The only way for Xiaomi's EV unit to succeed is to be one of the top 5 and ship more than 10 million cars annually, said Lei Jun.
(Image credit: Xiaomi)
The founder of Chinese smartphone giant Xiaomi shared his thoughts on the future of competition in the electric vehicle (EV) industry after Huawei's automotive business helmsman recently did so.
When the EV industry reaches maturity, the world's top five brands will have more than 80 percent of the market share, and the only way for Xiaomi to succeed is to be one of the top five and ship more than 10 million units a year, the smartphone maker's founder and CEO Lei Jun tweeted on Wednesday.
"The competition will be brutal," he wrote.
I'm convinced that the world's top 5 brands will hold more than 80% of the market share when the EV industry reaches maturity. In other words, the only way for us to succeed is to be one of the top 5 and ship more than 10 million cars annually. The competition will be brutal.
— Lei Jun (@leijun) October 19, 2022
Lei said Xiaomi conducted thorough research and gained deep insights into the industry before entering the EV market.
He believes that EVs are a form of consumer electronics with intelligence, software and user experience at their core, and that the nature of the automotive industry will evolve from mechanics to consumer electronics, with market share highly concentrated in the top players.
Compared with gasoline vehicles, the manufacturing threshold for EVs has been greatly reduced: 30,000 components are highly modular, and the cost of batteries has fallen 80 percent in the past decade, with room for at least 50 percent more cost reductions in the future, according to Lei.
The manufacturing threshold of EVs has been dramatically lowered compared to gasoline cars: 30,000 components are highly modular, and the cost of batteries has fallen by 80% in the past ten years (with at least 50% more room for cost reduction in the future).
— Lei Jun (@leijun) October 19, 2022
This is the second time in the past two months that Lei has shared his thoughts on the EV industry on Twitter.
"The race is just getting started, and I think Xiaomi has plenty of opportunities," Lei said last month.
Xiaomi officially announced its entry into the EV race on March 30 last year, saying it was investing an initial RMB 10 billion ($1.38 billion) in the car business and expected to invest $10 billion over the next 10 years.
At the end of November last year, Xiaomi signed a contract with the Beijing Economic and Technological Development Area Management Committee to build a headquarters base for its auto business and its sales and R&D headquarters in Yizhuang, and will build a car factory with an annual production capacity of 300,000 units.
The plant will be built in two phases, with annual production capacity of 150,000 vehicles in the first and second phases, respectively, an announcement at the time said, adding that Xiaomi's first car is expected to roll off the production line and achieve mass production in 2024.
Before Lei shared his latest insight, Richard Yu, Huawei's managing director and CEO of its smart car solutions business unit, said earlier this month when asked how many players there would eventually be in the Chinese auto market that there would be no more than five major players.
For car brands, competition is like aircraft manufacturing, where only a few will eventually win, Yu said in an interview with a local auto blogger.
There used to be a lot of players in the airplane manufacturing industry, but only Airbus and Boeing ended up being the main players, he said.
It is also worth noting that William Li, founder, chairman and CEO of NIO, said in an interview with German media outlet Heise Autos earlier this month that his company hopes to become one of the top five car manufacturers in the world by 2030.