CONNECT WITH US
TI(com)
Sponsored

Xiaomi EV sheds light on issues of Apple's car project

Nuying Huang, Taipei; Peng Chen, DIGITIMES Asia 0

Credit: Xiaomi

Two pieces of news regarding smartphone makers-turned-car producers stood out in the first quarter of 2024: Apple reportedly canceled its vehicle project, and Xiaomi rolled out its first EV.

Why did Apple fail to achieve its goal after 10 years of effort, while Xiaomi was able to start making cars only three years after an automotive market entry announcement? Automotive suppliers said the results are due to several factors.

The companies' EV endeavors are closely connected with the environment the two companies were in, geopolitics, and the development of future cars in recent years. In addition, Apple and Xiaomi took different approaches to their car ventures.

According to sources, Apple's decision to distance itself from the price war in the car market is a reason for its car project to fall apart. China has fostered a mature EV supply chain that is experiencing fierce domestic competition. The rivalry is expected to expand overseas in 2024.

The situation reflected that smartphone makers from other regions will be dragged into price-cut cycles even if they can differentiate their EV models. They will unlikely achieve reasonable profits. Therefore, the market will not fit Apple, which pursues high profit rates.

The cost competitiveness of the Xiaomi EV has been under the spotlight. The company has set up its stop loss point, investing US$10 billion in the project starting in 2021. Lei Jun, Xiaomi's CEO, has said publicly several times that the project will be the last bet in his career, implying the tremendous pressure he has.

Sources said Apple is vulnerable to the stress from the US-China geopolitical tension. The sales of iPhones demonstrated the situation, and Apple will be unable to leverage abundant car manufacturing resources in China as Xiaomi does.

Tesla gave Apple an idea about what challenges the tech giant might face in China. Suppliers said Tesla has faced cost pressure in the world's largest car market and operation bans near important military bases in the country.

According to sources, the advanced self-driving technology is another hurdle for Apple. It has almost been confirmed in Europe and the US that vehicles with level 4 and level 5 autonomy will be put on roads far later than expected due to multiple technology and policy issues.

No matter how rumors regarding Apple Car evolve, it is certain that the company will unlikely realize its original business model based on L4 and L5 vehicle autonomy.

In contrast, China is accelerating advanced autonomous driving development, which offers the Xiaomi EV a clear future. Tesla has also tried introducing its full self-driving capability to the Chinese market. Its effort is expected to bear fruits in the summer this year.

Sources said that even if Xiaomi cannot create a lead in EV production costs, it can leverage its strengths when moving to smart driving, smart cockpit, or the integration of car technology systems.

The company can connect its smartphones, tablets, smart home appliances, and cars, utilizing the data it gathers in the Chinese market. As generative AI arrives, more data will be generated in advanced data centers. Sources said that with the Xiaomi EV, the company can accumulate personal, vehicle, and home data, using large models to simulate various scenarios.

Huawei, Sony, Foxconn have jumped on the EV bandwagon

Huawei has begun reaping the rewards after struggling in the future car sector for years. It invested significantly in the field and continued to see losses. Many automakers reportedly intended to buy Huawei's advanced self-driving technology but fell through.

The company will likely see its hard work pay off in 2024. The sales of Aito vehicles, co-developed by Huawei and the Seres Group, are surging. Many Chinese car brands or joint-venture automakers have partnered with Huawei for smart driving and smart cockpit technology.

Japan-based Sony, another smartphone maker, has established Sony Honda Mobility with Honda Motor. The pair will launch the Afeela EV in 2026. Foxconn has become an iconic homegrown EV producer in Taiwan. The company positions itself as a tier-1 supplier in the global market, collaborating with international suppliers and leading automakers.