18:24.900 --> 00:18:28.200
initiated. And this one, we all know what it

00:18:28.200 --> 00:18:34.000
is. Xiaomi. Exactly. I had a question. I was

00:18:34.000 --> 00:18:36.019
like, do we have anything in between Kingsoft

00:18:36.019 --> 00:18:39.779
and Xiaomi? First of all, Xiaomi. So Linda, what

00:18:39.779 --> 00:18:42.700
does Xiaomi mean in Chinese? Little rice. Little

00:18:42.700 --> 00:18:45.279
rice. Or just rice. Or couscous, right? Little

00:18:45.279 --> 00:18:48.740
rice. Wait, it's actually couscous. Oh my god.

00:18:48.799 --> 00:18:51.299
But it also means little rice. It could be little

00:18:51.299 --> 00:18:53.599
rice, it could be couscous. How cute is that,

00:18:53.720 --> 00:18:56.920
right? Oh, because rice is da mi. Okay, sorry.

00:18:58.579 --> 00:19:01.940
No one can really pronounce a word that starts

00:19:01.940 --> 00:19:05.039
with X, right? Like, if you were to be looking

00:19:05.039 --> 00:19:07.220
up a dictionary, the only word that you can...

00:19:07.660 --> 00:19:09.480
that you will look at that start with an X, it's

00:19:09.480 --> 00:19:14.799
xylophone. Xiaomi? It's very hard for the Western

00:19:14.799 --> 00:19:20.059
market to pronounce that. So he had a partner

00:19:20.059 --> 00:19:25.480
who was the UI and UX designer for Xiaomi's cell

00:19:25.480 --> 00:19:27.480
phone later on. And his name is called Li Wanqiang,

00:19:27.539 --> 00:19:30.579
who is also a veteran from Kingsoft that Legion

00:19:30.579 --> 00:19:35.940
trusts very deeply. Li Wanqiang's dad. made a

00:19:35.940 --> 00:19:40.019
couscous porridge and sent it to the office on

00:19:40.019 --> 00:19:43.019
the day this company was registered and starting

00:19:43.019 --> 00:19:46.900
to operate. This is such a wholesome story. And

00:19:46.900 --> 00:19:49.960
then there is a photo documenting a group of

00:19:49.960 --> 00:19:53.619
them, the early, the beginners who were in nowadays

00:19:53.619 --> 00:19:58.720
Yinggu building in Zhongguancun and it was room

00:19:58.720 --> 00:20:03.920
807. It was all of them in the same place. They

00:20:03.920 --> 00:20:08.880
were standing around what we call a rice cooker.

00:20:09.339 --> 00:20:13.319
And in that rice cooker is the couscous. It's

00:20:13.319 --> 00:20:15.319
the birth of Xiaomi. It's the birth of Xiaomi.

00:20:15.579 --> 00:20:18.759
Literally, Xiaomi was there. It was present.

00:20:18.920 --> 00:20:21.839
Couscous was there. Imagine if the dad cooked

00:20:21.839 --> 00:20:23.799
something else that day. Like, Xiaomi would have

00:20:23.799 --> 00:20:28.220
been... Would have been like, I don't know, durian

00:20:28.220 --> 00:20:31.440
or like whatever. Well, thankfully, it wasn't

00:20:31.440 --> 00:20:33.859
that crazy. Thank you, dad. Yeah, thank you,

00:20:33.859 --> 00:20:35.420
Li Wenqiang's dad for giving us such a great

00:20:35.420 --> 00:20:42.720
story. So then, we'll shorten it. But we all

00:20:42.720 --> 00:20:45.019
know about Xiaomi's story that the most famous

00:20:45.019 --> 00:20:47.799
product that they've ever created is the product

00:20:47.799 --> 00:20:53.700
that they've launched in 2011, which is Xiaomi's

00:20:53.700 --> 00:20:57.619
first phone. And that phone, why was it so popular?

00:20:57.960 --> 00:21:02.180
It was cheap. It was cheap, but comparing to

00:21:02.180 --> 00:21:06.819
who it is cheap, right? 2010 was when iPhone

00:21:06.819 --> 00:21:10.359
4S, also my first cell phone, smartphone, was

00:21:10.359 --> 00:21:18.680
launched. iPhone 4S was prized at $4 ,988 RMB.

00:21:18.940 --> 00:21:23.400
Like $800? Yeah, somewhere around that. And do

00:21:23.400 --> 00:21:26.440
you know what is the annual GDP per person in

00:21:26.440 --> 00:21:31.519
China in 2011? Okay, I'll just tell you. It's

00:21:31.519 --> 00:21:39.220
about 5 ,700 US dollars and translate into 35K

00:21:39.220 --> 00:21:41.099
RMB around that. So if you were to be buying

00:21:41.099 --> 00:21:45.559
a phone, it is one seventh of your annual income.

00:21:45.839 --> 00:21:48.339
But annual GDP is way higher than annual income.

00:21:48.839 --> 00:21:50.460
For a typical country. Right, right, right. Yeah,

00:21:50.519 --> 00:21:52.599
for sure. So I think it would have probably taken

00:21:52.599 --> 00:21:54.779
you a few months to get your iPhone, like salary

00:21:54.779 --> 00:21:56.319
to get your iPhone back then. Exactly, that's

00:21:56.319 --> 00:22:00.039
right, that's right. What Xiaomi did was by putting

00:22:00.039 --> 00:22:03.160
everything together and knowing that the wave

00:22:03.160 --> 00:22:07.160
is here, like every single human being will be

00:22:07.160 --> 00:22:11.299
using a small machine. And as a believer of that,

00:22:11.500 --> 00:22:16.000
and also given the supply chain advantages, Leijun

00:22:16.000 --> 00:22:19.500
built... a phone that was in direct competition

00:22:19.500 --> 00:22:25.160
with iPhone. That phone was less than $2 ,000

00:22:25.160 --> 00:22:29.420
quiet. It was $1 ,999. So less than half the

00:22:29.420 --> 00:22:33.319
price of an Apple. Yes. A couple, $200, $300.

00:22:33.720 --> 00:22:37.119
But with, I would say, 80 % of the functionalities.

00:22:37.839 --> 00:22:41.670
Right. Yeah. Yeah. Actually, he's the first one

00:22:41.670 --> 00:22:44.950
to tap into cheap Chinese manufacturing and scale

00:22:44.950 --> 00:22:49.250
it to the world. And this is the same challenge

00:22:49.250 --> 00:22:52.789
that he had encountered while selling the software.

00:22:53.069 --> 00:22:56.210
If you don't bring your cost down, there will

00:22:56.210 --> 00:22:59.069
be a million parroted versions just floating

00:22:59.069 --> 00:23:01.769
around in the market. So you must develop something

00:23:01.769 --> 00:23:05.779
that is... The mass will use it. The price will

00:23:05.779 --> 00:23:08.420
be low. This is also at a period where China

00:23:08.420 --> 00:23:10.440
doesn't know how to do branding yet. Because

00:23:10.440 --> 00:23:12.940
I think China only learned to do branding after

00:23:12.940 --> 00:23:17.180
Legion. Well, like in the past, let's say five

00:23:17.180 --> 00:23:20.319
-ish years, like really after 2017, 18, when

00:23:20.319 --> 00:23:23.019
you start seeing Chinese brands in the international

00:23:23.019 --> 00:23:25.319
market. So back then it was a production house.

00:23:25.720 --> 00:23:30.019
And production houses cannot offer premium price

00:23:30.019 --> 00:23:32.359
products because they don't have the branding

00:23:32.359 --> 00:23:34.519
power. So they need to keep the cost down. That's

00:23:34.519 --> 00:23:37.779
right. That's right. And so what Xiaomi has done

00:23:37.779 --> 00:23:40.750
is legitimized. the cell phone making supply

00:23:40.750 --> 00:23:43.150
chain. Some of the cell phone makers really did

00:23:43.150 --> 00:23:45.869
wonders for the Chinese cell phone manufacturing

00:23:45.869 --> 00:23:48.970
business. Apple obviously is one, and Xiaomi

00:23:48.970 --> 00:23:51.930
is another one. Anyways, the conclusion is, Lei

00:23:51.930 --> 00:23:56.069
Jun's product making philosophy is, he doesn't

00:23:56.069 --> 00:23:59.309
like selling a straw at a gold bricks price.

00:23:59.789 --> 00:24:02.210
If he thinks that this is something that everyone

00:24:02.210 --> 00:24:05.390
will be using in the future, then, scale economy,

00:24:05.690 --> 00:24:09.680
I must find a way. so that more people can make

00:24:09.680 --> 00:24:13.500
use of it. Yeah. Which correspond to the product

00:24:13.500 --> 00:24:15.859
that he made later on, which is a Siri called

00:24:15.859 --> 00:24:18.400
Redmi, which is an even cheaper phone that he

00:24:18.400 --> 00:24:21.599
had made. He just tapped into a market that back

00:24:21.599 --> 00:24:24.099
then the market leaders like Apple and Samsung

00:24:24.099 --> 00:24:28.440
are not thinking about. And there wasn't another

00:24:28.440 --> 00:24:33.200
brand or supplier that has the skill to do this.

00:24:33.259 --> 00:24:35.619
Right. So it was a perfect niche in hindsight.

00:24:36.359 --> 00:24:38.500
That isn't even a niche. It's like a mass market.

00:24:38.680 --> 00:24:42.119
Right. He was ready. He picked it out. And in

00:24:42.119 --> 00:24:45.920
his reflection after Kingsoft, he asked himself,

00:24:46.099 --> 00:24:49.299
what did I miss such that I did not bring Kingsoft

00:24:49.299 --> 00:24:51.640
the way that I wanted to? And then he realized

00:24:51.640 --> 00:24:55.220
that, oh, I picked the wrong market. Yeah. Learning

00:24:55.220 --> 00:24:57.680
from your past. Exactly. I must pick something

00:24:57.680 --> 00:25:01.799
that will scale, that will have a demand. Therefore,

00:25:01.980 --> 00:25:05.420
I jump onto it. And I ride the waves, which is

00:25:05.420 --> 00:25:07.859
the correct way of doing business. And of course,

00:25:07.880 --> 00:25:11.339
he started the business in eight years. This

00:25:11.339 --> 00:25:13.779
time in eight years, 2018, Xiaomi went public.

00:25:13.940 --> 00:25:16.279
And then the valuation was 200x the original

00:25:16.279 --> 00:25:19.460
value. So it was impressive. Yeah. And you mentioned

00:25:19.460 --> 00:25:21.720
that there were four different lines within Xiaomi,

00:25:21.819 --> 00:25:24.980
right? Yes. Business lines. Yes. What are those?

00:25:25.099 --> 00:25:29.230
So we have obviously the smartphone. And I'm

00:25:29.230 --> 00:25:31.309
looking at, so we only have financial reporting

00:25:31.309 --> 00:25:35.569
after 2018, after it went public. So smartphone

00:25:35.569 --> 00:25:39.490
was the biggest segment back in 2018. Now it's

00:25:39.490 --> 00:25:42.690
about still half of the annual revenue, but one

00:25:42.690 --> 00:25:46.089
third of the gross income. And then it started

00:25:46.089 --> 00:25:51.410
their IoT and lifestyle products. So that is

00:25:51.410 --> 00:25:57.059
your Xiaomi. What else do we use? My Wi -Fi is

00:25:57.059 --> 00:25:59.160
Xiaomi hardware. My humidifier is Xiaomi. My

00:25:59.160 --> 00:26:07.319
alarm clock is Xiaomi. Small electronics. Yeah,

00:26:07.319 --> 00:26:13.140
appliances. And that is now also a significant

00:26:13.140 --> 00:26:15.839
part of their revenue. I think 30 % and then

00:26:15.839 --> 00:26:20.259
about 30 % of their gross profit. And then they

00:26:20.259 --> 00:26:22.099
have something called internet services, which

00:26:22.099 --> 00:26:24.589
is less well -known. Most of it is advertising

00:26:24.589 --> 00:26:26.990
money coming from Xiaomi cell phone or Xiaomi

00:26:26.990 --> 00:26:30.410
TV. Even though it's only 11 % of their total

00:26:30.410 --> 00:26:35.410
revenue share, it makes up for more in terms

00:26:35.410 --> 00:26:38.049
of gross profit than the smartphone business.

00:26:38.309 --> 00:26:39.730
That would make sense. Because the margin of

00:26:39.730 --> 00:26:44.130
it is so low. It's kind of... And Lei Jun was...

00:26:44.539 --> 00:26:47.960
so proud of that margin call right remember in

00:26:47.960 --> 00:26:50.579
one of the earlier releases for xiaomi phone

00:26:50.579 --> 00:26:54.319
he said that he will never exceed five percent

00:26:54.319 --> 00:26:58.460
of profit margin i didn't know that but now it's

00:26:58.460 --> 00:27:00.920
yeah on on the cell phone business yeah and he

00:27:00.920 --> 00:27:03.819
made a promise he made a public promise to all

00:27:03.819 --> 00:27:06.599
of those who are buying xiaomi's phones i think

00:27:06.599 --> 00:27:09.299
that could be one of the reason why the cell

00:27:09.299 --> 00:27:12.980
phone margin has to be so low yeah But this is

00:27:12.980 --> 00:27:15.779
great. It brought him skill, but also a trap

00:27:15.779 --> 00:27:18.359
that he always have to be constantly looking

00:27:18.359 --> 00:27:20.700
for something that will bring more profit to

00:27:20.700 --> 00:27:24.799
the company. Yeah. I didn't remember he said

00:27:24.799 --> 00:27:28.579
5%, but that's interesting because currently

00:27:28.579 --> 00:27:33.109
their gross... for cell phone is higher than

00:27:33.109 --> 00:27:37.369
5%. But I think it's because they're doing this

00:27:37.369 --> 00:27:39.890
mass market and there's a lot of economies of

00:27:39.890 --> 00:27:43.170
scale. But guess how much margin they have for

00:27:43.170 --> 00:27:47.630
internet services? I would say 40, 50%. 77. 77?

00:27:47.990 --> 00:27:52.230
Yeah. What is in that service? It's mostly advertising,

00:27:52.470 --> 00:27:54.569
right? So if you buy a Xiaomi phone, for example,

00:27:54.569 --> 00:27:58.460
and then you'll see some ads. And from the advertisers,

00:27:58.460 --> 00:28:00.480
they collect the money. But it's almost like,

00:28:00.500 --> 00:28:03.759
yes, you have the hardware, but then it's an

00:28:03.759 --> 00:28:05.319
accounting thing where you don't really count

00:28:05.319 --> 00:28:09.019
the costs. Gotcha. So there's literally no cost.

00:28:09.099 --> 00:28:11.400
Software services generally have a higher margin.

00:28:11.420 --> 00:28:13.740
But this one, because they own the whole hardware

00:28:13.740 --> 00:28:17.880
and ecosystem, it probably even lowers the cost

00:28:17.880 --> 00:28:21.059
even more. So that's the three product lines,

00:28:21.140 --> 00:28:23.259
smartphone, IoT, and lifestyle products, and

00:28:23.259 --> 00:28:26.099
internet services. And then here's our last one,

00:28:26.140 --> 00:28:29.240
which is the new business, Smart EV. This one,

00:28:29.259 --> 00:28:31.700
they started reporting revenue only starting

00:28:31.700 --> 00:28:33.920
from last year because that's when their first

00:28:33.920 --> 00:28:39.440
car launched. And even within nine months of

00:28:39.440 --> 00:28:46.180
the first sale of the SU7, in 2024, they generated

00:28:46.180 --> 00:28:50.019
9 % of the total revenue. So 32 billion Chinese

00:28:50.019 --> 00:28:57.750
yuan. business line in nine months. And their

00:28:57.750 --> 00:29:01.789
gross margin is, I think, at 18 % the entire

00:29:01.789 --> 00:29:03.849
year. But it's much higher if you look at more

00:29:03.849 --> 00:29:07.009
recent numbers. That's their gross margin. They're

00:29:07.009 --> 00:29:08.930
still making a loss because they're still investing

00:29:08.930 --> 00:29:12.849
in R &D and whatnot. But it's amazing. It's amazing.

00:29:13.089 --> 00:29:16.950
It's so fast. That brings us to a very interesting

00:29:16.950 --> 00:29:20.069
observation that I've made about how Lei Jun

00:29:20.069 --> 00:29:22.750
wants to run Xiaomi. First of all, he was born

00:29:22.750 --> 00:29:25.559
in a really good time. where the internet was

00:29:25.559 --> 00:29:28.359
booming. Internet related hardware is booming.

00:29:28.940 --> 00:29:32.160
And then he absolutely recognized that and he

00:29:32.160 --> 00:29:36.240
is completely aware of it. And he took advantage

00:29:36.240 --> 00:29:39.420
of that, right? Like the market is there. And

00:29:39.420 --> 00:29:43.359
then he himself, as an engineer, firmly believes

00:29:43.359 --> 00:29:48.000
in that he wants to build something great. And

00:29:48.000 --> 00:29:52.259
he wants to really understand the client's need.

00:29:52.829 --> 00:29:56.029
And that was written down in one of the books

00:29:56.029 --> 00:29:59.109
that he published in 2022. And he said, oh, befriend

00:29:59.109 --> 00:30:01.450
with your users. He's all about customer feedback.

00:30:01.549 --> 00:30:04.150
It's even to the point where his product managers

00:30:04.150 --> 00:30:07.670
are like, please stop. We're not making this

00:30:07.670 --> 00:30:14.509
change for 15 people. And he loves offering the

00:30:14.509 --> 00:30:16.930
products or services at a very competitive price.

00:30:17.369 --> 00:30:22.410
When he tells a story, Lei Junhe has above average

00:30:22.410 --> 00:30:25.150
engineering level of storytelling techniques.

00:30:25.589 --> 00:30:28.269
He's really good at it. And he's also very good

00:30:28.269 --> 00:30:33.170
at making something complex quite simple. Simple

00:30:33.170 --> 00:30:35.950
and straightforward because not all of his audience,

00:30:36.049 --> 00:30:38.130
most of his audience doesn't have any engineering

00:30:38.130 --> 00:30:42.180
background. So he managed to make... Like making

00:30:42.180 --> 00:30:45.039
a car sound simple but sophisticated. Right,

00:30:45.140 --> 00:30:48.019
yeah, for sure. That's something that he has.

00:30:48.220 --> 00:30:51.440
Talent. Yeah, definitely a unique talent. Before

00:30:51.440 --> 00:30:54.240
we dive into the EV bit, I want to start with

00:30:54.240 --> 00:30:57.700
a few questions. All right. What was your impression

00:30:57.700 --> 00:31:02.579
of all of Xiaomi's product before the EV? I would

00:31:02.579 --> 00:31:07.420
say it's cheap, cheaper than average market.

00:31:09.289 --> 00:31:13.349
I think they built a reputation around the fact

00:31:13.349 --> 00:31:18.109
that they're selling at cost plus. And so for

00:31:18.109 --> 00:31:21.569
the average consumer, you trust that they're

00:31:21.569 --> 00:31:25.329
not making a huge profit when you're purchasing

00:31:25.329 --> 00:31:28.690
their product. And their designs are usually

00:31:28.690 --> 00:31:32.529
wide and simple, straightforward. So for someone

00:31:32.529 --> 00:31:35.970
who's minimalist or for someone who... cares

00:31:35.970 --> 00:31:40.349
more about the the cost and maybe just not so

00:31:40.349 --> 00:31:44.210
much about the fancy schmancy like branding it

00:31:44.210 --> 00:31:46.890
i'm i'm definitely their target audience yeah

00:31:46.890 --> 00:31:48.549
like i bought a lot of xiaomi products around

00:31:48.549 --> 00:31:51.750
the house yeah um knowing that they're good quality

00:31:51.750 --> 00:31:56.410
good customer service and they won't overprice

00:31:56.410 --> 00:32:00.549
right yeah i have very similar impressions on

00:32:00.549 --> 00:32:05.279
xiaomi products minimalist not the loudest pieces

00:32:05.279 --> 00:32:07.960
of gadgets that you will get, which is a plus.

00:32:08.079 --> 00:32:12.539
If you like these kind of stuff, your brand loyalty

00:32:12.539 --> 00:32:15.779
is there. Kind of like Muji, but electric appliances.

00:32:15.819 --> 00:32:19.819
Exactly. While you mentioned that, I think it

00:32:19.819 --> 00:32:23.039
also means that Xiaomi is associated with cost

00:32:23.039 --> 00:32:28.240
efficiency. It's cheaper, but typically not the

00:32:28.240 --> 00:32:32.240
most durable products that you will buy. What

00:32:32.240 --> 00:32:34.119
you're thinking is, oh, if I were to be moving,

00:32:34.319 --> 00:32:35.980
if I were to go somewhere else, I'm just going

00:32:35.980 --> 00:32:39.319
to toss it. Because it's so cheap. Yeah. But

00:32:39.319 --> 00:32:41.920
it's not the worst. Because within the whole

00:32:41.920 --> 00:32:44.299
spectrum of what you can get in terms of hardware

00:32:44.299 --> 00:32:45.960
in China, electronic hardware in China. You can

00:32:45.960 --> 00:32:48.019
get really bad. There's stuff that, you know.

00:32:48.099 --> 00:32:52.019
So Xiaomi has this minimum standard where it's

00:32:52.019 --> 00:32:54.559
not going to break within the first two, three

00:32:54.559 --> 00:32:57.710
years at least. But it's not. Obviously, it's

00:32:57.710 --> 00:32:59.710
not like the highest quality. It's like if I'm

00:32:59.710 --> 00:33:02.490
buying a vacuum cleaner, it's not a Dyson. Exactly.

00:33:02.650 --> 00:33:05.529
But I'll buy it. Yeah, yeah, yeah. Value for

00:33:05.529 --> 00:33:09.089
money. Value for money. Here's a question. In

00:33:09.089 --> 00:33:13.210
year 2021, when Lei Jun, in March, standing on

00:33:13.210 --> 00:33:16.849
a stage, declared that, hey guys, after very

00:33:16.849 --> 00:33:18.690
thoughtful consideration, you know what? I'm

00:33:18.690 --> 00:33:22.009
going to start building an EV. Yeah. I learned

00:33:22.009 --> 00:33:25.190
that news much later on. And I'm like in my head.

00:33:25.269 --> 00:33:27.269
Do you know what image I had in my head? I was

00:33:27.269 --> 00:33:30.289
like, will it be like a minimalism white car?

00:33:30.369 --> 00:33:35.019
A matte white TV. Just, just, just. Simple to

00:33:35.019 --> 00:33:38.480
the core. I didn't know what to expect. But in

00:33:38.480 --> 00:33:40.960
my mind, I was associating Leijun's statement

00:33:40.960 --> 00:33:42.720
with, oh, it's going to be a very simple car,

00:33:42.799 --> 00:33:45.839
cost -effective car. So what, right? You're not

00:33:45.839 --> 00:33:48.019
the only one to ask that question. I heard an

00:33:48.019 --> 00:33:51.980
interview for the Xiaomi designer recently. Oh,

00:33:52.000 --> 00:33:54.259
he believed that. No, no. The interviewer asked

00:33:54.259 --> 00:33:56.339
the designer, like, why wasn't the car white?

00:33:56.500 --> 00:33:59.980
And the designer was like, are you crazy? Yeah.

00:34:02.490 --> 00:34:07.609
Let's maybe break down the steps of how did Xiaomi

00:34:07.609 --> 00:34:10.530
even make that decision? Or should I say Lei

00:34:10.530 --> 00:34:13.230
Jun made the decision to make that EV? Because

00:34:13.230 --> 00:34:15.590
we both think that this is the most interesting

00:34:15.590 --> 00:34:18.230
bit of the whole story. You're making cell phones.

00:34:18.309 --> 00:34:20.670
You're doing fine. You're selling a lot of phones.

00:34:20.829 --> 00:34:23.230
You have different lines of phones for different

00:34:23.230 --> 00:34:25.469
groups of people, for men, for women, for gamers,

00:34:25.590 --> 00:34:28.699
for students. And you have tablets, you have

00:34:28.699 --> 00:34:30.500
like TV screens, you have a lot of things going

00:34:30.500 --> 00:34:33.320
on. Why of all a sudden, when your financial

00:34:33.320 --> 00:34:38.019
report visibly looked okay, you decided that,

00:34:38.059 --> 00:34:39.920
hey, I'm going to be starting making views. Yeah.

00:34:40.800 --> 00:34:46.219
So I did do a lot of research on this. So the

00:34:46.219 --> 00:34:50.099
public information that's available comes from

00:34:50.099 --> 00:34:53.519
this 2014 speech. So Lei Jun does an annual speech,

00:34:53.780 --> 00:34:57.920
kind of like a tech talk. And this the 2020,

00:34:58.079 --> 00:35:02.840
sorry, not 2014, 2024 version was titled Courage.

00:35:03.059 --> 00:35:07.139
And in his three minutes of his speech, he went

00:35:07.139 --> 00:35:10.360
over exactly kind of the thought process of entering

00:35:10.360 --> 00:35:14.340
the EV market. I'll give you the conclusion first,

00:35:14.400 --> 00:35:16.860
which is somewhat misleading. But then here's

00:35:16.860 --> 00:35:19.360
kind of the entire storyline. So the timeline

00:35:19.360 --> 00:35:23.280
is he flashed a date, which is January 15, 2021

00:35:23.280 --> 00:35:26.809
on the screen. And he said, I got a phone call

00:35:26.809 --> 00:35:29.690
at 7 a .m. saying that you're being blacklisted

00:35:29.690 --> 00:35:33.869
in the U .S. So that signaled that there's an

00:35:33.869 --> 00:35:37.550
issue with potential future sales of Xiaomi phones

00:35:37.550 --> 00:35:41.130
or Xiaomi products. And there was an emergency

00:35:41.130 --> 00:35:43.690
board meeting that was called that day where

00:35:43.690 --> 00:35:48.510
they made a decision to run a 70 or so day investment

00:35:48.510 --> 00:35:53.500
on EV's feasibility. And then the announcement

00:35:53.500 --> 00:35:57.139
was made on March 30th. Let me break down the

00:35:57.139 --> 00:36:02.019
entirety of this story. January is the final

00:36:02.019 --> 00:36:06.000
days of the Trump administration. He issued an

00:36:06.000 --> 00:36:09.900
executive order in late 2020 where it says the

00:36:09.900 --> 00:36:13.619
Department of Defense actually can put companies

00:36:13.619 --> 00:36:16.139
on a blacklist if they think that there's ties

00:36:16.139 --> 00:36:20.159
with the Chinese military. And this is called

00:36:20.159 --> 00:36:22.900
the Communist Chinese Military Companies List,

00:36:22.980 --> 00:36:27.800
CCMC. And this is a key detail because this was

00:36:27.800 --> 00:36:31.860
not the same list that Huawei was on in 2019

00:36:31.860 --> 00:36:35.219
that banned them effectively from getting US

00:36:35.219 --> 00:36:38.420
chips or getting Google mobile services, which

00:36:38.420 --> 00:36:40.420
include the Play Store. So that kind of killed

00:36:40.420 --> 00:36:43.460
Huawei in the US. That's called the Department

00:36:43.460 --> 00:36:46.969
of Commerce's entity list. The list that Xiaomi

00:36:46.969 --> 00:36:49.630
got put on is called the Communist Chinese Military

00:36:49.630 --> 00:36:51.949
Company list, which is from the Department of

00:36:51.949 --> 00:36:56.989
Defense. This blacklist actually prohibits U

00:36:56.989 --> 00:37:00.389
.S. investors such as Vanguard and BlackRock

00:37:00.389 --> 00:37:05.769
from holding shares of Xiaomi. So after being

00:37:05.769 --> 00:37:09.889
blacklisted, Xiaomi did two things. They, first

00:37:09.889 --> 00:37:12.389
of all, immediately started to investigate the

00:37:12.389 --> 00:37:15.739
feasibility of entering the EV market. And this

00:37:15.739 --> 00:37:18.940
was widely publicized. He said there's 200 interviews,

00:37:19.219 --> 00:37:21.920
75 -day investigation, he didn't sleep and whatnot.

00:37:22.460 --> 00:37:25.480
At the same time, they also filed a lawsuit against

00:37:25.480 --> 00:37:28.699
the U .S. government calling the DOD designation

00:37:28.699 --> 00:37:32.679
unlawful. And so less than two months into the

00:37:32.679 --> 00:37:35.739
lawsuit, which is on March 12th, still before

00:37:35.739 --> 00:37:39.159
the EV announcement, the U .S. court granted

00:37:39.159 --> 00:37:42.400
a preliminary injunction. What this is, is a

00:37:42.400 --> 00:37:45.389
temporary order that essentially said, hold on,

00:37:45.409 --> 00:37:48.550
we're putting a pause on your ban while we review

00:37:48.550 --> 00:37:51.610
your evidence. And this is actually a major signal

00:37:51.610 --> 00:37:54.050
that the court was siding with Xiaomi rather

00:37:54.050 --> 00:37:57.469
than the DoD. And it's indicating that there

00:37:57.469 --> 00:38:00.469
wasn't enough evidence to link Xiaomi with Chinese

00:38:00.469 --> 00:38:03.949
military. It's a consumer product. It's not like

00:38:03.949 --> 00:38:06.070
Huawei where, you know, 5G towers and whatnot,

00:38:06.269 --> 00:38:11.610
right? So after three weeks of this ruling, is

00:38:11.610 --> 00:38:14.070
when xiaomi officially announced its entry into

00:38:14.070 --> 00:38:17.849
the ev business via the hong kong stock exchange

00:38:17.849 --> 00:38:23.590
voluntary declaration okay then two months later

00:38:23.590 --> 00:38:28.190
the dod dropped all the claims they dropped them

00:38:28.190 --> 00:38:30.650
from the blacklist but me that's in may but back

00:38:30.650 --> 00:38:32.289
in march they already know this is happening

00:38:32.289 --> 00:38:34.570
they can't win the case because the preliminary

00:38:34.570 --> 00:38:40.460
injunction was there so Going back to the 2024

00:38:40.460 --> 00:38:43.900
speech, which is three months after the initial

00:38:43.900 --> 00:38:47.119
car SU7 was launched, Lei Jun talked about the

00:38:47.119 --> 00:38:51.820
serious events, right? And he didn't exactly

00:38:51.820 --> 00:38:55.880
phrase the launch of the EV like I just... The

00:38:55.880 --> 00:38:59.119
timeline that I just did? So he mentioned how

00:38:59.119 --> 00:39:02.579
he started his speech with the huge sign of January

00:39:02.579 --> 00:39:04.659
15, what happened on the PowerPoint presentation.

00:39:05.420 --> 00:39:08.659
He recounted the emergency board meeting and

00:39:08.659 --> 00:39:11.199
described how urgent it is. Specifically, he

00:39:11.199 --> 00:39:14.710
mentioned that one board member asked. If you

00:39:14.710 --> 00:39:17.630
cannot make smartphones, what will you do about

00:39:17.630 --> 00:39:20.590
the 30 ,000 to 40 ,000 employees of Xiaomi? Oh,

00:39:20.590 --> 00:39:23.809
my God. Are they not going to have a job, right?

00:39:23.989 --> 00:39:26.809
And he also mentioned another board suggested,

00:39:27.150 --> 00:39:30.110
perhaps you should think about making cars as

00:39:30.110 --> 00:39:34.670
if they never thought about this before. And

00:39:34.670 --> 00:39:37.969
so he concluded by the end of this meeting, all

00:39:37.969 --> 00:39:40.929
the executives are in support of my EV venture

00:39:40.929 --> 00:39:44.489
and that... I actually was the one that thought

00:39:44.489 --> 00:39:46.949
that the risk was so big that I need to get into

00:39:46.949 --> 00:39:51.190
this 70 -day investigation process. And after

00:39:51.190 --> 00:39:53.449
the 70 days, they concluded, yes, it's a go.

00:39:53.570 --> 00:39:56.050
But we know that by the end of the 70 days, they

00:39:56.050 --> 00:39:59.409
knew at that point the blacklist wasn't going

00:39:59.409 --> 00:40:03.090
to happen. I think. Okay. I mean, I can conclude

00:40:03.090 --> 00:40:05.909
for certain, but this is my side of the story.

00:40:06.429 --> 00:40:10.349
Even in his books, there was a paragraph that

00:40:10.349 --> 00:40:14.550
was emphasizing on how did Xiaomi ended up on

00:40:14.550 --> 00:40:20.309
that CCMC list. He mentioned that in 2019, Lei

00:40:20.309 --> 00:40:25.750
Jun himself was awarded a prize by the MIIT,

00:40:25.849 --> 00:40:27.809
which is the Ministry of Industry and Information

00:40:27.809 --> 00:40:32.010
Technology of the PRC. That was perhaps one of

00:40:32.010 --> 00:40:36.960
the reasons that how Xiaomi was being... briefly

00:40:36.960 --> 00:40:40.000
put on the list of ccmc xiaomi was never actually

00:40:40.000 --> 00:40:43.420
at the risk of again they're not on the entity

00:40:43.420 --> 00:40:47.619
list so they never was at risk of losing smartphone

00:40:47.619 --> 00:40:51.159
components right access like they they can still

00:40:51.159 --> 00:40:53.539
get qualcomm chips right they can still work

00:40:53.539 --> 00:40:55.679
with google to get the android operating system

00:40:55.679 --> 00:40:59.679
and play store even if they maintained blacklist

00:40:59.679 --> 00:41:02.769
status They can still do that. The real threat

00:41:02.769 --> 00:41:06.849
is that there is a potential risk of stock price

00:41:06.849 --> 00:41:09.889
collapsing because their stock is owned at that

00:41:09.889 --> 00:41:13.090
point by a lot of US institutional investors.

00:41:13.730 --> 00:41:17.230
But ironically, you know, if they had they been

00:41:17.230 --> 00:41:20.369
on the list, right, not taken off. I love this

00:41:20.369 --> 00:41:23.650
statement. Every single episode, Linda will have

00:41:23.650 --> 00:41:28.710
had they. But if they were on the blacklist.

00:41:29.340 --> 00:41:32.539
What would happen is their stock price tumbles.

00:41:32.619 --> 00:41:35.539
It would have made the EV venture much harder,

00:41:35.719 --> 00:41:39.539
not easier, because a fall in their stock price

00:41:39.539 --> 00:41:42.360
would have dramatically increased the cost of

00:41:42.360 --> 00:41:46.340
raising massive capital needed to fund the EV

00:41:46.340 --> 00:41:49.480
investment. But what I do agree is that this

00:41:49.480 --> 00:41:51.619
event did help them accelerate this decision.

00:41:51.820 --> 00:41:54.539
It was becoming more urgent and geopolitical

00:41:54.539 --> 00:41:56.940
risk is real. It's saying that, you know, it

00:41:56.940 --> 00:41:59.699
will impact Xiaomi. It's not that they're completely

00:41:59.699 --> 00:42:03.679
immune just because on the surface, they're not

00:42:03.679 --> 00:42:06.639
a Huawei, right? Or they're not producing chips

00:42:06.639 --> 00:42:10.780
or whatnot. But the fact that, you know, had

00:42:10.780 --> 00:42:14.059
they never thought about this risk, I don't think

00:42:14.059 --> 00:42:18.090
so because Huawei even happened in 2019. Have

00:42:18.090 --> 00:42:20.309
they never thought about the fact that maybe

00:42:20.309 --> 00:42:23.210
Trump or someone else would put them on some

00:42:23.210 --> 00:42:26.030
kind of list to prevent them from selling smartphones?

00:42:26.230 --> 00:42:30.070
You could see it coming. Yeah. So the EV is the

00:42:30.070 --> 00:42:32.030
right decision. It's just the whole storyline

00:42:32.030 --> 00:42:34.650
might be a little bit misleading. Yeah, that's

00:42:34.650 --> 00:42:38.570
right. So what happened after they had made the

00:42:38.570 --> 00:42:40.630
decision and made the release that, hey, I'm

00:42:40.630 --> 00:42:43.530
going to make this phone? And in my mind, I was

00:42:43.530 --> 00:42:48.539
also calculating. Man is 52 now. Yeah. Why would

00:42:48.539 --> 00:42:52.900
you do that? Why would you have a new baby? In

00:42:52.900 --> 00:42:57.440
the video, in the Courage video, he famously

00:42:57.440 --> 00:43:00.099
mentioned that this is the last project that

00:43:00.099 --> 00:43:03.039
I will do. Yes. And he famously said that I will

00:43:03.039 --> 00:43:05.699
bet everything that I have. Yeah. There's so

00:43:05.699 --> 00:43:08.340
much drama in that. So everyone, please go watch

00:43:08.340 --> 00:43:10.860
the Courage TED Talk. It's so good. There's so

00:43:10.860 --> 00:43:14.280
much drama. He also seemed a little stressed.

00:43:14.519 --> 00:43:16.639
He is a little chubby at the time. Maybe it's

00:43:16.639 --> 00:43:18.960
because of the stress. But he seemed a lot better

00:43:18.960 --> 00:43:20.739
right now. Like you can see his... Oh, yeah.

00:43:20.840 --> 00:43:22.559
Every single year he makes a different video

00:43:22.559 --> 00:43:24.760
and then he looks very different. And you can

00:43:24.760 --> 00:43:27.659
see like this is... My mental status. The mental

00:43:27.659 --> 00:43:32.139
status. How the stock price will go. I was thinking

00:43:32.139 --> 00:43:35.059
whether this decision was reasonable enough.

00:43:35.440 --> 00:43:38.159
And here's my thinking process. Xiaomi is the

00:43:38.159 --> 00:43:41.369
number three cell phone maker in the world. There's

00:43:41.369 --> 00:43:45.429
Apple and Samsung. To be a really large cell

00:43:45.429 --> 00:43:47.710
phone maker in the world right now, you're playing

00:43:47.710 --> 00:43:51.230
a game of elimination. It's very Game of Thrones

00:43:51.230 --> 00:43:55.230
-esque. And in China, you have to compete with

00:43:55.230 --> 00:43:59.030
six other phone makers, Xiaomi included. And

00:43:59.030 --> 00:44:01.869
that's Huawei, Oppo, Vivo, Honor, and Transient,

00:44:01.929 --> 00:44:05.039
which is Infinix. You have phone makers that

00:44:05.039 --> 00:44:08.900
covers the upper level, the mid -level, and then

00:44:08.900 --> 00:44:13.360
the low -end type of phones. So inside of China,

00:44:13.460 --> 00:44:17.179
it is very saturated. There are about 10 .4 billion

00:44:17.179 --> 00:44:21.880
phones in the world. 70 % of the population are

00:44:21.880 --> 00:44:26.239
unique phone users, which is about 5 .8 billion.

00:44:26.679 --> 00:44:30.159
And the most developed countries are already

00:44:30.159 --> 00:44:33.650
equipped. with a phone. So the part of the world

00:44:33.650 --> 00:44:38.489
that doesn't have a phone is the developing countries.

00:44:38.750 --> 00:44:42.150
And to sell phones to those countries, you're

00:44:42.150 --> 00:44:45.070
not going to have a very high profit margin,

00:44:45.110 --> 00:44:47.210
like AKA you're selling it to Africa, you're

00:44:47.210 --> 00:44:50.349
selling it to other emerging markets. So for

00:44:50.349 --> 00:44:53.969
example, Transient, Infinix Mobile is selling

00:44:53.969 --> 00:44:56.389
in Africa, and they're selling it at a super

00:44:56.389 --> 00:44:59.369
cheap price. To be able to continue on in the

00:44:59.369 --> 00:45:02.119
mobile phone game, you will have to increasingly

00:45:02.119 --> 00:45:05.440
manage your costs. You can't compete with Samsung

00:45:05.440 --> 00:45:07.719
and Apple in terms of the high end. You have

00:45:07.719 --> 00:45:10.119
to compete in the mid to low market. Here comes

00:45:10.119 --> 00:45:13.239
another question. If you want to become an EV

00:45:13.239 --> 00:45:18.000
seller, you also face quite a lot of competitions.

00:45:18.280 --> 00:45:22.400
However, the market is really large. And we can

00:45:22.400 --> 00:45:25.280
both see in the numbers that we put together.

00:45:25.980 --> 00:45:30.119
BYD is selling at millions. of cars starting,

00:45:30.239 --> 00:45:33.880
I think, in 2023. And it's officially hitting

00:45:33.880 --> 00:45:38.840
the 4 million mark as of 2024. So BYD actually

00:45:38.840 --> 00:45:42.139
ascended really fast. But all the other car manufacturers,

00:45:42.380 --> 00:45:44.639
they're trying to find their value proposition

00:45:44.639 --> 00:45:48.679
and trying to take up a fair share in that whole

00:45:48.679 --> 00:45:52.920
mix. Xiaomi has probably observed that there

00:45:52.920 --> 00:45:56.360
is still a lot of room in that game. Therefore,

00:45:56.539 --> 00:45:59.059
it will be worth it for me to start participating

00:45:59.059 --> 00:46:01.880
in right now. Yeah, I would say actually the

00:46:01.880 --> 00:46:05.539
EV market is similar to the smartphone market

00:46:05.539 --> 00:46:11.280
back in 2013, 14 maybe, is when you still have

00:46:11.280 --> 00:46:15.019
a lot of players and not everyone has a smartphone

00:46:15.019 --> 00:46:18.659
yet, right? So not everyone has an EV. In fact...

00:46:19.079 --> 00:46:22.619
I think only 25 % of the global population, not

00:46:22.619 --> 00:46:28.420
even 25, 25 % of new cars sold are EVs. So that's

00:46:28.420 --> 00:46:32.719
not even near penetration. So any company has

00:46:32.719 --> 00:46:37.719
a goal in EV compared to smartphones. Yeah. And

00:46:37.719 --> 00:46:40.980
so the competitive landscape, I didn't go into

00:46:40.980 --> 00:46:43.320
the details, but you can tell that there are

00:46:43.320 --> 00:46:47.099
at least four groups of... contenders in that

00:46:47.099 --> 00:46:51.340
game the first one is the completely new ev brands

00:46:51.340 --> 00:46:53.960
that are coming from large tech companies and

00:46:53.960 --> 00:46:57.440
for example there's neo there's xpeng there's

00:46:57.440 --> 00:47:00.480
liado and then there's the the manufacturers

00:47:00.480 --> 00:47:02.280
they're not internet they're not even internet

00:47:02.280 --> 00:47:04.739
brands they're just like new tech brands yeah

00:47:04.739 --> 00:47:06.980
completely new brands yeah and there are the

00:47:06.980 --> 00:47:10.530
battery manufacturers The BYD, right? Yeah. And

00:47:10.530 --> 00:47:12.889
then there are the phone companies who are trying

00:47:12.889 --> 00:47:15.409
to make bigger phones with real. That's Huawei

00:47:15.409 --> 00:47:17.489
and Xiaomi, right? And Apple tried and failed.

00:47:17.769 --> 00:47:21.230
Yeah. Yeah, and then they failed. And finally,

00:47:21.309 --> 00:47:23.710
there is the traditional car companies who are

00:47:23.710 --> 00:47:25.570
trying to make sense of what's going on with

00:47:25.570 --> 00:47:27.170
all the hype. Can I just still join the game?

00:47:27.269 --> 00:47:32.250
Can I just replace my ICU with batteries? That's

00:47:32.250 --> 00:47:36.269
right. The game has begun and then you have those

00:47:36.269 --> 00:47:39.190
four groups of people in this. Here comes Xiaomi.

00:47:39.349 --> 00:47:43.469
Lei Jun, he has always mentioned this similar

00:47:43.469 --> 00:47:45.829
conclusion in different, either his interview

00:47:45.829 --> 00:47:50.070
videos or in the car launches. His conclusion

00:47:50.070 --> 00:47:53.110
is if you don't do EVs, someone else will and

00:47:53.110 --> 00:47:54.829
someone else will take over your market share.

00:47:55.070 --> 00:47:57.809
So the urgency is definitely there. Yeah. If

00:47:57.809 --> 00:47:59.829
you don't do it now, you're losing out. Right.

00:48:00.130 --> 00:48:02.469
Like if you don't go into it now, then don't

00:48:02.469 --> 00:48:05.130
go into this. That's right. And he has... Three

00:48:05.130 --> 00:48:07.969
beliefs that he had set out at the very beginning

00:48:07.969 --> 00:48:10.789
out of like 14 years of making phones and starting

00:48:10.789 --> 00:48:13.570
many, many companies. His conclusions are first,

00:48:13.829 --> 00:48:17.050
90 % of the people who are in this game right

00:48:17.050 --> 00:48:21.469
now might lose later on. So it's not a matter

00:48:21.469 --> 00:48:24.630
of when you enter the game. It's a matter of

00:48:24.630 --> 00:48:26.449
whether you can make it till the end. How long

00:48:26.449 --> 00:48:29.150
do you survive? Exactly. Game of elimination.

00:48:29.230 --> 00:48:32.989
There you go. And in this game, there are two

00:48:32.989 --> 00:48:36.409
bits that you compete. Number one is the actual

00:48:36.409 --> 00:48:39.090
electrification of a vehicle. Do you turn this

00:48:39.090 --> 00:48:42.869
into a battery, an electric motor powered machine

00:48:42.869 --> 00:48:45.150
versus a petrol powered machine? And then the

00:48:45.150 --> 00:48:48.190
second bit is, how do you make this car a smart

00:48:48.190 --> 00:48:51.849
car? As smart as your phone. That's the second

00:48:51.849 --> 00:48:55.090
bit. And he said that he has significant more

00:48:55.090 --> 00:48:57.530
confidence in the second bit than the first bit

00:48:57.530 --> 00:49:00.539
because of experience making Xiaomi. and then

00:49:00.539 --> 00:49:03.480
the third is lessons learned from xiaomi is if

00:49:03.480 --> 00:49:07.559
you want a hardware to have longer lifetime then

00:49:07.559 --> 00:49:10.840
you must invest in the core technologies early

00:49:10.840 --> 00:49:14.960
on yeah which is why he had built the electric

00:49:14.960 --> 00:49:18.139
motor himself, the V8, and also on the software

00:49:18.139 --> 00:49:21.079
bit. They also hired somewhere around a thousand

00:49:21.079 --> 00:49:24.360
people just to do the FSD. This is actually,

00:49:24.460 --> 00:49:25.980
I don't want to interrupt, this is actually a

00:49:25.980 --> 00:49:27.860
learning he had from his cell phone making days

00:49:27.860 --> 00:49:32.239
where his initial plan was to have more dependency

00:49:32.239 --> 00:49:36.139
on the suppliers. And in one of the years, I

00:49:36.139 --> 00:49:39.940
think 2017 or 16, I can't remember exactly which

00:49:39.940 --> 00:49:43.579
year, there was a hiccup in the supply. chain,

00:49:43.860 --> 00:49:48.619
namely with the Korean OLED suppliers, both Samsung

00:49:48.619 --> 00:49:53.260
and LG. And that played a huge role in his decision

00:49:53.260 --> 00:49:57.380
in the investment in R &D for EV and the fact

00:49:57.380 --> 00:50:00.920
that he has to control the core supply chain

00:50:00.920 --> 00:50:03.860
components. That's right. Yeah. Yeah. Lessons

00:50:03.860 --> 00:50:05.880
learned. Yeah. You can't be depending on someone

00:50:05.880 --> 00:50:08.739
else. Learn from your mistakes. Exactly. He launched

00:50:08.739 --> 00:50:10.780
another very important meeting and then he had

00:50:10.780 --> 00:50:13.719
a discussion with the board. Most of the big

00:50:13.719 --> 00:50:15.440
corporations, when they launch something innovative,

00:50:15.800 --> 00:50:19.340
it often end up failing. In what way will Xiaomi

00:50:19.340 --> 00:50:22.280
EV die? That was it. Yeah, that was it. Yeah,

00:50:22.300 --> 00:50:25.059
that's it. I don't have to worry about it for

00:50:25.059 --> 00:50:28.280
now. And his examples were, so Microsoft once

00:50:28.280 --> 00:50:30.440
upon a time had a mobile phone service, had a

00:50:30.440 --> 00:50:34.139
mobile phone smartphone product. We didn't even

00:50:34.139 --> 00:50:39.400
heard of it. I mean, yeah. And Intel had a cell

00:50:39.400 --> 00:50:43.500
phone chip service. and also did not end up yeah

00:50:43.500 --> 00:50:47.480
yeah okay it wasn't it didn't survive it didn't

00:50:47.480 --> 00:50:49.960
survive till today maybe but do we know about

00:50:49.960 --> 00:50:52.719
it is it a core revenue generating like business

00:50:52.719 --> 00:50:56.719
probably not yeah so be careful when you're innovating

00:50:57.949 --> 00:51:02.809
What if Xiaomi EV died like any other bigger

00:51:02.809 --> 00:51:05.570
companies, innovative projects? There is that

00:51:05.570 --> 00:51:08.030
possibility. In what way? In high likelihood.

00:51:08.289 --> 00:51:11.369
Right, high likelihood. And he discovered that

00:51:11.369 --> 00:51:14.210
maybe there are three reasons that are preventing

00:51:14.210 --> 00:51:16.949
the bigger corporations from having innovative

00:51:16.949 --> 00:51:21.949
businesses. The first is you are too content

00:51:21.949 --> 00:51:26.349
with your current title that you don't push forward.

00:51:26.840 --> 00:51:29.239
You have experience in cell phone making, but

00:51:29.239 --> 00:51:31.699
you have zero experience in EV. However, you

00:51:31.699 --> 00:51:34.559
carry the name of Xiaomi. You feel content. You

00:51:34.559 --> 00:51:39.139
stop making things right. Second is anything,

00:51:39.340 --> 00:51:41.519
any experience that you have accumulated in the

00:51:41.519 --> 00:51:44.659
past may not be useful in the new company. Like

00:51:44.659 --> 00:51:47.139
this is the new company doesn't even have the

00:51:47.139 --> 00:51:50.179
zero to one stage. So anything that's before

00:51:50.179 --> 00:51:54.699
may not be useful for the new one. So past experience.

00:51:55.369 --> 00:51:57.949
And the third one is that you have cognitive

00:51:57.949 --> 00:52:03.989
dissonance into you don't understand the current

00:52:03.989 --> 00:52:07.949
stage of your problem. You cannot identify in

00:52:07.949 --> 00:52:11.429
car making how big this problem is and at what

00:52:11.429 --> 00:52:13.690
level I should be responding to this problem.

00:52:13.809 --> 00:52:16.639
Like as in you're not. fully formed in the car

00:52:16.639 --> 00:52:18.420
industry in fact you don't know anything about

00:52:18.420 --> 00:52:20.280
the car industry the car industry doesn't even

00:52:20.280 --> 00:52:22.420
recognize you so basically if you're too full

00:52:22.420 --> 00:52:24.980
of yourself you will fail yeah yeah well i think

00:52:24.980 --> 00:52:27.699
reason one two three are all all the same yeah

00:52:27.699 --> 00:52:30.480
all the same like you be modest yeah be modest

00:52:30.480 --> 00:52:34.980
be modest was that identified he decided that

00:52:34.980 --> 00:52:39.320
okay maybe we need to scratch everything that

00:52:39.320 --> 00:52:42.400
we have before and just assemble a complete new

00:52:42.400 --> 00:52:47.559
team and build a very rigorous PMF process, product

00:52:47.559 --> 00:52:51.440
market fit process, to be able to actually make

00:52:51.440 --> 00:52:55.760
this car. Here is how he built that car. Who

00:52:55.760 --> 00:52:58.920
are the first group of people that he had hired

00:52:58.920 --> 00:53:04.920
to build this car? Who are they? Ocean 17. There

00:53:04.920 --> 00:53:10.380
are 16 people who migrated from Xiaomi, the corporate,

00:53:10.639 --> 00:53:14.949
to Xiaomi EV. Got it. That's the 16 people already.

00:53:15.190 --> 00:53:16.829
But I thought he said don't start. He started

00:53:16.829 --> 00:53:19.989
from scratch. But those people are those who

00:53:19.989 --> 00:53:23.110
have like HR experience, those who have finance

00:53:23.110 --> 00:53:28.170
experience. Got it. Those have PR and internationalization

00:53:28.170 --> 00:53:32.170
of marketing. So the mid -office folks are all

00:53:32.170 --> 00:53:35.670
from Xiaomi. Exactly. There is one person that

00:53:35.670 --> 00:53:39.269
was not directly hired from Xiaomi. This person

00:53:39.269 --> 00:53:42.840
is poached from BMW. Oh, the designer. Exactly.

00:53:42.960 --> 00:53:45.969
His name is Li Tianyuan. Sawyer Lee. Designer

00:53:45.969 --> 00:53:51.070
for BMW i -Series, which is also an electric

00:53:51.070 --> 00:53:54.929
vehicle series. He was working for BMW for about

00:53:54.929 --> 00:53:58.090
10 years. The moment that Leijun announced that,

00:53:58.150 --> 00:54:00.550
hey guys, I'm going to be making an EV. So he

00:54:00.550 --> 00:54:02.289
was like, hey guys, I'm going to be coming back

00:54:02.289 --> 00:54:05.809
to China to build this with you, buy BMW. So

00:54:05.809 --> 00:54:09.849
it was a mutual feeling for each other that drew

00:54:09.849 --> 00:54:12.989
himself to Xiaomi. I have a little bit more,

00:54:13.030 --> 00:54:15.659
I guess, insight on this. I spoke to someone

00:54:15.659 --> 00:54:18.719
who is in HR in the auto industry. Cool. And

00:54:18.719 --> 00:54:21.940
he mentioned that actually for most of the new

00:54:21.940 --> 00:54:25.139
EV companies, they had two types of people that

00:54:25.139 --> 00:54:27.960
they need to hire. One is the designer who's

00:54:27.960 --> 00:54:30.440
in control of the looks and feel of the car.

00:54:30.559 --> 00:54:33.239
And then there's kind of the production side

00:54:33.239 --> 00:54:37.019
of things. So for designers, most of them still

00:54:37.019 --> 00:54:40.050
prefer to hire from abroad. So people who have

00:54:40.050 --> 00:54:43.630
extensive experience in Germany or in the US

00:54:43.630 --> 00:54:46.690
or in Japan and Korea. But for the production

00:54:46.690 --> 00:54:49.550
side of things, because the SOP and everything

00:54:49.550 --> 00:54:52.429
is so well established in China nowadays, they

00:54:52.429 --> 00:54:55.829
can hire domestically. And so it's not a surprise

00:54:55.829 --> 00:55:01.030
that Lei Jun chose to poach someone from BMW

00:55:01.030 --> 00:55:04.230
or other manufacturing. What is surprising is

00:55:04.230 --> 00:55:09.199
that this... guy he is only 35 years old so he's

00:55:09.199 --> 00:55:12.179
not like well established in the market somewhat

00:55:12.179 --> 00:55:14.260
established somewhat established but still quite

00:55:14.260 --> 00:55:16.760
young in terms of someone who's leading this

00:55:16.760 --> 00:55:20.380
project because we everyone had really high hopes

00:55:20.380 --> 00:55:23.260
of this project never had had very high demands

00:55:23.260 --> 00:55:25.840
for this project so for him to bet on someone

00:55:25.840 --> 00:55:31.250
who's younger than expected it's a It feels like

00:55:31.250 --> 00:55:33.530
the deep -seek hiring strategy where you believe

00:55:33.530 --> 00:55:35.849
in someone, right? Yeah, you believe in someone.

00:55:35.969 --> 00:55:41.210
When Sue7 was made in the first release, an American

00:55:41.210 --> 00:55:44.730
designer, Chris Bangle, who is also the chief

00:55:44.730 --> 00:55:47.389
designer for BMW Group, was invited. There was

00:55:47.389 --> 00:55:50.690
a three -minute plug by him just endorsing how

00:55:50.690 --> 00:55:53.090
great of a car it is. He still works at BMW?

00:55:53.550 --> 00:55:56.789
He doesn't work for BMW anymore, but he had a

00:55:56.789 --> 00:56:00.440
TEDx video. which is really fun. And it lays

00:56:00.440 --> 00:56:03.519
out his design thinking, which is great cars

00:56:03.519 --> 00:56:08.940
are art. He believes that cars convey feelings.

00:56:09.780 --> 00:56:14.280
Cars are important tools of how we express ourselves

00:56:14.280 --> 00:56:18.039
in daily lives. In total, to be able to complete

00:56:18.039 --> 00:56:23.539
this project, Xiaomi hired about 6 ,000 people

00:56:23.539 --> 00:56:28.369
with 100 folks. who are plugged from Xiaomi Corporate

00:56:28.369 --> 00:56:32.650
and put into Xiaomi EB. Got it. So mostly new

00:56:32.650 --> 00:56:35.010
hires, which reflects his start -from -scratch

00:56:35.010 --> 00:56:39.769
mentality. Coming to the story of launching Su7.

00:56:39.969 --> 00:56:42.769
The first car. The first car. So we're going

00:56:42.769 --> 00:56:47.130
to call it Su7, right? Su7 is technically called

00:56:47.130 --> 00:56:51.139
Su7. If you know the Chinese intonations. And

00:56:51.139 --> 00:56:54.840
Su means speed. It's called Speed 7. Su 7. Okay.

00:56:55.320 --> 00:56:57.179
But if you want to call it SU7. I'm looking at

00:56:57.179 --> 00:57:00.079
YouTube and everyone's calling it SU7. But the

00:57:00.079 --> 00:57:04.219
Chinese pronunciation, guys, is Su 7. Yeah, yeah,

00:57:04.280 --> 00:57:06.960
yeah. It has nothing to do with Tesla Model S.

00:57:07.260 --> 00:57:09.760
Yeah, not the same, not the same. The Tesla Mod

00:57:09.760 --> 00:57:12.539
naming convention is SEXY. And then we all know

00:57:12.539 --> 00:57:15.579
what that is. I actually didn't know about it

00:57:15.579 --> 00:57:19.860
before you told me. Leijun had later reflected

00:57:19.860 --> 00:57:22.619
that it has been incredibly difficult to make

00:57:22.619 --> 00:57:25.519
a car. And one of a very specific challenge that

00:57:25.519 --> 00:57:28.579
he had mentioned is... You're essentially bridging

00:57:28.579 --> 00:57:30.820
three different groups of people together and

00:57:30.820 --> 00:57:32.599
then they don't necessarily speak the same language.

00:57:32.780 --> 00:57:36.079
First, it's the automakers. Second, it's the

00:57:36.079 --> 00:57:39.179
cell phone makers. And third, the software makers.

00:57:39.420 --> 00:57:41.960
If you have those three people working under

00:57:41.960 --> 00:57:44.280
the same company, it'll take some time for the

00:57:44.280 --> 00:57:46.099
three of them can actually work together. I can

00:57:46.099 --> 00:57:49.179
imagine. Right? Not to mention if you hired someone

00:57:49.179 --> 00:57:51.840
who is non -Chinese, that will add like a different

00:57:51.840 --> 00:57:54.800
level of complexity on top of. the existing one

00:57:54.800 --> 00:57:58.260
how do you create a framework such that car designers

00:57:58.260 --> 00:58:00.900
cell phone designers and software designers can

00:58:00.900 --> 00:58:02.900
both work together actually one thing we forgot

00:58:02.900 --> 00:58:06.480
to mention is that he had to run this project

00:58:06.480 --> 00:58:09.039
he has to head the project personally i think

00:58:09.039 --> 00:58:11.320
for for the board to approve everything yeah

00:58:11.320 --> 00:58:13.099
for sure and then he applied for the project

00:58:13.099 --> 00:58:15.800
he led the project and he also applied for a

00:58:15.800 --> 00:58:18.320
really large amount of money to run that project

00:58:18.320 --> 00:58:22.119
right yeah the announcement said 10 billion chinese

00:58:22.119 --> 00:58:25.500
yuan in the first year and then committing 10

00:58:25.500 --> 00:58:28.800
billion us dollars which is about seven eight

00:58:28.800 --> 00:58:31.699
times of that yeah in the next 10 years yeah

00:58:31.699 --> 00:58:35.960
yeah yeah and he has used a lot of that existing

00:58:35.960 --> 00:58:39.679
budget yeah yeah 60 70 of that already oh really

00:58:39.679 --> 00:58:42.780
yeah okay yeah well some of them are like capex

00:58:42.780 --> 00:58:45.280
and and stuff that he can recover like buying

00:58:45.280 --> 00:58:47.760
the the land right buying the land and building

00:58:47.760 --> 00:58:49.599
the factory probably cost a lot more exactly

00:58:49.599 --> 00:58:53.019
but you just have to give it time till like later

00:58:53.019 --> 00:58:55.719
on maybe you can amortize it for 20 years yeah

00:58:55.719 --> 00:58:58.599
ramping it up ramping up the production cost.

00:58:58.719 --> 00:59:04.039
In 2022, that's the year when he was just quietly

00:59:04.039 --> 00:59:08.159
building the car. And 2023 is the year when the

00:59:08.159 --> 00:59:10.880
car prototype was built. And then the car prototype

00:59:10.880 --> 00:59:13.619
started to test run in different Chinese cities.

00:59:13.699 --> 00:59:18.139
By the end of 2023, that's when he had organized

00:59:18.139 --> 00:59:21.539
a small release within the auto press group.

00:59:22.010 --> 00:59:27.269
And he had invited about a group of 2030 media

00:59:27.269 --> 00:59:30.829
folks who are very much affiliated with the auto

00:59:30.829 --> 00:59:33.769
industry. Most of them gave very negative feedback

00:59:33.769 --> 00:59:38.230
about Su7. And they were saying that your product

00:59:38.230 --> 00:59:40.690
is way too niche. Why do they call it niche?

00:59:40.869 --> 00:59:44.750
Because by the time it was the end of 2023, everyone

00:59:44.750 --> 00:59:47.369
who was in the game, like Huawei and Li Auto,

00:59:47.610 --> 00:59:50.630
they were making SUVs. They were making bigger

00:59:50.630 --> 00:59:53.090
cars. And why did they make SUVs? Because if

00:59:53.090 --> 00:59:54.929
you were to be putting a battery pack in a car,

00:59:55.090 --> 00:59:57.710
it takes up a lot of room. So if you were to

00:59:57.710 --> 01:00:00.849
be making an SUV, it's easier to pack everything

01:00:00.849 --> 01:00:03.889
together. But by then, the biggest seller, BYD,

01:00:03.929 --> 01:00:06.429
was making sedans. To be able to compete in a

01:00:06.429 --> 01:00:09.389
slightly different group was a mid -end, mid

01:00:09.389 --> 01:00:12.949
to higher end of cars. A lot of people who at

01:00:12.949 --> 01:00:16.579
that price point were making... And also SUVs,

01:00:16.579 --> 01:00:18.239
you can naturally charge people a higher price.

01:00:18.300 --> 01:00:23.159
Because they were at the 200 ,000 Chinese yuan

01:00:23.159 --> 01:00:26.300
above category. Exactly. It was in between 200

01:00:26.300 --> 01:00:29.840
and 300k category. Lei Jun decided that, okay,

01:00:29.900 --> 01:00:32.219
so within this category, a lot of people were

01:00:32.219 --> 01:00:34.880
finding it difficult to make a physical sedan

01:00:34.880 --> 01:00:39.260
and to make it a good looking sedan. So he wants

01:00:39.260 --> 01:00:43.090
to give it a shot. And his benchmark was... If

01:00:43.090 --> 01:00:46.110
any car, if any EV that was able to sell in the

01:00:46.110 --> 01:00:49.909
Chinese market monthly at 10K, that's the volume,

01:00:50.070 --> 01:00:54.949
10 ,000 pieces of that EV, then that car would

01:00:54.949 --> 01:00:57.889
be like a viral product. That car would be a

01:00:57.889 --> 01:01:00.389
viral. That's a low goal for his... Right now,

01:01:00.469 --> 01:01:02.530
they're currently selling at somewhere around

01:01:02.530 --> 01:01:05.889
20 to 30K. Not there yet, but that's their goal

01:01:05.889 --> 01:01:08.110
for the end of 2025. Right, right, right. They're

01:01:08.110 --> 01:01:10.329
selling a lot more than that. Now that you know

01:01:10.329 --> 01:01:13.119
you want to build a sedan. Within the 200 and

01:01:13.119 --> 01:01:15.960
300K bracket, here are the classic questions

01:01:15.960 --> 01:01:20.360
when you're doing PMF, which is first, who are

01:01:20.360 --> 01:01:24.079
the primary users for your product? And second,

01:01:24.340 --> 01:01:26.980
what problem do they have that is not resolved

01:01:26.980 --> 01:01:31.119
with the current EVs? Number three, what can

01:01:31.119 --> 01:01:33.019
your product do to solve the problem for them?

01:01:33.139 --> 01:01:38.119
And last bit, will this product be both functionally

01:01:38.119 --> 01:01:42.210
good and aesthetically pleasing? at the same

01:01:42.210 --> 01:01:45.050
time. That's the typical PMF questions that you

01:01:45.050 --> 01:01:49.150
would have. And after which I would think rounds

01:01:49.150 --> 01:01:52.190
and rounds of audience research, Leijun decided

01:01:52.190 --> 01:01:55.630
that with the first car, I am really going to

01:01:55.630 --> 01:01:59.150
please the women buyers, which is very obvious

01:01:59.150 --> 01:02:03.789
in the first press release. Not only did he intentionally

01:02:03.789 --> 01:02:07.550
tailor the car for women, he had also tried to...

01:02:07.760 --> 01:02:10.519
use his social media to engage more with the

01:02:10.519 --> 01:02:14.239
female audience. In just about less than a year

01:02:14.239 --> 01:02:19.300
time, his channel's female subscriber went up

01:02:19.300 --> 01:02:27.539
from 3 .7 % to 22%. He only had 3 % before EV

01:02:27.539 --> 01:02:32.659
launch? Yes. He had 3 .5%. No woman was watching

01:02:32.659 --> 01:02:38.460
his videos up until right now. All because of

01:02:38.460 --> 01:02:41.559
the UV protection blocking the car. We'll get

01:02:41.559 --> 01:02:43.420
to that later. We'll get to that in a bit. But

01:02:43.420 --> 01:02:47.119
so just a quick fact. I remember you talked about

01:02:47.119 --> 01:02:53.280
the end of 2023 small scale media launch. Yeah.

01:02:53.699 --> 01:02:58.380
So back then, Everyone in the car industry thought

01:02:58.380 --> 01:03:03.179
this wasn't going to mass produce because Xiaomi

01:03:03.179 --> 01:03:07.460
was targeting their car branding as the supercar,

01:03:07.559 --> 01:03:09.800
as a sports car. Performance car. Performance

01:03:09.800 --> 01:03:12.119
car. And nobody thought that that was a niche

01:03:12.119 --> 01:03:14.380
market in China because people don't buy sports

01:03:14.380 --> 01:03:17.280
cars. Like people buy road cars and like SUVs.

01:03:17.280 --> 01:03:21.159
And so they didn't understand how Leijing can

01:03:21.159 --> 01:03:25.420
turn a sports car imaging into mass market. That's

01:03:25.420 --> 01:03:27.440
an excellent question. I think he really tried

01:03:27.440 --> 01:03:29.960
to tackle that problem from a product manager

01:03:29.960 --> 01:03:32.860
point of view. In his social media, he tried

01:03:32.860 --> 01:03:36.460
very hard to almost to test out the public sentiment

01:03:36.460 --> 01:03:40.440
to a sports slash performance cars. Every single

01:03:40.440 --> 01:03:43.420
time, he gets a very positive feedback on the

01:03:43.420 --> 01:03:45.880
videos that he has posted. And then you will

01:03:45.880 --> 01:03:49.300
get positive feedback on, like in wintertime,

01:03:49.320 --> 01:03:52.019
he did the winter testing on a frozen lake in

01:03:52.019 --> 01:03:54.719
northeastern China. During the summer endurance

01:03:54.719 --> 01:03:57.500
test, he went to the western part of China, like

01:03:57.500 --> 01:03:59.239
in the middle of nowhere, there is a desert,

01:03:59.340 --> 01:04:03.110
and he tested donating in a desert. Every single

01:04:03.110 --> 01:04:05.409
time, people were leaving him a lot of comments

01:04:05.409 --> 01:04:07.849
and say, oh, I look forward to the performance

01:04:07.849 --> 01:04:10.570
of this car. So I think throughout his testing,

01:04:10.730 --> 01:04:14.469
in between the end of 2023 and 2024, he posted

01:04:14.469 --> 01:04:17.150
so many videos on his channel. To make the public

01:04:17.150 --> 01:04:19.690
think that this is a performance car, this is

01:04:19.690 --> 01:04:22.550
a supercar. Exactly. And then he didn't release

01:04:22.550 --> 01:04:26.760
the price during the initial... tech talk presentation

01:04:26.760 --> 01:04:29.599
that's right on purpose on purpose it was like

01:04:29.599 --> 01:04:32.340
we were expecting a sports car category he was

01:04:32.340 --> 01:04:35.719
trying to showcase which is so smart right you

01:04:35.719 --> 01:04:37.760
were you were testing out and just showcasing

01:04:37.760 --> 01:04:40.239
how great the performance is about this car in

01:04:40.239 --> 01:04:43.519
every different place in china a few weeks before

01:04:43.519 --> 01:04:46.239
the official launch he was still trying to test

01:04:46.239 --> 01:04:49.480
out like how would people take this at what price

01:04:49.480 --> 01:04:51.719
point at what range should i be offering this

01:04:51.719 --> 01:04:56.730
the critique was very common and they all align

01:04:56.730 --> 01:04:59.389
in a way that oh you want to target the female

01:04:59.389 --> 01:05:01.630
audience you want to target those who are buying

01:05:01.630 --> 01:05:03.650
the car for the first time but you're building

01:05:03.650 --> 01:05:06.250
a performance vehicle how large do you think

01:05:06.250 --> 01:05:08.590
that group is right like so nobody is going to

01:05:08.590 --> 01:05:11.730
buy your car so that's the common critique how

01:05:11.730 --> 01:05:14.789
did the media how did the auto industry get this

01:05:14.789 --> 01:05:19.730
so wrong well i think the auto industry was maybe

01:05:19.730 --> 01:05:24.650
it was a 50 50 right but the concern was was

01:05:24.650 --> 01:05:28.210
real they thought it was gonna be like a 10 000

01:05:28.210 --> 01:05:32.809
car market overall yeah well look at it now right

01:05:32.809 --> 01:05:36.010
but legend still wants to target female in the

01:05:36.010 --> 01:05:38.969
uh in the in the good for him yeah it's whether

01:05:38.969 --> 01:05:42.030
and that he had segmented into two smaller groups

01:05:42.030 --> 01:05:45.280
one is female individual who have enough money,

01:05:45.380 --> 01:05:47.760
wants to buy a car for the first time. And second

01:05:47.760 --> 01:05:50.719
is the female who is in the family because he

01:05:50.719 --> 01:05:53.260
said specifically, in a family, men can have

01:05:53.260 --> 01:05:55.159
the power to say which car they pick, but it's

01:05:55.159 --> 01:05:57.679
the woman that holds the financial power. If

01:05:57.679 --> 01:05:59.539
the woman likes the car, then she can point to

01:05:59.539 --> 01:06:01.280
the man which car to buy. That's what he said.

01:06:01.440 --> 01:06:04.059
So he really knows. They actually satisfy both

01:06:04.059 --> 01:06:06.800
genders because it does have the performance

01:06:06.800 --> 01:06:10.920
that a lot of men are looking for. Okay. So at

01:06:10.920 --> 01:06:13.320
least now, we've narrowed down to, okay, we want

01:06:13.320 --> 01:06:16.239
to build a city. and we want to build this for

01:06:16.239 --> 01:06:18.820
the newer generation of car owners, perhaps a

01:06:18.820 --> 01:06:21.739
lot younger, perhaps more women. What will that

01:06:21.739 --> 01:06:27.440
car look like, right? Not white. A matte. His

01:06:27.440 --> 01:06:30.440
previous product will give people the impression

01:06:30.440 --> 01:06:34.019
that it's very bland and it's very basic, right?

01:06:34.079 --> 01:06:35.539
But if you're building something for the women,

01:06:35.699 --> 01:06:37.940
then you cannot. That's not going to be enough.

01:06:38.480 --> 01:06:42.719
He said, in the past 140 years, All the good

01:06:42.719 --> 01:06:46.219
looking designs have been designed. Everything

01:06:46.219 --> 01:06:49.099
that you could have think of has been realized.

01:06:49.760 --> 01:06:52.639
If I were to be building a new car, no matter

01:06:52.639 --> 01:06:55.179
how well I design it, it's either going to have

01:06:55.179 --> 01:06:57.699
the same face or going to have the same butt.

01:06:57.900 --> 01:07:02.079
That's what he says. So funny. So he copied.

01:07:02.440 --> 01:07:06.000
He asked himself, the choice is between do I

01:07:06.000 --> 01:07:09.159
be classy or do I be edgy with a new car? If

01:07:09.159 --> 01:07:12.119
you're being edgy for a new design, then... You're

01:07:12.119 --> 01:07:13.940
originally targeting a very niche market and

01:07:13.940 --> 01:07:16.539
then you're edgy. So it's maybe going to be even

01:07:16.539 --> 01:07:18.559
smaller. You don't want to be designing a car

01:07:18.559 --> 01:07:21.440
for the sake of a new car. So he decided that

01:07:21.440 --> 01:07:25.460
maybe being classy is the way to go. So he borrowed

01:07:25.460 --> 01:07:30.199
some of the design. Some may think. I get it.

01:07:30.199 --> 01:07:32.980
A lot of cars look alike. But it has been criticized

01:07:32.980 --> 01:07:36.840
as looking too much alike another car. He tried

01:07:36.840 --> 01:07:39.219
his best to explain. when you want to be building

01:07:39.219 --> 01:07:42.880
a classy, good -looking, charming sports car,

01:07:43.039 --> 01:07:46.380
what's the one thing that you should be focusing

01:07:46.380 --> 01:07:49.860
on? His answer is, and even for a good -looking

01:07:49.860 --> 01:07:53.920
individual, it is the portion of the car. If

01:07:53.920 --> 01:07:57.059
a person or if a car is good -looking, then that

01:07:57.059 --> 01:08:00.320
car must have its proportion. There's a golden

01:08:00.320 --> 01:08:03.820
ratio for car design. That's exactly right. In

01:08:03.820 --> 01:08:08.739
the Su7 release, That happened in March 2024.

01:08:09.179 --> 01:08:13.139
I watched the whole. Three hours. It was just

01:08:13.139 --> 01:08:16.779
so long. Did you know how many times. I didn't

01:08:16.779 --> 01:08:22.420
count actually. I watched it. He mentioned so

01:08:22.420 --> 01:08:26.140
many times. Isn't it good looking. Isn't it good

01:08:26.140 --> 01:08:29.640
looking? 好看吗? He called out so many times. There

01:08:29.640 --> 01:08:33.659
are about 200 plus selling points in that particular

01:08:33.659 --> 01:08:36.140
product. Every single thing has something to

01:08:36.140 --> 01:08:39.800
it. It's the color, the texture, the hardware,

01:08:40.119 --> 01:08:43.819
the software, the battery, the range. Oh my god,

01:08:43.859 --> 01:08:45.579
there are so many of them. Even though I didn't

01:08:45.579 --> 01:08:49.000
watch the entire thing, I did look up the specs

01:08:49.000 --> 01:08:53.010
and stuff. purposely chose a three -hour time

01:08:53.010 --> 01:08:55.409
slot even though the car launch could be 30 minutes

01:08:55.409 --> 01:08:58.810
long they purposely did it three hours to make

01:08:58.810 --> 01:09:01.409
sure they brief everyone on every single technical

01:09:01.409 --> 01:09:05.029
and creative detail correct to make the audience

01:09:05.029 --> 01:09:07.649
feel like they are part of this journey and to

01:09:07.649 --> 01:09:10.529
make them understand as much be transparent as

01:09:10.529 --> 01:09:14.130
possible and it played right into their target

01:09:14.130 --> 01:09:17.869
audience's hearts yeah and you can hear the audience

01:09:17.869 --> 01:09:21.619
like among them are some Like bros. Like fans.

01:09:21.760 --> 01:09:25.180
Fans. He's like, yes, I want it. Give it to me.

01:09:25.539 --> 01:09:27.100
You're going to hear them yelling. It's like,

01:09:27.100 --> 01:09:29.619
I don't have a car driver's license, but I want

01:09:29.619 --> 01:09:33.659
this. Yeah, but I want this. But I do have very

01:09:33.659 --> 01:09:37.279
strong impressions on a few key selling points,

01:09:37.399 --> 01:09:42.380
which are a lot of colors. Oh, yeah. Nine colors

01:09:42.380 --> 01:09:47.560
of C7. Second of all. Yeah. There is a... A built

01:09:47.560 --> 01:09:51.380
-in cell phone holder. Oh. Leijun also makes

01:09:51.380 --> 01:09:54.579
fun of it. How can a cell phone maker not have

01:09:54.579 --> 01:09:56.680
a place for cell phone in a car that it built?

01:09:57.159 --> 01:09:59.920
Question. Does it only seal the Xiaomi phone

01:09:59.920 --> 01:10:02.180
or can it seal another? I think it's a generic

01:10:02.180 --> 01:10:04.619
one. Probably like every phone, every single

01:10:04.619 --> 01:10:08.140
phone should be able to fit into that. And number

01:10:08.140 --> 01:10:12.760
three, the very big one -piece ceiling that it

01:10:12.760 --> 01:10:15.340
has. The glass ceiling that it has. It is...

01:10:15.609 --> 01:10:19.529
one complete piece, very large piece of glass

01:10:19.529 --> 01:10:24.529
with sunscreen to it. So for those of you who've

01:10:24.529 --> 01:10:29.109
never been in China, sunscreen for the female

01:10:29.109 --> 01:10:31.409
population is a big thing. It's a big thing.

01:10:31.470 --> 01:10:34.569
It's a huge thing. Lei Jun is so proud of it.

01:10:34.649 --> 01:10:40.010
And he mentioned that for Xiaomi Su 7 compared

01:10:40.010 --> 01:10:43.510
with Tesla Model 3, if you put both of them,

01:10:43.960 --> 01:10:47.340
under 38 degrees celsius right under the sun

01:10:47.340 --> 01:10:52.180
for 1 .5 hours su7 would be 12 degrees cooler

01:10:52.180 --> 01:10:56.859
than model 3 oh yeah and and it's sunscreen and

01:10:56.859 --> 01:11:00.609
it's cooler like why not it's such a So this

01:11:00.609 --> 01:11:02.710
is why it's been criticized by the auto industry

01:11:02.710 --> 01:11:05.890
so much. Like, it's great. It's a cheap trick

01:11:05.890 --> 01:11:08.189
kind of. But it's not cheap. It is a very thoughtful.

01:11:09.069 --> 01:11:11.670
It's a very useful and thoughtful component of

01:11:11.670 --> 01:11:14.829
the car. But the auto industry, you know, the

01:11:14.829 --> 01:11:18.189
old style auto makers. The petrol boys. Right.

01:11:18.909 --> 01:11:20.909
That's not what they're selling. They're selling

01:11:20.909 --> 01:11:22.890
horsepower. They're selling engine. It's not.

01:11:22.949 --> 01:11:24.890
Xiaomi does have a really good engine. Yeah.

01:11:25.130 --> 01:11:29.819
But no one. ever thought about putting sunscreen

01:11:29.819 --> 01:11:34.060
as your main selling point in in a car manufacturer

01:11:34.060 --> 01:11:36.359
honestly the only thing that i had remembered

01:11:36.359 --> 01:11:40.199
after that three hour release was the sunscreen

01:11:40.199 --> 01:11:43.439
me too like it makes so much it went viral because

01:11:43.439 --> 01:11:45.699
of the sunscreen yeah like who would have knew

01:11:45.699 --> 01:11:51.319
yeah yeah and then the price of it it's still

01:11:51.319 --> 01:11:54.380
cheaper with everything that's being put together

01:11:55.180 --> 01:11:58.739
It is still 30k RMB cheaper than Tesla Model

01:11:58.739 --> 01:12:03.060
3. But here comes my question too. Legion has

01:12:03.060 --> 01:12:09.060
also invested in NIO and Li Auto. With the launch

01:12:09.060 --> 01:12:13.000
of Su7, isn't this a little self -sabotaging

01:12:13.000 --> 01:12:15.760
that you're blocking the other... You're your

01:12:15.760 --> 01:12:18.239
competitor and the investor of two other car

01:12:18.239 --> 01:12:21.890
companies. He actually mentioned that the CEO

01:12:21.890 --> 01:12:24.590
of both these companies were in active support

01:12:24.590 --> 01:12:28.930
of his decision to enter the EV industry, which

01:12:28.930 --> 01:12:31.989
is surprising because Lei Jun also said he believes

01:12:31.989 --> 01:12:35.649
90 % of the EV will be owned by the top five,

01:12:35.770 --> 01:12:40.399
say, manufacturers. And so why would he? go into

01:12:40.399 --> 01:12:43.180
an industry where he invested it into companies

01:12:43.180 --> 01:12:45.539
already why don't you just put more money into

01:12:45.539 --> 01:12:47.800
those two companies if you believe in the industry

01:12:47.800 --> 01:12:51.180
rather than becoming a competitor again i think

01:12:51.180 --> 01:12:54.279
there's a difference between smartphone and ev

01:12:54.279 --> 01:12:58.819
industry in terms of the market penetration if

01:12:58.819 --> 01:13:02.140
you look at the gas cars manufacturers right

01:13:02.140 --> 01:13:06.260
now yes there is some concentration at the top

01:13:06.260 --> 01:13:10.859
but it's definitely not like five takes all,

01:13:10.979 --> 01:13:13.479
right? We can probably account for at least a

01:13:13.479 --> 01:13:15.520
dozen manufacturing that are on top of their

01:13:15.520 --> 01:13:18.720
games. And Toyota, who leads the market, gets

01:13:18.720 --> 01:13:21.659
probably 10 % market share. Whereas if you think

01:13:21.659 --> 01:13:23.600
Apple and Samsung probably together gets half

01:13:23.600 --> 01:13:27.279
of the entire cell phone markets. So for NIO

01:13:27.279 --> 01:13:31.279
and for Lee Auto, they are part of the auto industry.

01:13:32.039 --> 01:13:35.140
They have background in the auto industry. So

01:13:35.140 --> 01:13:38.319
for them, They actually believe in a pie for

01:13:38.319 --> 01:13:42.239
everyone. Maybe not a pie for the 100 EV manufacturers

01:13:42.239 --> 01:13:44.520
that are currently in the market in China right

01:13:44.520 --> 01:13:48.399
now, but definitely the top dozen. Because even

01:13:48.399 --> 01:13:51.659
if you look at the market position for the top

01:13:51.659 --> 01:13:57.000
EV manufacturing, BYD, low -end, cheaper. Mass

01:13:57.000 --> 01:14:02.100
market. Mass market. NIO is high -end battery

01:14:02.100 --> 01:14:05.899
swapping user ecosystem. Li Auto is more for

01:14:05.899 --> 01:14:07.859
performance. Extended range. Yeah, extended range.

01:14:08.380 --> 01:14:11.560
Xpeng is for autonomous driving. They're kind

01:14:11.560 --> 01:14:15.180
of the rival for the Tesla FSD. And then Huawei

01:14:15.180 --> 01:14:18.760
is for they're also autonomous driving, but they're

01:14:18.760 --> 01:14:20.560
more on the partnership model rather than the

01:14:20.560 --> 01:14:23.470
manufacturing model. So everyone has their own

01:14:23.470 --> 01:14:25.170
niche and everyone thought that the niche is

01:14:25.170 --> 01:14:28.510
enough to sustain their own business. Because

01:14:28.510 --> 01:14:32.470
for you to start making a profit, so the volume

01:14:32.470 --> 01:14:35.909
for you to start making profit is actually quite

01:14:35.909 --> 01:14:38.270
standard across all of these manufacturers, about

01:14:38.270 --> 01:14:43.409
350 ,000 to 400 ,000 deliveries a year. And that

01:14:43.409 --> 01:14:47.310
is not a lot if you think about the Chinese population

01:14:47.310 --> 01:14:51.100
size. Not at all. Yeah, and so if I can start

01:14:51.100 --> 01:14:56.079
making a profit at this volume, the market can

01:14:56.079 --> 01:14:58.159
probably sustain at least 10 companies at this

01:14:58.159 --> 01:15:02.060
volume without penetration. So I think one of

01:15:02.060 --> 01:15:04.899
the reasons is that we can each have our own

01:15:04.899 --> 01:15:09.119
niche. We can each... Safe place to start. Exactly.

01:15:09.359 --> 01:15:11.720
Everyone can get something out of it. Exactly.

01:15:11.720 --> 01:15:14.579
And then once they penetrate the Chinese market,

01:15:14.659 --> 01:15:17.479
there's obviously the entire global market that

01:15:17.479 --> 01:15:20.340
I think the Chinese EV manufacturer have their

01:15:20.340 --> 01:15:24.600
eyes on now. Very much. So it's less competitive

01:15:24.600 --> 01:15:29.260
than you think. So it is fair to see that different

01:15:29.260 --> 01:15:30.920
competitors coming out of the Chinese market

01:15:30.920 --> 01:15:33.739
and going global because the business model would

01:15:33.739 --> 01:15:35.760
make sense. Yeah, and maybe it's a long -term

01:15:35.760 --> 01:15:38.939
play where the Chinese manufacturers in three

01:15:38.939 --> 01:15:41.899
to four years time, they will start targeting...

01:15:42.489 --> 01:15:45.529
Europe, right? They're already started, but maybe

01:15:45.529 --> 01:15:49.210
the ambition is to take over the global EV market.

01:15:49.529 --> 01:15:52.489
And so maybe it's all of them together targeting

01:15:52.489 --> 01:15:57.609
Renault or targeting Ford or Tesla. EV bros.

01:15:57.670 --> 01:16:00.250
So it's just a start. The EV bros. Or the CIS.

01:16:00.710 --> 01:16:06.090
Moving back to more products that's launched.

01:16:06.329 --> 01:16:10.350
Have you ever wondered why they launched Su7

01:16:10.350 --> 01:16:15.260
first? And then Su7 Ultra. And then Y7. No. Ultra.

01:16:15.420 --> 01:16:21.500
Okay. Ultra is this performance electric monster.

01:16:21.659 --> 01:16:24.619
I think that's the only right way to characterize

01:16:24.619 --> 01:16:27.939
it. It's a real sports car. It's a real sports

01:16:27.939 --> 01:16:30.859
car. Yeah. Do you know how heavy it weighs? No.

01:16:31.000 --> 01:16:37.119
I don't even know. It's 2 .4 ton. It's two, three

01:16:37.119 --> 01:16:41.909
times of... A typical ICE combustion engine.

01:16:42.170 --> 01:16:46.529
Oh, wow. A sports car. And it's very heavy. Xiaomi

01:16:46.529 --> 01:16:51.409
launched it in that order. Su7, Ultra, and U7.

01:16:51.449 --> 01:16:55.229
It's like half a year, right? Su7, March, Ultra

01:16:55.229 --> 01:16:59.369
somewhere in the fall. Ultra is October. October

01:16:59.369 --> 01:17:04.149
2024. And then U7 or YU7. was in july july yes

01:17:04.149 --> 01:17:08.329
it was july 2024 june july 2024 i think it was

01:17:08.329 --> 01:17:10.810
the last no u7 was launched recently recently

01:17:10.810 --> 01:17:14.750
yes 2025 oh sorry sorry 2025 yes 2025 yes all

01:17:14.750 --> 01:17:18.430
right yeah okay so what is ultra ultra is an

01:17:18.430 --> 01:17:21.229
absolute electric monster it is a collector items

01:17:21.229 --> 01:17:25.069
for the auto fanatics out there yeah and we'll

01:17:25.069 --> 01:17:27.489
just skip to the exciting part of ultra and why

01:17:27.489 --> 01:17:30.319
it Distinguish yourself from other, whether it's

01:17:30.319 --> 01:17:34.800
EV or sports car, because it's both of EV and

01:17:34.800 --> 01:17:37.960
a sports car, which is unheard of. EV, sports

01:17:37.960 --> 01:17:40.460
car. There's just so few of them. It's not even

01:17:40.460 --> 01:17:43.380
a category, official category. I made you watch

01:17:43.380 --> 01:17:48.819
that documentary. Yes. In 2024, October, Ultra

01:17:48.819 --> 01:17:53.520
had its first run in the Nürburgring. It was

01:17:53.520 --> 01:17:56.800
so long, the documentary. It is 45 minutes. If

01:17:56.800 --> 01:17:58.960
you want to take a look at it, it is on billybilly

01:17:58.960 --> 01:18:04.180
.com. In short, Xiaomi had the plan of test run

01:18:04.180 --> 01:18:07.600
this car in Nürburgring, but they booked it in

01:18:07.600 --> 01:18:11.760
January. They had no idea that October, Nürburgring

01:18:11.760 --> 01:18:15.300
in Germany rains so much. That's why you can

01:18:15.300 --> 01:18:17.279
book it because no one else wants to have that

01:18:17.279 --> 01:18:20.520
time, right? And when you're in October, they

01:18:20.520 --> 01:18:23.279
landed there right after the October holidays

01:18:23.279 --> 01:18:26.739
in China. It typically ends on the 7th of October.

01:18:26.779 --> 01:18:30.300
And on the 8th of October, both the car and the

01:18:30.300 --> 01:18:32.739
whole team who wants to race the car are in the

01:18:32.739 --> 01:18:37.079
Nürburgring waiting for some time that it will

01:18:37.079 --> 01:18:40.439
clear up, that it won't rain. If it rains in

01:18:40.439 --> 01:18:43.140
Nürburgring, then it becomes unraceable. Like

01:18:43.140 --> 01:18:46.300
the track will be too wet. And it will be very

01:18:46.300 --> 01:18:48.399
dangerous for the person who is driving the car.

01:18:48.539 --> 01:18:51.439
So they waited and they waited. They waited until

01:18:51.439 --> 01:18:55.119
October 18th. There was a brief moment where

01:18:55.119 --> 01:18:57.180
it was clearing up, but two hours afterwards,

01:18:57.380 --> 01:18:59.899
it started pouring again. So it was never a good

01:18:59.899 --> 01:19:03.859
time. They even waited until the BYD team had...

01:19:03.859 --> 01:19:07.359
Oh, BYD was there too. Yes, Xiaomi team. was

01:19:07.359 --> 01:19:10.859
asking them whether I can take 20 minutes of

01:19:10.859 --> 01:19:14.119
your slot if you have extra. BYD ended up not

01:19:14.119 --> 01:19:16.500
having any extra time. Because it was raining

01:19:16.500 --> 01:19:19.560
as well. Because the time was very limited. And

01:19:19.560 --> 01:19:21.140
you don't want to be testing the car for one

01:19:21.140 --> 01:19:23.060
round. You want to be testing it for several

01:19:23.060 --> 01:19:27.340
rounds and see when the tire is warmer. Understandable.

01:19:27.739 --> 01:19:32.439
So they waited and waited. And finally on 28th

01:19:32.439 --> 01:19:35.979
of October, it cleared up. It was in the morning.

01:19:36.439 --> 01:19:40.579
And they were able to finally run this 2 .4 ton,

01:19:40.819 --> 01:19:44.460
very chubby baby Ultra. It was on the racetrack.

01:19:44.460 --> 01:19:46.800
And to be honest, it wasn't completely dry. It

01:19:46.800 --> 01:19:49.699
is still somewhat a little damp. This driver,

01:19:49.939 --> 01:19:54.539
David Petard, who is a pro driver, only had 10

01:19:54.539 --> 01:19:57.770
minutes. to drive and for 10 minutes on uber

01:19:57.770 --> 01:20:00.210
green that was only good for one one lap that's

01:20:00.210 --> 01:20:03.010
it one lap that's it if you want to finish as

01:20:03.010 --> 01:20:05.430
a pro driver typically it takes about like six

01:20:05.430 --> 01:20:07.810
seven minutes if you're a little crazier than

01:20:07.810 --> 01:20:10.310
six minutes but if you want to play safe then

01:20:10.310 --> 01:20:12.569
it will be seven minute and above it's just enough

01:20:12.569 --> 01:20:14.529
to get to know the track like you can't make

01:20:14.529 --> 01:20:18.050
any progress right right right so So he drove

01:20:18.050 --> 01:20:21.010
for the first half of that lap. It was quite

01:20:21.010 --> 01:20:22.949
gentle. But towards the second half of the lap,

01:20:23.010 --> 01:20:25.569
you can visibly see that he's pushing the limits

01:20:25.569 --> 01:20:27.989
a little bit. Maybe because the tires are warm

01:20:27.989 --> 01:20:30.289
enough and he got used to the condition. And

01:20:30.289 --> 01:20:34.409
he finished the whole lap at 6 minutes, 46 seconds,

01:20:34.590 --> 01:20:43.250
8 .74. By October 28, 2024, Ultra was named the

01:20:43.250 --> 01:20:48.819
fastest four -door... production vehicle yeah

01:20:48.819 --> 01:20:53.319
one lap one lap track one lap only world record

01:20:53.319 --> 01:20:58.180
yeah wow almost a year afterwards on april the

01:20:58.180 --> 01:21:01.079
first not april first day it was a serious test

01:21:01.079 --> 01:21:06.020
in 2025 xiaomi su7 ultra prototype completed

01:21:06.020 --> 01:21:10.659
a second time the lap was completed at 6 minute

01:21:10.659 --> 01:21:15.989
22 seconds 091 so 24 second gain 24 second gain.

01:21:16.069 --> 01:21:18.829
That's right. All the numbers are officially

01:21:18.829 --> 01:21:22.710
documented on the Neubergering record. As Top

01:21:22.710 --> 01:21:27.649
Gear puts it, in June 2025, it is the fastest

01:21:27.649 --> 01:21:31.550
electric production car. Wow. Yeah, it is the

01:21:31.550 --> 01:21:35.270
fastest. In electric vehicles, only four cars

01:21:35.270 --> 01:21:39.949
that completed the electric vehicle laps on Neubergering.

01:21:40.010 --> 01:21:43.390
And from three different companies. One is Tesla.

01:21:43.510 --> 01:21:46.659
One is Porsche. And the last one is Xiaomi. And

01:21:46.659 --> 01:21:51.000
currently, Xiaomi's Su7 Ultra with track package

01:21:51.000 --> 01:21:55.359
is the fastest out of all the electric vehicles.

01:21:55.560 --> 01:21:59.899
So I think Li Jun did end up achieving what he

01:21:59.899 --> 01:22:03.420
set out to achieve with the supercar category.

01:22:03.819 --> 01:22:05.699
Like they're not just putting out, they can't

01:22:05.699 --> 01:22:08.739
just put out Su7 thinking that, you know, I'm

01:22:08.739 --> 01:22:11.439
going to label it as racing supercar and then

01:22:11.439 --> 01:22:14.550
not have something. like this lap record to come

01:22:14.550 --> 01:22:16.750
with it that's right that's right for the past

01:22:16.750 --> 01:22:19.869
month we've just just been immersed in a world

01:22:19.869 --> 01:22:22.729
of like auto sports and racing we watch something

01:22:22.729 --> 01:22:24.750
every single weekend and we talk about this very

01:22:24.750 --> 01:22:26.789
constantly so i guess to give everyone a little

01:22:26.789 --> 01:22:29.649
bit more context also as a newly converted auto

01:22:29.649 --> 01:22:32.130
fan like then still thanks to linda there are

01:22:32.130 --> 01:22:34.970
typically two types of races in auto industry

01:22:34.970 --> 01:22:38.109
right one is the sprint race where you compete

01:22:38.109 --> 01:22:40.930
on speed And the other one is called the endurance

01:22:40.930 --> 01:22:45.029
racing, where you compete. Can you last 24 hours

01:22:45.029 --> 01:22:48.350
and still be in one piece? Yeah. Right? Yeah.

01:22:48.409 --> 01:22:50.489
Right. Who drives the longest? Right. Who drives

01:22:50.489 --> 01:22:52.050
the longest? Who drives the longest distance?

01:22:52.250 --> 01:22:55.689
Yeah. So in the sprint racing, you would have

01:22:55.689 --> 01:23:01.289
Formula One, NASCAR, AutoGP, and IndyCar. And

01:23:01.289 --> 01:23:05.369
in the endurance race, the most famous one. Le

01:23:05.369 --> 01:23:08.989
Mans? Exactly. That's right. Most of the cars

01:23:08.989 --> 01:23:13.449
who were able to complete any one of those races

01:23:13.449 --> 01:23:18.189
became the champion for that automaking company.

01:23:18.529 --> 01:23:22.810
And that brought brand power to that company.

01:23:23.050 --> 01:23:27.850
People don't want to just buy a regular car.

01:23:27.970 --> 01:23:30.409
People want to buy, oh, what's produced in a

01:23:30.409 --> 01:23:32.489
Ferrari. A race winner. Exactly, a race winner.

01:23:32.590 --> 01:23:35.390
Oh, Porsche. Does that mean... They're going

01:23:35.390 --> 01:23:39.909
to enter races? You're onto something. I would

01:23:39.909 --> 01:23:44.229
logically assume that maybe that would be the

01:23:44.229 --> 01:23:46.670
goal. I can't wait. I can't wait either. Please

01:23:46.670 --> 01:23:49.510
put it on track. If you're interested in learning

01:23:49.510 --> 01:23:55.050
more about how the halo effect, the race winning

01:23:55.050 --> 01:23:58.770
car, brings glory to a production car, there

01:23:58.770 --> 01:24:01.850
is a great movie as reference, which is... Ford

01:24:01.850 --> 01:24:06.050
versus Ferrari. The one that we recently watched.

01:24:06.090 --> 01:24:09.029
It's a great movie. By Christian Bale and Matt

01:24:09.029 --> 01:24:15.109
Damon. That is when Ford company wants to really

01:24:15.109 --> 01:24:19.850
increase its, not really production, but they

01:24:19.850 --> 01:24:24.970
want to pivot to a new brand image. And by competing

01:24:24.970 --> 01:24:27.729
with Ferrari gives them the new brand value.

01:24:27.909 --> 01:24:32.819
And that's when the Ford GT40 was created right

01:24:32.819 --> 01:24:38.699
and it was a movie about the le mans race wonderful

01:24:38.699 --> 01:24:44.000
was so interesting the halo effect happened in

01:24:44.000 --> 01:24:47.359
a lot of different companies so ford made mustang

01:24:47.359 --> 01:24:50.579
and ford also has you know gt40 and a few other

01:24:50.579 --> 01:24:55.100
gt cars and porsche has the regular porsche cars

01:24:55.100 --> 01:24:56.859
where you can buy as a beginner there is also

01:24:56.859 --> 01:25:01.800
the the Porsche 911, the Porsche 356, where they

01:25:01.800 --> 01:25:05.680
won races and brought so much glory to the company

01:25:05.680 --> 01:25:07.979
such that the entire brand increases in value

01:25:07.979 --> 01:25:11.140
and everyone wants to get that car. And okay,

01:25:11.199 --> 01:25:14.340
fun fact, very fun fact. Now that we've watched

01:25:14.340 --> 01:25:17.199
F1 the movie for a couple of times, did you know?

01:25:17.380 --> 01:25:19.260
A couple of times? No, a couple of times. Did

01:25:19.260 --> 01:25:24.000
you know F1, the first car that showed up in

01:25:24.000 --> 01:25:28.789
Daytona 24, that actual blue car that was being

01:25:28.789 --> 01:25:32.750
raced. By Brad Pitt? By Brad Pitt. It was a Porsche

01:25:32.750 --> 01:25:36.909
GT3R. It was an actual race car. Yeah. And then

01:25:36.909 --> 01:25:40.090
the person who was handing that car to Sonny

01:25:40.090 --> 01:25:44.850
Hayes was an actual car racer. Oh. Yeah. Oh,

01:25:44.909 --> 01:25:47.369
so his teammates in the movie were actual racers.

01:25:47.369 --> 01:25:50.569
Yes. Interesting. And he was an actual car racer.

01:25:50.789 --> 01:25:53.970
Perfect. With an actual Porsche racing car, you

01:25:53.970 --> 01:25:55.920
know, who... brought the car to Sonny Hayes.

01:25:56.300 --> 01:25:58.880
Wow. Now that I've watched it for so many times,

01:25:58.920 --> 01:26:00.100
I was finally able to connect it up. There's

01:26:00.100 --> 01:26:02.779
a lot of actual racers in the movie. The motorsports

01:26:02.779 --> 01:26:07.159
has been popular in the EU and in the US. And

01:26:07.159 --> 01:26:09.779
Japan was kind of in that game as well. And now

01:26:09.779 --> 01:26:14.100
finally, Xiaomi. Made it China relevant. Right.

01:26:14.319 --> 01:26:16.119
Yeah. So I think that was it. I think there's

01:26:16.119 --> 01:26:19.439
another reason where, so they decided to self

01:26:19.439 --> 01:26:22.800
-invest the engine because of their learnings

01:26:22.800 --> 01:26:24.399
in the smartphone. They need to actually make

01:26:24.399 --> 01:26:28.119
their components, key components. Yeah. And Ultra,

01:26:28.359 --> 01:26:32.359
Su7 Ultra was actually the perfect way to market

01:26:32.359 --> 01:26:36.899
their hyper engine V8. Yeah. Yeah. It was saying

01:26:36.899 --> 01:26:40.220
that with this engine, our horsepower is amazing.

01:26:40.800 --> 01:26:47.939
It was 1 ,500 PS. That's 1 .5 times of Porsche

01:26:47.939 --> 01:26:52.180
taken. In the ultra release meeting, Lei Jun

01:26:52.180 --> 01:26:54.380
was also trying to be funny and trying to sell

01:26:54.380 --> 01:26:58.239
the car. And he mentioned how much of a details

01:26:58.239 --> 01:27:01.300
that he was trying to put into the car that he

01:27:01.300 --> 01:27:03.840
was hoping that everyone can notice that. And

01:27:03.840 --> 01:27:06.920
one of it is he mentioned, for those of you...

01:27:07.199 --> 01:27:10.920
who buy a lot of sports cars, would know that

01:27:10.920 --> 01:27:14.180
carbon fiber is a very expensive material in

01:27:14.180 --> 01:27:16.319
the car. And for those of you who don't buy sports

01:27:16.319 --> 01:27:21.739
cars, I now just told you. He showcased in 17

01:27:21.739 --> 01:27:26.819
different places in this ultra car. I use carbon

01:27:26.819 --> 01:27:28.680
fiber. But honestly, I think... Honestly, don't

01:27:28.680 --> 01:27:31.279
all sports cars have carbon fiber? But here's

01:27:31.279 --> 01:27:33.079
the thing, though. The battery pack is too heavy.

01:27:33.180 --> 01:27:35.840
So it has to reduce weight where you can. And

01:27:35.840 --> 01:27:37.439
that means you have to use a lot of carbon fiber.

01:27:37.739 --> 01:27:40.539
So all the materials, it wasn't because of, oh,

01:27:40.579 --> 01:27:42.199
I want to use it because it's luxurious, but

01:27:42.199 --> 01:27:45.699
because I want to save weight. yeah such that

01:27:45.699 --> 01:27:48.199
he has to use a carbon fiber and also he made

01:27:48.199 --> 01:27:51.579
a very funny comment on the Pirelli tires he

01:27:51.579 --> 01:27:53.279
was saying that for those of you who wants to

01:27:53.279 --> 01:27:56.000
order you can order it now you have about like

01:27:56.000 --> 01:27:58.399
whatever time before you can lock down your deals

01:27:58.399 --> 01:28:02.319
and if you think that you want to you know just

01:28:02.319 --> 01:28:05.000
upgrade your car a little bit we have the Pirelli

01:28:05.000 --> 01:28:08.479
P Zero tires for you to order And when you're

01:28:08.479 --> 01:28:11.100
driving to work with your P0 tires, who was going

01:28:11.100 --> 01:28:13.760
to drive to work with some P0 tires just on a

01:28:13.760 --> 01:28:17.680
regular street? I think he was trying to give

01:28:17.680 --> 01:28:20.340
those who are in the performance or the racing

01:28:20.340 --> 01:28:23.859
needs an option that you can upgrade it to a

01:28:23.859 --> 01:28:30.060
racing tire. Yeah, last bit. On to U7, finally.

01:28:30.220 --> 01:28:35.619
So the U7. Once again, YU7, right? Why is it

01:28:35.619 --> 01:28:39.539
YU7? Naming convention comes first. YU7 is coming

01:28:39.539 --> 01:28:44.899
from an expression. It's called 雨风而行, and it

01:28:44.899 --> 01:28:48.539
roughly translates into, 雨风 is sitting on top

01:28:48.539 --> 01:28:52.060
of the wind. It's back in the days how a god

01:28:52.060 --> 01:28:55.899
would travel. Oh, like traveling on the cloud,

01:28:56.000 --> 01:29:00.340
like Goku from... Something like that. This line

01:29:00.340 --> 01:29:04.579
is from Zhuangzi. Which translates into a happy

01:29:04.579 --> 01:29:06.840
journey or a carefree journey. He wants you to

01:29:06.840 --> 01:29:10.760
have the feeling that traveling by Yuseven is

01:29:10.760 --> 01:29:13.199
like sitting on top of the wind. It's so fast

01:29:13.199 --> 01:29:17.840
and so smooth. And carefree. Come try our SUV.

01:29:18.279 --> 01:29:20.479
That's kind of the brand image that he was trying

01:29:20.479 --> 01:29:24.770
to... And it fits for a family car. The U7's

01:29:24.770 --> 01:29:29.789
competitors are Model Y, Porsche, Macan. This

01:29:29.789 --> 01:29:33.510
car was released recently and within three minutes

01:29:33.510 --> 01:29:41.010
of the first release, 240 ,000 pieces of that

01:29:41.010 --> 01:29:46.510
car was ordered. That's how much Tesla sold,

01:29:46.609 --> 01:29:48.850
Model 3 sold for a year. For a year, right? Yeah.

01:29:49.409 --> 01:29:53.640
In its peak in 2021. Right. So now the only problem

01:29:53.640 --> 01:29:55.800
is whether they can actually deliver it. I guess

01:29:55.800 --> 01:29:58.420
the last one quick comment that I want to ask

01:29:58.420 --> 01:30:00.380
about U7 before we dive into the production and

01:30:00.380 --> 01:30:03.199
delivery is U7 gives you a little bit of a surprise

01:30:03.199 --> 01:30:05.699
as well. Now that the Ultra has completed the

01:30:05.699 --> 01:30:10.000
sprint race, U7 completed a, not a Le Mans race,

01:30:10.220 --> 01:30:12.880
but a Le Mans 24 -hour driving and charging.

01:30:13.060 --> 01:30:15.859
Yes. I found the video. That video was released.

01:30:16.100 --> 01:30:21.090
It was edited. it shows that one u7 testing car

01:30:21.090 --> 01:30:26.970
completed a non -stop 24 -hour journey and it

01:30:26.970 --> 01:30:30.989
was racing and charging and racing and charging

01:30:30.989 --> 01:30:34.079
and then the car did not explode how is that

01:30:34.079 --> 01:30:37.619
possible wait wait okay first of all cars don't

01:30:37.619 --> 01:30:41.220
explode the battery will overheat right and if

01:30:41.220 --> 01:30:44.640
the battery overheats i don't i've never been

01:30:44.640 --> 01:30:47.520
running a car for 24 hours i don't know what

01:30:47.520 --> 01:30:50.800
will happen if a car runs for 24 hours where

01:30:50.800 --> 01:30:53.340
you continually exhaust and charge and exhaust

01:30:53.340 --> 01:30:55.899
and charge typically if i do that to my phone

01:30:55.899 --> 01:30:59.319
my mom would ask me to put the phone down so

01:31:00.250 --> 01:31:02.529
But yes, that's surprising. First of all, their

01:31:02.529 --> 01:31:06.949
position as the Model Y, which is kind of a small

01:31:06.949 --> 01:31:11.189
SUV type of car, and it was targeted for families

01:31:11.189 --> 01:31:15.689
with kids, just families in general. So I wasn't

01:31:15.689 --> 01:31:17.829
expecting that it would go through the same marketing

01:31:17.829 --> 01:31:22.470
as Ultra, which is targeting the sports enthusiasts.

01:31:23.130 --> 01:31:26.109
The performance, yeah. And here's the funny thing.

01:31:26.149 --> 01:31:29.319
A lot of people, I've watched a few... reviews

01:31:29.319 --> 01:31:35.100
on Bilibili on how the Su7 owners and U7 owners,

01:31:35.159 --> 01:31:37.720
even the Ultra owners, how they see their cars

01:31:37.720 --> 01:31:40.539
and how they see the performance of their cars.

01:31:40.739 --> 01:31:43.560
And it seems that some people have even said

01:31:43.560 --> 01:31:46.539
that you can almost get all three of them. They

01:31:46.539 --> 01:31:49.279
don't overlap with each other. An SUV for family,

01:31:49.340 --> 01:31:52.859
for endurance and range. An Ultra just because

01:31:52.859 --> 01:31:56.699
it's a crazy electronic monster that the performance

01:31:56.699 --> 01:31:59.890
is so great. and very limited if you can even

01:31:59.890 --> 01:32:03.050
get the car right and a su7 for daily commute

01:32:03.050 --> 01:32:06.069
yeah so these three products are complementary

01:32:06.069 --> 01:32:09.409
to each other they don't overlap a lot and i

01:32:09.409 --> 01:32:13.029
had the rare chance of sitting in a su7 ultra

01:32:13.029 --> 01:32:16.770
just about a couple weeks ago it was a complete

01:32:16.770 --> 01:32:18.949
accident i was in i was in shenzhen visiting

01:32:18.949 --> 01:32:22.310
my friends by the end of it My friend offered

01:32:22.310 --> 01:32:24.210
that. Can I give you a lift home? I'm like, sure.

01:32:24.390 --> 01:32:27.210
And walked into the garage. He's like, here comes

01:32:27.210 --> 01:32:30.010
a... What a coincidence. Yeah, what a coincidence.

01:32:30.350 --> 01:32:33.659
And... I was really surprised that you are, how

01:32:33.659 --> 01:32:36.119
are you able to get it so fast, right? Yeah,

01:32:36.119 --> 01:32:39.359
how? Yeah, he just got it early enough. Oh, okay.

01:32:39.460 --> 01:32:43.260
We didn't try anything crazy, but he did demonstrate

01:32:43.260 --> 01:32:47.600
in like the two second acceleration, the feeling

01:32:47.600 --> 01:32:50.260
that you're sitting in a sports car, that's the

01:32:50.260 --> 01:32:53.020
G -force that's against you. Yeah. It's quite

01:32:53.020 --> 01:32:55.260
comfy, I have to say. But by only experience

01:32:55.260 --> 01:32:57.760
for like five seconds, that's it. I mean, yeah.

01:32:59.439 --> 01:33:02.039
It would have been a bit dangerous if you experienced

01:33:02.039 --> 01:33:04.279
it for more than five seconds. I would not recommend

01:33:04.279 --> 01:33:09.199
driving it at that speed at a non -racing convention.

01:33:09.560 --> 01:33:12.420
If it's a regular commute, please drive very

01:33:12.420 --> 01:33:15.239
safely. But for that particular experience, I'd

01:33:15.239 --> 01:33:19.520
say it's a very comfortable car. About the deliveries

01:33:19.520 --> 01:33:23.210
and concerns and numbers. Yes. Let's go. Okay,

01:33:23.270 --> 01:33:24.949
I think we should take a step back right now

01:33:24.949 --> 01:33:27.470
to just get a perspective of EV overall right

01:33:27.470 --> 01:33:29.869
now. I'm using rough numbers, but the annual

01:33:29.869 --> 01:33:32.829
global sales in terms of passenger vehicles,

01:33:32.970 --> 01:33:35.670
this is not just EVs, every single passenger

01:33:35.670 --> 01:33:40.130
vehicle. So your sedans, SUVs, it's about 75

01:33:40.130 --> 01:33:44.949
million units per year. And China accounts for

01:33:44.949 --> 01:33:48.149
one third of that, which is a lot, 25 million.

01:33:48.949 --> 01:33:51.289
Right now in China, half of the new sales are

01:33:51.289 --> 01:33:56.140
EVs. About half. So let's say 11, 12 million

01:33:56.140 --> 01:34:00.699
of that. How many do you think are sold globally?

01:34:01.399 --> 01:34:05.460
75 is like gas cars and EVs, right? Out of the

01:34:05.460 --> 01:34:09.880
75, China accounts for 25, but about like less

01:34:09.880 --> 01:34:13.600
than half of those are EVs. So that's 11. So

01:34:13.600 --> 01:34:18.140
75, China 25, EV 11 in China. There's 50 million

01:34:18.140 --> 01:34:20.500
that's outside of China. Out of those 50 million,

01:34:20.600 --> 01:34:24.479
how much are EVs? 5 million -ish? 6 million.

01:34:24.680 --> 01:34:29.180
Okay, okay. China is the single largest market

01:34:29.180 --> 01:34:32.699
by far when it comes to EVs because 11 millions

01:34:32.699 --> 01:34:35.680
are sold in China and 6 millions are sold everywhere

01:34:35.680 --> 01:34:39.539
else. This is the importance of China as an EV

01:34:39.539 --> 01:34:43.920
market. And this is how strong the demand is.

01:34:44.039 --> 01:34:46.579
And this is... partially actually mainly because

01:34:46.579 --> 01:34:49.100
of government support and so let's go back to

01:34:49.100 --> 01:34:51.939
this 11 million figure which is the numbers of

01:34:51.939 --> 01:34:54.659
ev sold in china last year which is xiaomi's

01:34:54.659 --> 01:35:00.420
entire market where was xiaomi's share so out

01:35:00.420 --> 01:35:04.000
of the 11 million byd took up in china i think

01:35:04.000 --> 01:35:06.460
about two no their entire global is four four

01:35:06.460 --> 01:35:08.340
something million so in china i think it's about

01:35:08.340 --> 01:35:12.590
maybe two ish two three So they're the biggest

01:35:12.590 --> 01:35:15.430
player, right? And this is how scattered the

01:35:15.430 --> 01:35:17.630
Chinese market is because BYD as the biggest

01:35:17.630 --> 01:35:20.289
player took up like maybe less than one third

01:35:20.289 --> 01:35:23.810
and then everyone gets cuts. Everyone gets cuts.

01:35:24.329 --> 01:35:29.170
Xiaomi only took up 1 .2%. Really? Minding that

01:35:29.170 --> 01:35:32.229
they started... So two reasons for that. One

01:35:32.229 --> 01:35:35.529
is the traditional automaker took a majority

01:35:35.529 --> 01:35:39.739
of that. right byd plus uh your cherries your

01:35:39.739 --> 01:35:43.140
saic they took out most of it because economies

01:35:43.140 --> 01:35:46.279
of scale distributor whatnot yeah and all the

01:35:46.279 --> 01:35:49.500
taxi drivers gets these cars uh so they get bulk

01:35:49.500 --> 01:35:54.000
buying too most of them the new ev players like

01:35:54.000 --> 01:35:59.829
lee otto neo xiaomi expo they're all under They're

01:35:59.829 --> 01:36:05.869
way under 1 million. Li Auto is 526 ,000. And

01:36:05.869 --> 01:36:10.010
then NIO, XPeng, and Xiaomi all get 150 -ish.

01:36:10.289 --> 01:36:15.170
So Xiaomi's exact numbers is 136 ,854 that they

01:36:15.170 --> 01:36:19.569
published. So let's say 140 ,000. That's only

01:36:19.569 --> 01:36:22.970
1 .2 % of the market. To be completely fair though,

01:36:23.010 --> 01:36:27.810
about 60 % of this 11 million, so about six something

01:36:27.810 --> 01:36:32.569
million. are pure electric EV. The others are

01:36:32.569 --> 01:36:34.689
hybrids. So technically they're competing in

01:36:34.689 --> 01:36:38.149
the 6 million category. But even then, think

01:36:38.149 --> 01:36:43.529
about the scale, right? Majority of those EVs

01:36:43.529 --> 01:36:47.729
are mass market low end. Xiaomi competes in the

01:36:47.729 --> 01:36:53.989
30 ,000 plus USD category. And that's already

01:36:53.989 --> 01:36:57.310
a smaller segment. And within the segment, they

01:36:57.310 --> 01:37:01.989
compete against more than, I would say, it's

01:37:01.989 --> 01:37:04.149
technically more than 100, but I would think

01:37:04.149 --> 01:37:07.750
their main competitors are about 20 or so. And

01:37:07.750 --> 01:37:11.689
they get a part of that. When the SU7 was released

01:37:11.689 --> 01:37:14.250
last year, it took nine months for them to generate

01:37:14.250 --> 01:37:21.869
140 ,000 sales. And I think 80, about more than

01:37:21.869 --> 01:37:26.479
half was ordered. With the YU7, you just mentioned

01:37:26.479 --> 01:37:30.100
that 240 were ordered in the first day. We haven't

01:37:30.100 --> 01:37:32.439
seen too much delivered yet. It's only 6 ,000

01:37:32.439 --> 01:37:34.420
or so because it was just released last month.

01:37:35.159 --> 01:37:41.279
But these numbers comparing to Tesla, currently

01:37:41.279 --> 01:37:44.279
they're suppressing Tesla sales. However, Tesla

01:37:44.279 --> 01:37:49.479
peaked in 2021. And at its peak, it's actually

01:37:49.479 --> 01:37:52.199
slightly higher than Su7. But bear in mind that

01:37:52.199 --> 01:37:55.380
Tesla actually started selling their EV much,

01:37:55.399 --> 01:37:59.460
much earlier. Even in China, the first year of

01:37:59.460 --> 01:38:02.960
the domestic Shanghai produced Tesla started

01:38:02.960 --> 01:38:08.619
their first sale in 2019. So by no means this

01:38:08.619 --> 01:38:10.800
is like low in terms of sales numbers, but it

01:38:10.800 --> 01:38:13.579
is right now in its first year on par with Tesla.

01:38:14.020 --> 01:38:17.119
Right. And this is only their first year. And

01:38:17.119 --> 01:38:22.000
it surpassed all of its immediate competitors,

01:38:22.119 --> 01:38:29.079
like NEO. With the total order, I think it surpassed

01:38:29.079 --> 01:38:36.180
both XPeng and Li Auto. This is way beyond everyone's

01:38:36.180 --> 01:38:39.239
expectations, even beyond Lei Jun's expectations,

01:38:39.539 --> 01:38:42.619
I would believe. They have three years to do

01:38:42.619 --> 01:38:45.779
this, right? And so if you had you planned your

01:38:45.779 --> 01:38:50.420
capacity correctly, you should be able to deliver

01:38:50.420 --> 01:38:55.000
your cars according to your sales, right? In

01:38:55.000 --> 01:38:57.000
the grand scheme of things, they're not big,

01:38:57.119 --> 01:38:59.479
but they're the fastest rising. Nobody expected

01:38:59.479 --> 01:39:04.039
them to go into their first year to produce or

01:39:04.039 --> 01:39:08.149
to sell this many cars. Because NIO and XPeng

01:39:08.149 --> 01:39:12.029
has been in this industry for years and their

01:39:12.029 --> 01:39:17.449
sales in mid 2025 today are not as high. So they

01:39:17.449 --> 01:39:21.829
are, in fact, the largest, the fastest growing

01:39:21.829 --> 01:39:26.729
one. And the 150 ,000 or 140 ,000 I just mentioned,

01:39:26.869 --> 01:39:30.550
it's up to December last year, right? Nine months

01:39:30.550 --> 01:39:35.420
in, it's just the SU7s, including... maybe two

01:39:35.420 --> 01:39:39.500
months into the ultra production the u7 because

01:39:39.500 --> 01:39:43.640
it's a family car you get three times as much

01:39:43.640 --> 01:39:46.359
interest in terms of the initial order so so

01:39:46.359 --> 01:39:51.000
we're expecting a that 150 number yeah to multiply

01:39:51.000 --> 01:39:55.979
or to triple uh this year yeah i mentioned that

01:39:55.979 --> 01:39:59.979
xiaomi didn't expect this no And how do we know

01:39:59.979 --> 01:40:04.659
that? The factory wasn't large enough. So right

01:40:04.659 --> 01:40:06.420
now, I think if you order a car, you have to

01:40:06.420 --> 01:40:08.779
wait for one year. And this is like hashtag going

01:40:08.779 --> 01:40:12.659
on on Weibo. That's like, give me my car. Something

01:40:12.659 --> 01:40:15.079
along the lines of where's my car? Like how long

01:40:15.079 --> 01:40:17.659
do I have to wait? Obviously, the sales and the

01:40:17.659 --> 01:40:19.880
order went wildly beyond everyone's expectation.

01:40:20.579 --> 01:40:22.939
When they initially planned their factories,

01:40:23.140 --> 01:40:25.220
it was in Beijing. They signed a special deal.

01:40:25.560 --> 01:40:28.680
They planned two factories. Both of them had

01:40:28.680 --> 01:40:32.079
an initial capacity of 150 ,000 deliveries a

01:40:32.079 --> 01:40:35.659
year. The first one started production last year

01:40:35.659 --> 01:40:41.579
when SU -7 was launched. This is March. By June,

01:40:41.880 --> 01:40:44.619
three months later, they realized it's not going

01:40:44.619 --> 01:40:48.039
to work. 150 ,000 is not going to cut it. So

01:40:48.039 --> 01:40:51.640
they started double shifting. So instead of having

01:40:51.640 --> 01:40:53.680
eight -hour shifts, shut down the factory and

01:40:53.680 --> 01:40:57.039
then come back next. They started doing two 8

01:40:57.039 --> 01:40:58.680
-hour shifts, and obviously you can do this in

01:40:58.680 --> 01:41:01.939
China. They started two 8 -hour shifts to increase

01:41:01.939 --> 01:41:06.180
the capacity, not up to 300 ,000, because you

01:41:06.180 --> 01:41:08.000
still have downtime in between. You don't want

01:41:08.000 --> 01:41:10.539
to work your machinery too hard. But officially,

01:41:10.600 --> 01:41:14.479
they claim that it's from 150 ,000 capacity,

01:41:14.840 --> 01:41:18.920
it increased to 2 ,400. Wow. It's one factory.

01:41:19.279 --> 01:41:23.600
Second factory, same plant capacity. now doubles

01:41:23.600 --> 01:41:27.020
and the second factory actually was only i don't

01:41:27.020 --> 01:41:29.380
know if they they probably only started production

01:41:29.380 --> 01:41:33.159
this month sounds about right yeah and so and

01:41:33.159 --> 01:41:36.819
so xiaomi if you look at their financial statement

01:41:36.819 --> 01:41:39.899
they moved up their projection for capacity from

01:41:39.899 --> 01:41:45.000
300 000 or delivery from 300 000 to 350 000 because

01:41:45.000 --> 01:41:48.279
of this all kind of unexpected shift and that

01:41:48.840 --> 01:41:51.439
Forced them to think about all the things they

01:41:51.439 --> 01:41:54.420
can do to increase production last minute. And

01:41:54.420 --> 01:41:59.859
rumor, actually confirmed rumor, that one of

01:41:59.859 --> 01:42:02.239
their subsidiaries just purchased an extra piece

01:42:02.239 --> 01:42:05.840
of land nearby the two factories. Meaning that

01:42:05.840 --> 01:42:08.819
they are planning to start construction on the

01:42:08.819 --> 01:42:12.159
third factory. Wow. Yeah. That's so fast. Exactly.

01:42:12.180 --> 01:42:18.340
And I've seen on the Bilibili. every 76 seconds

01:42:18.340 --> 01:42:23.000
a car can be manufactured and it is 100 automated

01:42:23.869 --> 01:42:26.569
As in there's minimum human that's needed. However,

01:42:26.750 --> 01:42:29.590
the machines do need downtime and maintenance.

01:42:30.170 --> 01:42:34.329
We've tried to reserve spots to go and see the

01:42:34.329 --> 01:42:36.670
factories ourselves. But even the factory itself

01:42:36.670 --> 01:42:41.569
is very overbooked. Yeah, the tourists are overbooked

01:42:41.569 --> 01:42:43.409
because everyone wants to see how it's made.

01:42:43.909 --> 01:42:48.310
Actually, they initially only planned two sessions

01:42:48.310 --> 01:42:52.829
a week. And then they had to increase it to a

01:42:52.829 --> 01:42:56.800
daily. Two sessions daily, plus extra sessions

01:42:56.800 --> 01:42:59.279
on the weekends, extra tours on the weekends.

01:42:59.399 --> 01:43:01.159
To accommodate all people. And still we couldn't

01:43:01.159 --> 01:43:05.260
book a time two weeks in. Just to show you the

01:43:05.260 --> 01:43:09.340
popularity that it has. Exactly. With the two

01:43:09.340 --> 01:43:12.300
factories, with the double shift, they can technically

01:43:12.300 --> 01:43:16.640
produce 500 ,000 units a year. And this is anticipated

01:43:16.640 --> 01:43:20.300
number by the end of this year. So in comparison,

01:43:20.680 --> 01:43:25.800
Tesla in Shanghai. So Tesla produce about 1 .8

01:43:25.800 --> 01:43:30.140
million units a year. So way beyond Xiaomi's

01:43:30.140 --> 01:43:32.579
unit production, obviously, because they've been

01:43:32.579 --> 01:43:34.399
in the market longer and they're selling globally,

01:43:34.600 --> 01:43:37.060
right? Half of those are produced in Shanghai.

01:43:37.180 --> 01:43:41.300
So 900 ,000 units. Xiaomi's production capacity

01:43:41.300 --> 01:43:45.319
right now is already at, well, not exactly, but

01:43:45.319 --> 01:43:46.720
let's say end of this year, they should be at

01:43:46.720 --> 01:43:52.380
500 per year. versus 900 in tesla out of the

01:43:52.380 --> 01:43:55.399
900 probably only two -third of that is sold

01:43:55.399 --> 01:44:00.579
in china so their expected annual sales volume

01:44:00.579 --> 01:44:04.319
will match tesla in their second year of business

01:44:04.319 --> 01:44:09.270
with two sk use if You know, the production goes

01:44:09.270 --> 01:44:12.710
all right. Double shift, 150 per shift. So that

01:44:12.710 --> 01:44:15.590
times that by four. So 500 should be something

01:44:15.590 --> 01:44:19.109
that they can commit to. And then with the third

01:44:19.109 --> 01:44:22.850
factory. So also the speed of which they complete

01:44:22.850 --> 01:44:26.750
the factory construction. Every year, there's

01:44:26.750 --> 01:44:31.329
a new factory so far. So if that's the production

01:44:31.329 --> 01:44:35.680
rate. And sales continue to go up and they release

01:44:35.680 --> 01:44:39.600
a unit reaching Tesla level. It's just a matter

01:44:39.600 --> 01:44:43.460
of time and it's maybe two, three years. Yeah.

01:44:43.579 --> 01:44:47.100
Yeah. So that's why we think it ascended. It

01:44:47.100 --> 01:44:50.460
did. And it's stock price too, if you look at

01:44:50.460 --> 01:44:56.060
it. In the history of EV making in China, I think

01:44:56.060 --> 01:44:59.619
we can definitely say they're a success. Just

01:44:59.619 --> 01:45:05.399
for... How a short amount of time and how much

01:45:05.399 --> 01:45:09.359
that they were able to complete. Lei Jun at 52

01:45:09.359 --> 01:45:12.840
-year -old starting a new venture. And in three

01:45:12.840 --> 01:45:16.039
years, he actually ended somewhere. And one other

01:45:16.039 --> 01:45:17.859
thing I want to talk about is profitability.

01:45:19.180 --> 01:45:22.140
Because Lei Jun mentioned that he's willing to

01:45:22.140 --> 01:45:24.659
put up money for, I think it was five years.

01:45:25.719 --> 01:45:28.340
before making a profit. This is already very

01:45:28.340 --> 01:45:30.880
fast for car manufacturing because the amount

01:45:30.880 --> 01:45:34.680
of R &D and news distribution down costs is very

01:45:34.680 --> 01:45:40.460
high. And so they didn't take money from VCs

01:45:40.460 --> 01:45:44.420
because Xiaomi as a cell phone manufacturer had

01:45:44.420 --> 01:45:48.079
huge large cash reserves. So they could afford

01:45:48.079 --> 01:45:50.760
this whole venture by themselves. But they're

01:45:50.760 --> 01:45:53.920
also under a lot of... pressure to deliver profit

01:45:53.920 --> 01:45:57.840
as soon as possible um and my expectations right

01:45:57.840 --> 01:46:00.539
now and there's this magic number in china ev

01:46:00.539 --> 01:46:04.220
making in the market level that they're in or

01:46:04.220 --> 01:46:09.640
in in in the car in the premium ev cars if you

01:46:09.640 --> 01:46:16.479
make 350 000 cars and if your costs are at par

01:46:16.479 --> 01:46:18.500
with market you should be able to make a profit

01:46:18.500 --> 01:46:25.449
and Xpeng has delivered that. For Xiaomi right

01:46:25.449 --> 01:46:30.250
now, if you look at the current trajectory, oh,

01:46:30.270 --> 01:46:32.869
sorry, Li Auto has delivered that. It's the first,

01:46:32.909 --> 01:46:38.170
this type of EV to generate a profit. Xiaomi

01:46:38.170 --> 01:46:41.109
can probably do it by end of this year, but because

01:46:41.109 --> 01:46:44.149
it ramps up production, right? So I think the

01:46:44.149 --> 01:46:46.850
first year Xiaomi will report a profit will be

01:46:46.850 --> 01:46:51.340
actually 2026. And it probably reaches profitability

01:46:51.340 --> 01:46:55.840
by end of this year. Right. So... It's really

01:46:55.840 --> 01:46:59.779
fast. Really fast because there's only two manufacturers.

01:47:00.079 --> 01:47:03.420
The new type of manufacturers, one is Li Auto.

01:47:03.779 --> 01:47:07.640
The other one is called Leap Motor. Yeah. Ling

01:47:07.640 --> 01:47:12.640
Pao Zi Chou. Either your volume goes up and you

01:47:12.640 --> 01:47:16.550
hit scales of production, 350 ,000, or... you

01:47:16.550 --> 01:47:19.229
have some level of vertical integration. So you

01:47:19.229 --> 01:47:21.789
own the battery making or you own components.

01:47:21.890 --> 01:47:28.329
So Leap Motor actually achieved profit at 300k,

01:47:28.390 --> 01:47:31.050
so a bit lower than the 350, let's say magic

01:47:31.050 --> 01:47:33.449
number, because they do have some vertical integration

01:47:33.449 --> 01:47:37.470
going on. And Xiaomi, I feel like it's, and they've

01:47:37.470 --> 01:47:40.310
done it in years. So for Xiaomi to do it in a

01:47:40.310 --> 01:47:42.689
year and a half is also... creating a record

01:47:42.689 --> 01:47:47.310
in the fastest automaker to EV maker to produce

01:47:47.310 --> 01:47:50.470
a profitability. And they actually achieved it

01:47:50.470 --> 01:47:53.689
in two different ways. BYD is also absolutely

01:47:53.689 --> 01:47:55.590
generating revenue, but they're in a different

01:47:55.590 --> 01:47:58.310
category. They're in the lower cost category.

01:47:58.789 --> 01:48:04.289
Now that we know what went on in the past four,

01:48:04.390 --> 01:48:07.510
five years, what do you think is going to happen

01:48:07.510 --> 01:48:10.649
in the future? Oh my God. Million dollar question.

01:48:10.869 --> 01:48:13.689
Yeah. I have another piece of evidence, which

01:48:13.689 --> 01:48:16.529
I think is a very good start of what could be

01:48:16.529 --> 01:48:20.670
the direction of the future for Xiaomi EV. I

01:48:20.670 --> 01:48:24.170
think very positively of this venture. I know

01:48:24.170 --> 01:48:26.869
this is relatively controversial. I think people,

01:48:27.029 --> 01:48:29.970
at least the traditional manufacturers, are thinking

01:48:29.970 --> 01:48:32.189
that, oh, how could you be doing something? You're

01:48:32.189 --> 01:48:35.029
just copycatting. This is not even a serious

01:48:35.029 --> 01:48:37.789
motor. And the production level is so low. But

01:48:37.789 --> 01:48:42.800
Lei Jun himself? wants to aim for a goal that's

01:48:42.800 --> 01:48:47.159
very high up there like not within reach he wants

01:48:47.159 --> 01:48:50.699
to be the number five top five top five so at

01:48:50.699 --> 01:48:52.939
least four million units automakers in the world

01:48:52.939 --> 01:48:56.039
right like this is crazy like you're a cell phone

01:48:56.039 --> 01:48:58.840
manufacturer you're But I mean, when he went

01:48:58.840 --> 01:49:01.039
into cell phone manufacturing, he didn't think

01:49:01.039 --> 01:49:02.720
I'm going to be the top three either, right?

01:49:02.840 --> 01:49:06.600
Or I mean, maybe he did, but it was a miracle.

01:49:06.819 --> 01:49:10.560
It was a, yeah, it was unintended, but it was

01:49:10.560 --> 01:49:16.739
a, he really was very good at making hardware

01:49:16.739 --> 01:49:18.979
products and he will continue to do that. And

01:49:18.979 --> 01:49:20.779
he has a track record of demonstrating that.

01:49:21.779 --> 01:49:25.500
Also, very interestingly, are you a GT game Gran

01:49:25.500 --> 01:49:28.869
Turismo player? You're not. Okay. Here's another

01:49:28.869 --> 01:49:32.989
surprise. My love is limited to F1. Ultra is

01:49:32.989 --> 01:49:38.989
the only Chinese car that is featured in Gran

01:49:38.989 --> 01:49:43.670
Turismo 7. No. Yes. And this was launched in

01:49:43.670 --> 01:49:48.869
June. So just two months ago. And so what is,

01:49:48.909 --> 01:49:50.489
okay, what is this GT game? Does Xiaomi have

01:49:50.489 --> 01:49:55.939
to pay GT to get in? I don't. think that they

01:49:55.939 --> 01:49:59.479
have to i do think this is i don't know for sure

01:49:59.479 --> 01:50:04.939
but i think the designer for gt highly approves

01:50:04.939 --> 01:50:08.979
the car so gt is a series of it's basically a

01:50:08.979 --> 01:50:12.420
racing video game that is developed it was released

01:50:12.420 --> 01:50:15.199
in playstation games something special about

01:50:15.199 --> 01:50:19.319
gt is it is intended to emulate the not just

01:50:19.319 --> 01:50:23.520
the appearance but the physical performance of

01:50:23.520 --> 01:50:26.199
the vehicle as well so in the game you will actually

01:50:26.199 --> 01:50:28.500
experience what's it like to be turning that

01:50:28.500 --> 01:50:33.100
car cornering like driving on curbs um so if

01:50:33.100 --> 01:50:35.279
you can't get a xiaomi car delivered to your

01:50:35.279 --> 01:50:37.439
house because of the order backlog you can buy

01:50:37.439 --> 01:50:42.500
the gt3 or gt isn't that a very smart way of

01:50:42.500 --> 01:50:47.399
getting your worldwide fans now everyone at least

01:50:47.399 --> 01:50:53.760
who plays gt seven can see and feel what's it

01:50:53.760 --> 01:50:57.579
like to be driving on a simulator and su7 ultra

01:50:57.579 --> 01:51:00.680
actually this relates to kind of my view for

01:51:00.680 --> 01:51:03.420
the future which is at some point right because

01:51:03.420 --> 01:51:06.279
china is the first one to really adopt the first

01:51:06.279 --> 01:51:09.800
major country to really adopt ev they have to

01:51:09.800 --> 01:51:13.520
turn to the global market at some point and the

01:51:13.520 --> 01:51:17.300
estimate is that by 2017 is with when xiaomi

01:51:18.159 --> 01:51:21.960
might be thinking about global penetration. I'm

01:51:21.960 --> 01:51:26.960
ready. So it's interesting how, you know, they're

01:51:26.960 --> 01:51:31.239
almost layering, putting in the pre -work even

01:51:31.239 --> 01:51:35.840
now to make this happen. And you know who else

01:51:35.840 --> 01:51:39.220
really loves Xiaomi outside of China? Outside

01:51:39.220 --> 01:51:41.180
of China? Yeah. Wait, a person or a company?

01:51:41.199 --> 01:51:44.399
A person, but he's a CEO of a company. Oh, who

01:51:44.399 --> 01:51:48.439
would that be? The CEO of Ford, Jim Farley. He

01:51:48.439 --> 01:51:53.300
talks about how he loves his Xiaomi Su7 extensively

01:51:53.300 --> 01:51:57.260
in the media. Right? For an auto manufacturer

01:51:57.260 --> 01:52:00.819
to talk about another auto manufacturer in praise.

01:52:01.220 --> 01:52:04.380
Wow. That's pretty high praise. Right. And props

01:52:04.380 --> 01:52:07.199
to Ford. Ford is actually, as a company, they

01:52:07.199 --> 01:52:09.779
visited China looking at the EV industry. And

01:52:09.779 --> 01:52:12.000
they're actually the second largest EV manufacturer

01:52:12.000 --> 01:52:16.060
in the US next... after tesla but i mean tesla

01:52:16.060 --> 01:52:21.640
is way up here so ford did a trip to china and

01:52:21.640 --> 01:52:23.800
they looked at all the manufacturing they went

01:52:23.800 --> 01:52:27.260
to buid and they went to catl which is a battery

01:52:27.260 --> 01:52:31.159
manufacturer and they realized that us is behind

01:52:31.159 --> 01:52:34.979
and they're not afraid to talk about these you

01:52:34.979 --> 01:52:38.640
know so they went on us media saying that the

01:52:38.640 --> 01:52:40.899
chinese battery technology is way more advanced

01:52:40.899 --> 01:52:44.340
we need to bring it to the us They actually got

01:52:44.340 --> 01:52:47.020
a little bit of backlash because of the geopolitical

01:52:47.020 --> 01:52:49.439
tension, but they ended up negotiating somehow

01:52:49.439 --> 01:52:52.819
to open up a factory in Michigan for the latest

01:52:52.819 --> 01:52:57.279
technology in battery manufacturing called the

01:52:57.279 --> 01:53:02.159
lithium -ion phosphate battery with CATL. So

01:53:02.159 --> 01:53:08.359
CEO Jim Farley managed in that trip to, I guess,

01:53:08.380 --> 01:53:11.960
get his hands onto a Xiaomi Su 7, brought it

01:53:11.960 --> 01:53:15.659
back. to the u .s drove it for six months loved

01:53:15.659 --> 01:53:18.319
it didn't want to give it up i don't know what

01:53:18.319 --> 01:53:22.039
like there's no follow -up story um but yeah

01:53:22.039 --> 01:53:24.619
no he went on tv saying how good it is and how

01:53:24.619 --> 01:53:27.579
much he enjoyed the experience yeah and how how

01:53:27.579 --> 01:53:30.420
much uh how much we need to acknowledge that

01:53:30.420 --> 01:53:35.460
china is ahead in this perspective yeah yeah

01:53:35.460 --> 01:53:42.449
high praise exactly yeah And so the founder of

01:53:42.449 --> 01:53:46.210
the GT7 game, GT game, Kazunori Yamaguchi, also

01:53:46.210 --> 01:53:49.569
had a test drive in Beijing with the Xiaomi car.

01:53:49.750 --> 01:53:52.630
With that very limited experience, he also enjoyed

01:53:52.630 --> 01:53:56.909
the feeling as well. In the game release, one

01:53:56.909 --> 01:54:01.369
of the ultra product manager, Xiaowen, she mentioned,

01:54:01.449 --> 01:54:04.210
made it very official that in the next year,

01:54:04.630 --> 01:54:10.140
Xiaomi EV is going to foster A thousand racing

01:54:10.140 --> 01:54:15.500
driver for high performance. And company employees

01:54:15.500 --> 01:54:20.680
included. Wow. So if you want to get a race driver's

01:54:20.680 --> 01:54:22.840
license. Xiaomi would pay for it? Xiaomi would

01:54:22.840 --> 01:54:28.880
pay for it. Xiaomi, are you hiring? Another very

01:54:28.880 --> 01:54:32.430
attractive onboarding package. That's crazy.

01:54:32.649 --> 01:54:34.670
You could be, you know, getting the driver's

01:54:34.670 --> 01:54:37.829
license and maybe decide later whether you want

01:54:37.829 --> 01:54:39.750
to stay with you. But just all in all, I think

01:54:39.750 --> 01:54:42.729
they're pretty ahead of how they want to be attracting

01:54:42.729 --> 01:54:44.869
talents and the way they're building cars. Leijun

01:54:44.869 --> 01:54:47.430
really seemed to enjoy, thoroughly enjoy this

01:54:47.430 --> 01:54:51.329
process of making the EV. He himself test drove

01:54:51.329 --> 01:54:56.590
about 170 plus cars borrowed from colleagues

01:54:56.590 --> 01:55:00.289
or... Just also like the cars that he had bought

01:55:00.289 --> 01:55:05.510
personally. He got a racing license as well.

01:55:06.630 --> 01:55:11.289
Test drove the car in winter, in summer, in different

01:55:11.289 --> 01:55:15.829
weathers, in different locations. And in the

01:55:15.829 --> 01:55:19.029
press release, he was able to confidently and

01:55:19.029 --> 01:55:22.350
competently talks about all the small details

01:55:22.350 --> 01:55:27.100
of a good performance car. That's pretty transformative.

01:55:27.239 --> 01:55:29.220
He had fun. Yeah, I think you have to really

01:55:29.220 --> 01:55:33.319
love something to devote your time and energy

01:55:33.319 --> 01:55:36.779
to it and making it a success. And he has demonstrated

01:55:36.779 --> 01:55:39.680
that openly to the public, which is actually

01:55:39.680 --> 01:55:43.319
one of the key reasons why the Xiaomi EVs so

01:55:43.319 --> 01:55:47.329
far are perceived so well in the market. despite

01:55:47.329 --> 01:55:50.850
some negative media attention with a crash recently.

01:55:51.069 --> 01:55:54.750
But the amount of energy and the amount of love

01:55:54.750 --> 01:55:58.470
that he has expressed in this project through

01:55:58.470 --> 01:56:02.710
all his social media is definitely out there

01:56:02.710 --> 01:56:08.210
and very much visible. I think with the release

01:56:08.210 --> 01:56:13.010
of the Xiaomi EV, the performance car, more racing

01:56:13.010 --> 01:56:16.819
tracks inside of China. will start to attract

01:56:16.819 --> 01:56:20.579
more people who are within the ultra club or

01:56:20.579 --> 01:56:24.399
within the EV performance league. For the first

01:56:24.399 --> 01:56:28.939
time ever in China, people don't want to damage

01:56:28.939 --> 01:56:34.140
their pocket or pay extreme amount of money for

01:56:34.140 --> 01:56:36.159
a performance vehicle. We'll finally now get

01:56:36.159 --> 01:56:39.420
the chance to get a car and to maybe enter that

01:56:39.420 --> 01:56:42.199
space. So maybe, I don't know, 10 years down

01:56:42.199 --> 01:56:44.850
the line. We'll have more people who drive in

01:56:44.850 --> 01:56:47.850
Le Mans who are Chinese. I don't know. That would

01:56:47.850 --> 01:56:49.829
be awesome. That would be awesome. More people

01:56:49.829 --> 01:56:53.649
maybe entering like F1, other performers. I don't

01:56:53.649 --> 01:56:56.810
know. I think so. I think this is definitely

01:56:56.810 --> 01:57:00.449
a good start. I don't know how much this one

01:57:00.449 --> 01:57:03.810
car will, you know, but I think that a mix of

01:57:03.810 --> 01:57:07.409
things will happen to push the Chinese auto industry

01:57:07.409 --> 01:57:10.739
forward. And my wildest dream, maybe in the year

01:57:10.739 --> 01:57:14.979
2027, and I've told this to a friend in Leijun's

01:57:14.979 --> 01:57:19.300
investing firm, Shunwei Capital. I just casually

01:57:19.300 --> 01:57:23.420
joked with her and I said, maybe one day, Su7

01:57:23.420 --> 01:57:26.220
or like one of the Xiaomi cars, Xiaomi EVs will

01:57:26.220 --> 01:57:28.300
be featured in Fast and Furious. You don't know.

01:57:28.500 --> 01:57:30.500
Never know. It's possible. It might be the first

01:57:30.500 --> 01:57:34.399
EV. Might be the first EV. Yeah, no, definitely.

01:57:35.439 --> 01:57:39.279
Looking forward to the future of Xiaomi EV. Yeah.

01:57:39.640 --> 01:57:43.300
Look forward to that, guys. And that's a wrap

01:57:43.300 --> 01:57:46.079
on a nearly two -hour episode. If you made it

01:57:46.079 --> 01:57:48.600
this far, thank you for sticking with us. Whether

01:57:48.600 --> 01:57:50.760
you're deep in thought or just needed a companion

01:57:50.760 --> 01:57:53.340
for your commute, we like to think it was a bit

01:57:53.340 --> 01:57:56.239
of Yuan Fen or fate that brought you here. If

01:57:56.239 --> 01:57:57.960
you enjoyed the show, the best way to support

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us is by leaving a quick rating on Apple Podcasts

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or Spotify. It truly helps us grow. We'll see

01:58:04.260 --> 01:58:05.680
you in the next episode of Ascent.