Mobile phones are not easy to make money, go to build a car?

Source/Screenshot of Extreme Daily on Meizu’s official website

Extreme Daily (ID: rancaijingapp) original

Author | Hui Pengquan

Editor | Rao Xiafei

Recently, there have been many rumors about Meizu.

For example, Meizu is reserving and recruiting talents in automobile-related fields; the Meizu Technology Building has been replaced with a new poster of “all in auto”; Wan Zhiqiang, Assistant Vice President of Meizu Technology, has revealed two styles of the new Meizu flagship store, both of which have display cars. exposed.

Although Yang Xueliang, senior vice president of Geely Automobile, clearly responded that Meizu only provides services for car companies, from the perspective of the industry, these information all indicate one thing, that is, Meizu is trying to enter the automotive field .

Zhang Xiang, a visiting professor at the Yellow River University of Science and Technology, told Jipai Daily that Meizu’s participation in automobile manufacturing is similar to Huawei’s, and it also broadens the boundaries of its mobile phone products and applications to the automotive field, attracting more users and car companies to buy products and services.

In fact, the participation of mobile phone manufacturers in car building is not a new topic.

As early as 2014, Apple started a car-building plan, but due to internal disputes over car-building routes and other reasons, the plan was temporarily shelved. However, recent sources said that Apple is likely to rebuild the Apple Car team before the end of this year.

Xiaomi is a mobile phone maker that announced its car production later. On March 30, 2021, Lei Jun said, “I am willing to risk all the achievements and reputation accumulated in my life to fight for Xiaomi Auto.”

Not to mention Huawei, although it does not build cars, almost every car has a shadow of Huawei.

Why are mobile phone manufacturers so keen to build cars? Zhang Xiang analyzed that mobile phone manufacturers have ecosystems such as voice recognition, maps, and wallets, which are exactly what many car companies need and can empower car companies. In addition, as the smartphone industry continues to slump, mobile phone companies must also open up new businesses to protect the company’s share price and market value.

However, not every new energy vehicle on the tuyere can “fly”. Jia Yueting, who is far away in the United States, continues to pursue his dream of building a car, and “returning to China next week” seems simple, but it has become a flag that is difficult for him to complete.

Compared with the eagerness of other mobile phone manufacturers, Samsung, which ranks first in the global mobile phone shipment rate, has clearly stated that it will not build cars, because after evaluation, the investment in car building is huge, and there is no guarantee of a continuous source of profit, also known by netizens as “” Wake up.”

It is undeniable that with the global smartphone market experiencing three consecutive quarters of decline, mobile phone manufacturers are eager to find the next growth point. Big waves wash the sand, there will always be people who will stay, who will have the last laugh, it is not known.

01 Those mobile phone manufacturers involved in car building

There is no doubt that in the mobile phone industry, Huawei is the “class representative” of my country’s domestic high-end mobile phones, and in the automotive industry, it is the soul of some car companies.

Before joining hands with Huawei, Xiaokang and Celis were not well known to the public. In April 2021, the “Huawei Customized Edition” SF5, which has undergone major changes by hundreds of Huawei technicians and the unconditional cooperation of Xiaokang Co., Ltd., was launched, and 8,000 units were sold throughout the year, while the number in 2020 was 800 units.

Source/Screenshot of Extreme Daily on AITO’s official website

The next Wenjie M5 is regarded by Huawei as a “pro-son”. Huawei has worked hard from pre-planning, design, marketing, and then to sales, handing over 365 orders on the first day and over 1,000 vehicles in two days. . It is precisely because of Huawei’s deep participation that some riders replaced the “AITO M5” behind the car with “Huawei”.

Huawei’s small test in the field of car manufacturing has also led more car companies to learn from Huawei. According to the incomplete statistics of Extreme Daily, there are 13 car companies that cooperate with Huawei, including Nezha Automobile, BAIC, and Avita.

It is understood that the cooperation models between Huawei and car companies are divided into three categories: supplier model, Huawei Inside model (HI) and Huawei Smart Selection model.

The supplier model means that Huawei provides intelligent components to car company customers, covering intelligent driving, smart cockpit and other sectors; Huawei Inside model (HI) means that Huawei and car companies jointly define and develop, and use Huawei’s full-stack smart car Solution; Huawei Smart Selection Mode is a mode in which Huawei is deeply involved, including product definition, vehicle design, parts supply, vehicle sales, etc.

Different from Huawei’s “do not build cars”, Xiaomi has entered the field of car building with a high profile.

Lei Jun personally serves as the CEO of the smart electric vehicle business, with an initial investment of 10 billion yuan (RMB, the same as the following if not marked), and is expected to invest 10 billion US dollars in the next 10 years. The cash balance at the end of 2020 will be 108 billion yuan.”

Regarding Xiaomi’s car-building, Liu Lei, who has worked at Xiaomi for many years, told Jipai Daily that they are very supportive and believe that Xiaomi’s car-building is a must and can be done, “I understand that Xiaomi is down-to-earth. It is a real enterprise, so we have established a wholly-owned subsidiary this time, and we will not cooperate with others, nor will we be kidnapped by capital, and the first car will only be produced in 2024, and there will be a polishing process.”

In addition, Liu Lei also shared a few small details. For example, it is difficult to transfer to Xiaomi’s auto department internally. He must be very good in this department and be able to meet the needs of the auto department. In addition, he noticed that when talking about Xiaomi cars only with colleagues in the automotive department, whether they are senior managers or grassroots employees, their eyes will glow. “I believe that Xiaomi can make car products that move people’s hearts and prices are kind, and the first generation of Xiaomi cars should be very good.” Liu Lei said.

Meizu, OPPO, vivo and BlackBerry are also among the mobile phone manufacturers participating in the car manufacturing.

By providing vivo Jovi InCar 2.0 version, vivo has established cooperative relationships with more than 80 car brands and provided services to more than 40 million car owners. A few days ago, vivo also invested 100 million US dollars in China’s third-ranked power battery manufacturer Zhongxinhang. Industry insiders explained that it is not limited to the layout of new energy vehicles, but may also be involved in the field of energy storage.

As the number one smartphone sales in China in 2021, OPPO not only applied for the OCAR trademark, but also carried out the layout of automobile patents. It also poached technical experts from Xiaopeng Motors and other car companies to set up an automobile business department. Some industry experts said that OPPO made The car is just waiting for the official announcement .

02 Mobile phone manufacturers become “doing no business”

Why are mobile phone manufacturers scrambling to make cars? In the eyes of many people in the industry, the continued downturn in the mobile phone market is one of the reasons .

Recently, Canalys, a third-party research institute, released a report on the global smartphone market in the third quarter of 2022. The data shows that the global smartphone market suffered a continuous decline, down 9% year-on-year. According to IDC data, global smartphone sales peaked in 2016, and then declined year by year. In the first half of 2022, domestic smartphone shipments decreased by 21.7% year-on-year to 134 million units, which may fall to the lowest level in 10 years.

Due to the rapid expansion rate, Meizu has faced severe operating pressure since 2017, and its market share has gradually shrunk. According to IT House data, as of December 31, 2021, the market share of Meizu mobile phones was only 0.1%. Before being acquired by Geely, the reason why Meizu transformed the auto industry was more of a last resort. From the official statement of Meizu, Meizu will not release a new phone in 2022.

According to statistics from CINNO Research, the sales volume of smartphones in the Chinese mainland market in September was about 19.6 million units, down 4% month-on-month from August and 18% year-on-year, both month-on-month and year-on-year. Xiaomi ranked fifth, with a year-on-year decrease of 36.3% and a month-on-month decrease of 18.5%. The Top 5 brands experienced the largest month-on-month decline.

And the downturn in the smartphone market doesn’t seem to be turning around anytime soon. Industry analysts say there is still no sign of improvement in market demand through the fourth quarter of this year and the first half of 2023.

Mobile phone manufacturers are actively saving themselves.

In July of this year, Meizu, whose market share plummeted, and Geely’s Hubei Xingji Times got married. Meizu needed strong foreign aid to fight against its old rivals, and Geely also needed strong foreign aid to upgrade the OTA and smart cockpits of the Krypton vehicle.

Li Shufu once said that in the future, the two industries of smart cars and smart phones are an integrated relationship of multi-terminal, full-scenario, and immersive experience for common users. The ecological chain can achieve super synergy.

According to Zhang Shunjun, a senior expert in the industry, affected by the fluctuation cycle of consumer electronics, new energy policies have exerted force, especially under the dual-carbon strategy, Xiaomi and Huawei have embarked on a journey of “car building” .

In fact, on the other hand, building a car is a must for Xiaomi, because “If Xiaomi doesn’t do it, it will fall behind.”

Lei Jun said that according to the trend of the entire automobile industry and investment and financing fields, the market has formed a consensus that new energy vehicles are developing in the opposite direction. With the continuous iteration of intelligence and electrification, the automobile industry is getting closer and closer to consumer electronics.

“If one day Xiaomi becomes the No. 1 consumer electronics company in the world, without making new energy vehicles, it will become a traditional company and there is a risk of being outdated.” Lei Jun said.

People close to Huawei told Jipai Daily that Huawei cannot be regarded as a mobile phone manufacturer when it comes to “building a car”. Huawei only uses its ICT (information and communication technology) advantages to empower car manufacturers and help them build good cars. As a main terminal form, the car is a part of the intelligent world, and the future unmanned driving will also be supported and realized based on the mobile communication network.

Therefore, in his view, Huawei’s involvement in this field is following the trend. ” As for why other mobile phone manufacturers build cars, I think it may be the same logic as the previous Internet companies to build mobile phones .”

The success of BlackBerry seems to be one reason why mobile phone makers are jumping into the car-making business.

Once a representative in the field of mobile phone security, although BlackBerry has disappeared in the field of smart phones for a long time, it has taken the lead in the development of car operating software.

Source/Screenshot of BlackBerry’s official website Extreme Daily

BlackBerry QNX software continues the gene of safety and is inclusive, and is welcomed by many car companies such as BMW, Honda, and Volkswagen. In China, Nezha S and Xiaopeng P7 are also equipped with QNX operating system modules.

According to statistics, there are currently more than 215 million vehicles in the world equipped with BlackBerry QNX software, an increase of 20 million from 2021. Meanwhile, BlackBerry QNX unrealized royalty revenue rose 14 percent to $560 million from $490 million last year.

03 Who will have the last laugh?

But is car building a good business for the future? It’s hard to say.

Zhang Xiaorong, president of Deepin Science and Technology Research Institute, told Jipai Daily that it is a collective industrial illusion that mobile phone manufacturers get together to build cars. Under the appeal of new energy vehicles, mobile phone manufacturers mistakenly believe that they can continue their own mobile phone manufacturing experience and enter the cross-border market. In the field of car manufacturing, there has been no successful case so far.

“Many mobile phone manufacturers mistakenly believe that electric vehicles are mobile phones. But in fact, Apple, the world’s strongest mobile phone manufacturer, has been researching and building cars for many years, but has been unable to mass-produce it. Domestic mobile phone manufacturers believe that their advantage is software design, but limited Due to the shortcomings of the Android operating system, it is impossible to build a software system suitable for automobiles.” Zhang Xiaorong said.

Even the new forces that focus on building cars are getting worse and worse.

The financial report shows that in the second quarter of 2022, Weilai’s net loss was 2.557 billion yuan, a year-on-year increase of 369.6%, and the delivery volume was 25,100 vehicles, that is, a loss of 102,000 yuan from selling a car.

The net loss of Xiaopeng Motors was 2.709 billion yuan, a year-on-year increase of 126.1%. Xiaopeng Motors delivered 34,400 vehicles, that is, a loss of 78,700 yuan from selling a car.

The net loss of the ideal car was 641 million yuan, a year-on-year increase of 172.2%, and the ideal car was 28,700, that is, a loss of 22,300 yuan from selling one.

In terms of stock price, as of the close of Hong Kong stocks on October 28, Xiaopeng Motors (09868.HK) closed at HK$26.00 per share, down 86.04% year-to-date, with a total market value of only HK$44.82 billion; Weilai (09866.HK) closed at 73.55 Hong Kong dollar/share, down 54.03% year-to-date, with a total market value of only HK$124.5 billion; Ideal (09866.HK) closed at HK$53.70/share, down 56.23% year-to-date, with a total market value of only HK$111.9 billion.

According to the “September 2022 New Energy Vehicle Sales List” of the Passenger Federation, among the top 11, BYD occupies 6 seats, Tesla 2 seats, Aian 2 seats and Wuling Hongguang MINIEV, Nezha V leads the manufacturing The new car force ranked 12th, and the sales volume of Xiaopeng P7 was 4,634 units, falling outside the 30th.

Going back to ten years ago, Lei Jun, Luo Yonghao, Huang Zhang, Liu Zuohu, Jia Yueting and others were in high spirits on the mobile phone track, using emerging brand mobile phones to drive away copycats.

Over time, Lei Jun accumulated hundreds of billions of cash on his mobile phone and turned to build a car; Luo Yonghao became a good thing recommendation officer, paid off hundreds of millions of foreign debts, and wrote a “true repayment” for fans.

Huang Zhang found the big tree Geely, and worked closely with Xingji Times, “Meizu Technology’s tomorrow will be better and better”; Liu Zuohu and his OnePlus are still one of the leaders in China’s smartphone road; and Jia Yueting, who can’t pay off his huge debts, is still using PPT to build cars. No matter what “good” news is released, it has become a topic of conversation after dinner.

Nowadays, mobile phone manufacturers have turned to the car-building track. Who can build a good car and who will have the last laugh. Everything is still unknown.

In Zhang Shunjun’s view, although mobile phone manufacturers rely on technology to have a first-mover advantage in electrification and intelligence, what they lack is the precipitation in the car-making industry and insight into consumers, which may not always be successful.

Zhang Shunjun took Huawei’s “car building” as an example. Huawei has made some achievements in empowering Seris vehicles. In August and September, sales exceeded 10,000 units in succession, but this is inseparable from Huawei’s strong sales advantages. It is understood that by the end of 2021, Huawei has established more than 56,000 stores and counters around the world, including more than 5,500 experience stores.

On the other hand, there are more and more car manufacturers that Huawei cooperates with, such as BAIC Jihu Automobile, Chery Automobile, Changan Automobile, etc. In addition to Wenjie M5, the sales of other models are also relatively bleak, especially Huawei, Ningde Times and Changan Automobile jointly built For the Avita 11, under the circumstance that the order exceeded 20,000, the number of insurances in September was only 95, which makes people imagine.

Source/Screenshot of Extreme Daily on Xiaomi official website

Although Xiaomi is making a solid car, it has been nearly 600 days since the announcement. Judging from the information shared by Lei Jun, the Xiaomi engineering prototype has been basically completed, and the scale of the autonomous driving team has exceeded 500 people, with 140 employees. test car.

It is worth noting that Xiaomi Auto will not be able to obtain the qualification to build a car until June-July next year.

Wang Chuanfu, President of BYD, commented on Xiaomi’s car-making at the Yabuli China Entrepreneurs Forum in 2021, saying, “5 billion is nothing to thunder, and 100 billion is not a problem. The key is to waste three years of your time. How much is these three years worth? money?”

However, in Liu Lei’s view, why Xiaomi announced to be a Xiaomi car last year is because it is fully prepared in terms of funds, talents, structure, etc.

Regarding the question of “who can build new energy vehicles well among mobile phone manufacturers” that Extreme Pai Daily is concerned about, Zhang Xiang, a visiting professor at the Yellow River University of Science and Technology, believes that companies with strong capital, many users, high brand awareness, large investment and strong innovation, The chances of success are higher .

References:

“Meizu only sells cars? Geely says to serve car companies, Meizu says to build a Huawei-style flagship store”, source: The Paper;

“The Past of Chinese Mobile Phones: Because of Lei Jun and Luo Yonghao, China Says Goodbye to Shanzhai Phones”, source: Tencent Shenwang.

*Liu Lei in the text is a pseudonym.

*Disclaimer: Under no circumstances does the information or opinions expressed in this article constitute investment advice to anyone.