Lessons from Xiaomi’s Cars: Execution Lets Latecomers Catch Up

Lei Jun Builds Cars China’s new-energy vehicle market was already intensely crowded, yet newcomer Lei Jun broke through and found growth in a red ocean. His deep realization was: ‘Only a breakthrough in understanding brings real growth. That begins with immersing yourself and turning work into a passion.’ To understand performance and the driving experience, he personally test-drove over 170 models. He also observed that Ferrari and Porsche excelled because their founders were racing drivers who understood and loved cars. He decided to obtain a racing license and learn drifting. He learned to drift on ice. People warned him that it was difficult: failure might occur not merely once or twice, or eight or ten times, but over thirty or fifty times. He was prepared, yet Xiaomi employees stood outside filming on their phones. He privately worried: ‘If I fail in front of everyone, will it be embarrassing?’ That afternoon, guided by a driving instructor, he tried, failed, and adjusted repeatedly. Only after sunset, as darkness fell, did he finally complete three full circles and learn to drift. He said the experience taught him: ‘When learning something new, do not cling to pride. Only by continually trying, finding the pattern, and changing your understanding can you learn as quickly as possible.’ On November 13, 2024, Xiaomi’s 100,000th car rolled off the production line. That day, Lei posted a photograph of himself sleeping on the factory floor on Weibo. Online commenters interpreted it as ‘winning while lying down.’ He led the team to accomplish an almost impossible task and set the fastest record among automakers: 230 days from the SU7’s launch to over 100,000 cumulative deliveries. Production capacity of 100,000 cars is a dividing line for new entrants. For comparison, Li Auto took 708 days, XPeng 1,034, and NIO 1,046. Behind his present composure and success lay countless storms. From its inception, Xiaomi Auto faced questions about timing, model choice, pricing, and mass-production capacity. Almost every step was a test of survival. When Lei chose a sedan, observers thought Li Auto and NIO had taken the correct initial path with SUVs. Battery-electric sedans were considered a niche market. He nevertheless positioned the SU7 as a high-performance, ecosystem-oriented technology sedan, aiming to rival Porsche and Tesla with an attractive, enjoyable, intelligent, comfortable, and safe mobile smart space. Two or three months before launch, he invited 23 automotive-industry friends to a small meeting for advice. Unexpectedly, most were skeptical: selling 3,000 a month would be a blessing. Pricing required balancing market and consumer expectations against the company’s break-even point. Finally, Lei proposed: ‘Let us stop debating 229,000 or 249,000 yuan. Price it nearly 30,000 below the Model 3. Tesla is an established global benchmark, with many devoted Tesla and Musk fans. In these circumstances, let us show respect by pricing nearly 30,000 lower.’ The standard SU7 was priced at 215,900 yuan and received over 50,000 reservations within 27 minutes of launch. Every new automaker seems to endure a difficult production ramp-up, especially entrants crossing over from another industry. Capacity was a challenge for Lei too: ‘Set it too high and the cars may not sell; too low and customers wait a year or two, then accuse me of deliberately restricting supply.’ Many initially suggested annual capacity of 30,000. He ultimately chose 76,000. Excluding ramp-up time, that meant monthly sales of 10,000. Among battery-electric sedans, only the Model 3 sold that many. In May that year, Xiaomi revised its delivery goal to at least 100,000, aiming for 120,000. The factory continued ramping up. On November 18, the 100,000th car reached a customer. After meeting the minimum annual goal early, Lei again raised the 2024 target to 130,000, from 120,000. In the third quarter of 2024, quarterly automotive revenue approached 10 billion yuan, with a 17.1% gross margin, on par with Tesla (probably slightly lower). Through action, Lei broke through doubts about whether Xiaomi could enter carmaking. #中國企業家 202412 ----- Robin: ‘When Lei announced Xiaomi would build cars, most people were probably skeptical. Yet the SU7 sold over 120,000 in its first year. That deserves admiration. What impresses me most, though, is catching up after arriving late. Dozens of domestic and foreign phone makers preceded Xiaomi, and electric vehicles also looked like a red ocean. The team must have exceptional execution to enter late and still catch up. Other points—changing understanding, immersing yourself, setting aside pride, and acknowledging competitors—are offered for reference.’