Who is manufacturing Xiaomi cars?

The Xiaomi car, which is delivered upon release, is the riskiest product since Lei Jun started his business. It was so risky that Lei Jun, a high-achieving student, once superstitiously posted on Weibo: "Lei Jun makes cars, it's destiny; the word 'Lei' carries electricity, the word 'Jun' carries cars." Perhaps feeling that the phrase "it's destiny" had a strong element of luck, he eventually deleted the post.

It's better to forge ahead than to rely on destiny.

At 55, Lei Jun seems to have returned to the excited state he was in when Xiaomi was first founded. However, unlike more than a decade ago when he entered the mobile phone industry, Xiaomi now no longer touts itself as an internet company, but rather more like a manufacturing enterprise.

The familiar terms "born for fever" and "internet thinking" have faded from Lei Jun's vocabulary, replaced by "creating products that move people and are reasonably priced" and "not pursuing high hardware profit margins."

However, one thing remains unchanged: whether it's smartphones or cars, Xiaomi's production capacity is constrained in the initial stage of market launch.

Several market research institutions and analysts predict that Xiaomi will only sell 90,000 to 100,000 cars this year. The main reason for the low sales is still the limited production capacity, as the first-phase factory can only produce 150,000 vehicles per year, which is indeed not enough.

Everyone is looking forward to Xiaomi's production capacity increasing, including the suppliers for the SU7.

Who benefits?

In January of this year, Xiaomi deliberately posted a Weibo to refute rumors. The gist was that they noticed a picture circulating online about the Xiaomi car industry chain, and found that at least 50% of it was completely wrong. "We are deeply puzzled by the misleading information and the confusion it has caused to the public and investors. We hereby clarify this."

It was later proven that the circulated picture was actually the so-called "research results" of a securities software company, with the purpose of driving speculative trading, similar to the tactics of "Tesla concept stocks" and "Huawei concept stocks."

At that time, the Xiaomi car had not yet been released, so there was room for manipulation to ride the hype. Now it's not possible anymore, and the list of suppliers with a higher "Xiaomi content" has already been established.

Not long ago, CICC International combed through the main suppliers based on the five core technologies of the Xiaomi car.

This list has two characteristics: first, except for the battery, chassis, and camera, Xiaomi has basically only selected one supplier for each link, possibly because the order volume and supply chain maturity are not enough, and there is no way to cultivate secondary or tertiary suppliers in the automotive supply chain; second, when domestic suppliers can meet the requirements, Xiaomi prioritizes domestic suppliers or companies in the automotive industry chain that Xiaomi had previously invested in.

Core Technology 1: Super Motor

Xiaomi has released a total of two electric motors. The V6 and V6s, which have been mass-produced and installed, are not self-developed. They were jointly developed with Huichuan and Unitec Electronics. The V8s, which will not be mass-produced until 2025, is self-developed.

Core Technology 2: CTB Battery + High Voltage Platform + Efficient Thermal Management

The Xiaomi SU7 Standard Edition is equipped with Freddie's blade battery, while the Pro and Max editions are respectively equipped with CATL's Shenxing battery and Kirin battery. The power modules are from Infineon, and the three suppliers for thermal management are Sanhua Intelligent Control, Yilun Co., and Huayu Sibao.

Core Technology 3: Integrated Die Casting and Chassis Technology

Xiaomi has independently developed the "large die-casting integrated cluster" and designed a set of the most suitable and efficient production line. The die-casting machine is customized by partners according to the needs of this production line.

The chassis-related suppliers include Wuxi Zhenhua, which provides welding parts, and Fuyao Glass, which provides vehicle glass. In the control system, Bosch provides the ABS/ESP/DPB system, Wanxiang Qianchao provides the drive shaft and constant velocity drive shaft, Nidec provides the electric power steering system, and Top Group provides the air suspension system.

Core Technology 4: Intelligent Driving System

The automatic driving system "Pilot" released by Xiaomi this time has two configurations: Pro and Max. The SU7 model is equipped with the Pilot Pro system by default, while the SU7 Pro and SU7 Max are equipped with the Pilot Max system.

Specifically in terms of the composition of hardware devices, the high-definition cameras involve camera chip and module companies such as Sunny Optical, OFILM, and Valeo.

Ultrasonic radar and millimeter-wave radar are provided by Desay SV or Zongmu Technology, in which Xiaomi has previously invested. It should be noted that although Pilot Max is already equipped with three millimeter-wave radars, there may still be room for further increase in the number of millimeter-wave radars as Xiaomi's automatic driving capabilities continue to rise.

Hesai Technology, in which Xiaomi has previously invested, is the main supplier of LiDAR for Xiaomi's SU7, and similarly, Xiaomi's Pilot Max is only equipped with one LiDAR, which is much less than the number of LiDARs required for general L3+ automatic driving. Xiaomi's demand for LiDAR may have some room for growth.

NVIDIA's Orin chip is the main chip supplier for Xiaomi's SU7 automatic driving system, and Desay SV or Weiran Hengrun provides the solution for the automatic driving platform and domain controller.

Comparing Pilot Pro and Pilot Max, the RMB 8000 price difference between the two different models mainly comes from one NVIDIA Orin chip, one Hesai Technology LiDAR, and two rear corner millimeter-wave radars. Based on past experience, Xiaomi may maximize the cost-effectiveness of its products, and as different models are further introduced to the market and Xiaomi's automatic driving technology is upgraded, technology hardware such as chips and sensors may continue to benefit.

Core Technology 5: Intelligent Cockpit

Xiaomi's car chooses the Qualcomm Snapdragon 8295P chip as the main control chip for the intelligent cockpit, with a computing power of around 30 TOPS. In addition, the Xiaomi SU7 series also uses the QCA6696 and QCA6695 WiFi chips.

The Xiaomi SU7 and SU7 Pro are both equipped with a 16.1-inch 3K resolution central control screen and a 7.1-inch flip-type instrument screen. Xiaomi may choose TCL as the main supplier for the central control screen, while the instrument screen supplier is mainly handled by BOE. The SU7 Max is additionally equipped with a 56-inch head-up display system, with the supplier being Zejing Technology.

Like the intelligent driving control platform, Desay SV Automotive is also a major supplier of intelligent cockpit control platform solutions.

Who is waiting to enter the venue?

Xiaomi did not start laying out the automotive industry chain after announcing its car-making, and it is well known that the financing of Xiaopeng and NIO was finalized before.

After that, Xiaomi invested in many automotive parts enterprises, especially in the field of electrification and intelligence.

Therefore, as the first model, Xiaomi SU7 can use the top domestic suppliers in core configurations, such as CATL and BYD's batteries.

Considering Xiaomi's consistent control of the supply chain and the characteristics of the automotive industry, it is very likely that different suppliers will be added in the subsequent models to maintain the stable supply of parts and price system. These additional quotas are probably from Xiaomi's investment targets in the field of new energy vehicles, including some unlisted companies.

Powertrain

In the field of lithium batteries, Xiaomi has invested in many battery production and R&D companies such as Honeycomb Energy, Weilan New Energy, Ganfeng Lithium, and Zhongchuang Innovation Aviation. Among them, Zhongchuang Innovation Aviation and Honeycomb Energy ranked third and sixth in the installation volume of power batteries and new energy vehicle companies in mainland China in 2023.

In addition to these two battery production and R&D companies invested by Xiaomi, it is also very likely that Xingwanda will enter Xiaomi's automotive industry chain in the future. Xiaomi is an important customer of Xingwanda in the mobile phone field. With the slowdown of the mobile phone market, power batteries for new energy vehicles have become one of Xingwanda's important strategies.

In addition to the investment in lithium-ion power batteries, Xiaomi also has layout in solid-state batteries and has invested in Weilan New Energy, a leading solid-state lithium battery production and R&D company, which is expected to enter Xiaomi's battery supplier.

Vehicle chassis

Xiaomi mainly lays out air suspension and wire control, among which in the air suspension field, Xiaomi has invested in Konghui Technology. It is very likely that the new SUV model to be released in the second half of the year can be equipped with air suspension, and Konghui Technology has a great opportunity to enter the supply chain.

In the field of wire control, Xiaomi has invested in Tongyu Automobile.

Intelligent connected network

Looking at the supply chain companies invested by Xiaomi in intelligent connected networks, they can be roughly divided into the following categories:

1. Sensors (including LiDAR) and upstream supply chain enterprises

Xiaomi has successively invested in mainland LiDAR companies, such as Suteng Juchuang and Hesai Technology, through equity financing. These two companies are expected to go public around 2024.

2. Intelligent driving solutions and chip companies

Xiaomi's previous investment in Aiboparking products may provide different parking technology support for host factories including Xiaomi, while Geopartner and Zongmu Technology are committed to exploring high-level autonomous driving solutions. In the field of main control chips, which are mainly occupied by mature markets such as Nvidia and other overseas chip suppliers, Xiaomi has also invested in Heizhima Intelligent, which is a positive signal for domestic chip substitution for intelligent driving main control chips.

3. Communication, control, and power chip companies

Previously, most of the main suppliers of vehicle-mounted communication, control, and power chips came from traditional chip companies including overseas Infineon, ON Semiconductor, and mainland's WT Microelectronics. Xiaomi has invested in Weizhao Semiconductor in the power chip field, and in the control field, Xiaomi has previously invested in Yuntu Semiconductor, Ainuo Semiconductor, and other battery management and vehicle driving control chip companies. The vehicle communication chip company Yutai Microelectronics, which Xiaomi previously invested in, has completed its A-share listing.

Epilogue

After the release of Xiaomi's car, there were many voices asking: Why hasn't Apple made a car, but Xiaomi has?

Some answered from a financial perspective: Xiaomi's total revenue last year was 271 billion yuan, lower than the 280 billion yuan in 2022 and the 328.3 billion yuan in 2021, indicating that Xiaomi's existing business can no longer support continued growth in performance, so a new business is needed.

Some answered from a mission perspective: Apple cannot redefine the car market as it did with the smartphone, nor can it create a "high selling price, high profit margin, and high market share" car triangle. Xiaomi actively embraces low profit margins, promises not to pursue high hardware profit margins, and is determined not to let the car industry make easy money, which is simply a two-way journey.

Although the above two answers have different perspectives, they may both fit Xiaomi's original intention of making cars. Especially the second point, which directly labels Lei Jun as "honest".

For Xiaomi, designing the appearance to appeal to consumers, designing functions that better fit user habits, and rigorously controlling the supply chain to reduce costs are all logically the same whether making a car, a power bank, or a plug board. Every time Xiaomi enters a new market or launches a new product, it cannot do so without the above considerations.

Not long ago, Lei Jun did a live broadcast on Douyin, originally intended for chatting and promoting products, but the tone of the broadcast turned into a refutation: he is not a top scorer in the college entrance examination, and his bank account does not have a cold 4 billion yuan.

The "cool male lead" that outsiders envy seems to be a label that Lei Jun does not want. He wants to prove that he is like Forrest Gump under the conservative creed, that good deeds bring good results, and behind the successful launch of the SU7, there are Jenny, Lieutenant Dan, and Lei Jun's long-standing entrepreneurial accumulation.

Disclaimer: This article is based on publicly available information or information provided by interviewees, but Decode and the article's author do not guarantee the completeness or accuracy of such information. Under no circumstances does the information in this article or the opinions expressed constitute investment advice for anyone.