In the face of the heated internet car building industry, almost all big manufacturers are anxious.

After Lei Jun announced that car building was “the last major business in his life,” Didi, who had been “getting closer” to building cars, was also revealed to have launched the “Da Vinci” plan to build cars. Counting earlier, Baidu announced that it would personally stop building cars. In the first quarter of 2021, three Internet companies had already caught up with the trend of car building.

Looking back, leading companies from all walks of life, such as Apple, Huawei, Ali, and Evergrande, will also appear on the list of new energy vehicle builders. Among them, the “smart self” L7, developed by Ali in collaboration with SAIC Motor, revealed its true appearance at the Shanghai World Expo Center on the 4th and 9th.

On the bandwagon of car builders, the scene where major internet companies are flocking in is very much like the scene of various brands piling up to make smartphones ten years ago. The “Battle of Hundred Cars” that followed was about to begin.

On April 8, Li Bin just welcomed the launch of the 100,000th NIO car at the Jianghuai production line in Hefei, and mentioned that it took 3 years to prove that “NIO is not a fraudulent company.” The first people explored the road, and the backers poured in frantically after the car was built. Looking at the three-year cycle of production and development of new energy vehicles to mass production, the “Battle of the Gods” that will break out in 2023 has only just begun.

The “back wave” of car building on the internet, who else hasn't boarded the car?

Turn back the clock to April three years ago. On an ordinary morning, half of the people at the helm of the Chinese auto industry gathered at the Beijing Guomao Marriott Hotel.

At the time, BYD Chairman Wang Chuanfu, FAW Chairman Xu Liuping, NIO founder Li Bin, and Ideal founder Li Xiang attended. The organizer behind this is Cheng Wei, the founder of Didi.

At the conference, Didi announced cooperation with 31 automobile industry chain enterprises to establish a “torrent alliance.” At the time, Didi was involved in an online car-hailing “battle of mergers” with her old rival Meituan. But what attracted the attention of the biggest names in the car industry was Cheng Wei's proposal, “Didi will never build a car.”

However, the unprofitable Didi cannot escape the “real fragrance” law. Recently, there was news that Didi has begun a car building project. The person in charge is Yang Jun, the vice president of Didi and general manager of Xiaoju Auto Service, and is digging around the car factory.

As an enterprise with a certain amount of traffic and resources in the automotive sector, it was to be expected that Didi would end up building cars. In fact, in the “back wave” of car building, Didi is undoubtedly the Internet company closest to car building.

As Cheng Wei said, a snowstorm in 2015 strengthened his determination to establish Didi Chuxing. The debut of the D1 custom online car-hailing service in 2020 was the starting point for Didi's car-hailing.

Previously, Didi had already reached a cooperation with BYD. In the field of autonomous driving, Didi is not “Xiaobai.” Since 2016, Didi has formed an autonomous driving team. In 2019, the team was upgraded to an independent company. The business focuses on autonomous driving R&D, product application and related business development.

The last business that allowed Internet giants to enter the market one after another was a community group buying business. If the news about Didi's car building were true, it would be the first internet company to “sell food” with the left hand and “build cars” with the right hand.

One thing they have in common is that community group buying and car building are all money-burning businesses.

20 billion dollars was once seen as the threshold for early entry into new energy vehicle construction, but since then, market perceptions have continued to change. Li Bin, founder of NIO, once said, “If you don't have 200 billion dollars, you can't build a car.” He Xiaopeng, the founder of Xiaopeng, also said bluntly after the A+ round of financing that 10 billion dollars is simply not enough to spend.

According to a Bloomberg data, in the past year, an electric car manufacturer had to “burn” an average of 8,000 US dollars per minute. If you calculate it, it costs 480,000 US dollars per hour.

NIO, Xiaopeng, and Ideal, which entered the market in the first round to build cars, have already paved the way for the giants. After entering the market to build a car, even though they lost their first-mover advantage, they will definitely walk fewer paths to explore. Whether it's the overvalued Didi, or the well-off Baidu and Xiaomi, the capital is the motivation for them to enter the market to build cars. Simply put, as long as the capital market is strong, building a car is tantamount to making a profit.

Because of this, three years later, the same scene was played again. Li Bin, He Xiaopeng, Li Xiang, and Wang Chuanfu also appeared at the “Huaxia Student Reunion” held at the Four Seasons Hotel in Beijing. The main character of the day is Lei Jun, the founder of Xiaomi, which has just announced the construction of the car.

The popularity of Lei Jun's promise at the new product launch has yet to dissipate. Afterwards, he said on the “Xiaomi Rice Noodle Open Day” live broadcast that Xiaomi's first car will definitely be the most advanced product of that time period. Meanwhile, Lei Jun, who has always liked to guarantee rice noodles, said that Xiaomi's first car will be unveiled in 3 years.

The two “promises” in a short period of time have made the focus of Xiaomi's car building higher and higher, and it is enough to see Xiaomi's determination to go ahead and build cars.

From an objective point of view, the experience of Xiaomi phones from 0 to 1 and cash reserves of 108 billion yuan seem to be able to support the path of car building. Recently, however, Xiaomi built a car in the front, and a fire broke out in the back. Because the phone has ads exclusive to high-end users, they have been sued by senior rice fans. “This is the reason why high-end users can't get better.”

It's worth noting that at the two auto industry gatherings mentioned above, there was no appearance of Baidu founder Li Yanhong, the founder of Baidu, who built “All in” cars. In fact, Baidu entered the driverless car sector as early as 2013, and is also an investor in NIO, and is known by the industry as the “Huangpu Military Academy” in the field of intelligent driving because it has trained a large number of intelligent driving talents.

Baidu, which has no shortage of money, and second, has no shortage of technology, may be Li Yanhong's personality and has not entered the “social circle” of car builders.

In fact, whether it's a new car builder or an internet giant, mass production is a difficult hurdle to overcome, but it must be overcome.

Bringing the timeline forward, some of the new car building forces that started together in the early days achieved mass production delivery and sprinted to profit, such as the Four Little Dragons; others stayed in the PPT stage; for example, Byton and Beau County, which had never delivered mass production, had already been forced out of the market. Moving forward, Tesla had planned to mass-produce 5,000 Model 3 vehicles per week by the end of 2017. This goal was also shelved for a while, and it wasn't achieved until early 2020.

It can be said that car building is very hot, but it is still far from mass production. Looking at it now, OEM is the choice of more new large manufacturers. Baidu has already reached a cooperation with Geely, and it is speculated that Didi will also adopt the OEM model.

Judging from the past, it takes at least 3 years for a car building brand from project establishment to product implementation. This also means that for Baidu, Xiaomi, and Didi, which first entered the market, 2023 will be the time for their decisive battle.

Internet giants, backed by strong capital and growing with questioning, are inherently more resistant to pressure and fault-tolerant than traditional enterprises.

The second half of the internet: Is it there? Urgently looking for a new story

Wang Xing, the predictor of food or not, once described this kind of river and mountain for the new car building market in China, the “4 3.”

According to Wang Xing's judgment, the future is a “3+3+3+3” pattern. Among them, 3 central enterprises are FAW, Dongfeng (FW), and Changan; 3 local state-owned enterprises are SAIC, GAC, and BAIC; 3 traditional private enterprises are Geely, Great Wall, and BYD; and 3 new car-building forces are Ideal, NIO, and Xiaopeng.

But what he didn't expect was that apart from the 3 companies that have already been initially formed, more and more of the big internet manufacturers and small factories related to or unrelated to car building are starting to lay out and build cars.

One of the reasons that have allowed major internet manufacturers to personally build cars is that the environment is ripe and the timing is right.

Lei Jun once summed up that his personality is “extreme radical under extreme conservatism.” If he doesn't think well, he doesn't do it; if he thinks well, he goes to the death. As can be inferred from Lei Jun, who believes in the rhetoric of building cars, it can be inferred that the trend of car building is actually here this time.

In the “Late Time” report, a person close to Lei Jun said, “The point in time made Lei Jun decide to build a car.”

This is different from Musk's initial decision to build a car. Before Tesla, electric cars were more like fanaticism and fantasy. Whether it was batteries, motors, semiconductors, or software, they were almost in a wild place. Tesla wants to create an oasis in the desert. You can imagine how difficult it is, but currently building cars is more like how big internet companies first made mobile phones. “You have and I have everything.”

Regarding timing, Wang Xing also famously said, “We can talk about a lot of things at what point in time, such as what kind of opportunities and challenges we have. But if I were to use just one concept and one sentence, I'd say the 'second half' has just begun.”

As more new players enter, the second half of car building really only begins.

However, the “backers” of the “backers” of car builders were also quickly seen through. There are no new stories to tell on the internet, and building cars has become one of the few options currently available.

One immediate fact is that the market actually gave high expectations and valuations to new car builders. As the “big brother of trams,” Tesla sold a total of 500,000 cars in 2020, only less than 1/20 of Toyota's sales volume during the same period, yet the market value was several times that of Toyota.

This kind of story not only happened to “Iron Man” in Silicon Valley, but can also be replicated by new domestic forces. With the market capitalization of new energy vehicles, BYD even surpassed the century-old car company Mercedes-Benz, NIO surpassed BMW in market capitalization. Even Xiaopeng, the latest to go public, is about to catch up with Hyundai and Ford. After stepping on the electric gate, the top 10 global car companies in terms of market capitalization actually entered the three new Chinese car-building forces. The “backers” of the car builders were moved by this sight.

After all, Baidu's stock price has been hovering around $100 for two years, and the market capitalization is not even as high as NIO at its peak, leaving Li Yanhong and Baidu very heartbroken. However, Xiaomi has not been favored by investors in the secondary market since the listing period. The ALoT story has also been told for more than 5 years, yet the stock price is not long, and Lei Jun has repeatedly called for another market listing.

Soon, the car-building story came to fruition. Baidu, which first stepped into this battlefield. After the official announcement that it was built, the stock price immediately got on a roller coaster and soared to its highest point in the past two years. It was laughed at by industry investors as a wave of successful market value management.

In addition to telling a new story, another reason why big internet companies are excited to build cars is this is a big cake that can be drawn until 3 years from now.

Whether it's a car or a mobile phone, they are all terminals for human-computer interaction, and for major internet companies that rely on traffic and build entry points to new scenarios, this opportunity must not be missed.

In fact, software has always been a weakness of traditional car manufacturers. At the stage of fuel car domination, car manufacturers hardly develop software themselves; they only install suppliers' products on their cars. But the problem this brings is that the software module is easily incompatible with one's own model, causing bugs. The synergistic cost of filling the bug is too high, and the software update speed is slow and iterative is slow.

Software, on the other hand, is what Internet giants do best.

Even Xiaomi, which appears to be a company that relies on hardware for a living, is actually an internet expert. According to Xiaomi's annual report, the mobile phone business accounts for 61.9% of total revenue, but its gross profit accounts for only 8.7% of total gross profit. Although Internet revenue accounts for only 30% of revenue, profit accounts for 61.6% of total gross profit. Xiaomi, as Lei Jun said, is an internet company clothed in hardware.

Faced with an already mature car building supply chain, supporters believe that Xiaomi only needs to use 10 years of mature supply chain experience to support its own software layer, just like building a Xiaomi phone, so that rice noodles can continue to get excited.

Who is more difficult “from 0 to 1” or “1 to 10”?

Building a car does require a story, but the story probably isn't necessarily sexy.

Although latecomers have a latecomer advantage, the market has accumulated talent reserves for a long time, the industry chain is mature, and there are even lessons from the past to learn from, but from 0 to 1, the imagination may have been realized, and when 1 is completed, how to re-create disruptive innovation has become a new problem.

As Li Xiang said in the earnings call, “I really admire and welcome technology companies into this industry, but in terms of time, we still have an advantage. When new companies are in the 0 to 1 stage, we have already entered a stage of rapid growth from 1 to 10.

The new forces, represented by NIO, Xiaopeng, and Ideal, have all explored vehicle manufacturing capabilities through their own efforts. They have already turned imagination into reality. Mass-produced cars are already on the way, and sales are gradually increasing.

In January 2021, Ideal ONE delivered 5,379 vehicles, an increase of 355.8% over the previous year. NIO's new car delivery volume increased by 352.1% over the same period, setting a new high number of deliveries in a single month for 6 consecutive months; Xiaopeng delivered a total of 6015 units, up 470% year on year, a record high, and with the gradual accumulation of brand effects, the market share will further increase.

On the other hand, a counterattack by traditional car companies has already begun. Volkswagen Group CEO Dees called out to Tesla in January and provocatively said, “I want to take away some of your market share. Our ID.33 has already defeated Tesla in Europe.” A new round of traditional car companies will soon be encircled.

As can be seen from Baidu's choice of Geely, Didi and BYD previously teamed up with BYD to build D1, it may not be possible to quickly realize the dream of building cars on the Internet by fighting alone. Electric vehicle components, chips, and engine manufacturers all rely on the supply chain, and OEMs all rely on the supply chain. As a result, there may not be much difference in the cars made by all parties. This may become a new hindrance to the “backwaves” of car builders in the future.

For the backbone of car building, the value of car building also lies in the extent to which the car building business can form a synergistic effect with the original business.

After all, Jia Yueting, who initially created the opposite of ecology, also caused LeTV's overall crisis one after another because the car building business was burning money too fast, and there was no clear synergistic effect between the car building business and LeTV's other businesses. As a result, building a car seemed like an unstoppable opening of blood. The white knight Sun Hongbin, who once helped each other, said that LeTV's layout was perfect other than building cars, but he wouldn't take the initiative to save cars.

Baidu DiDi seems to be all related to travel, but Baidu Apoloo has been nurturing for 7 years, and now they only want to monetize using cars. The difficulty cannot be ignored, yet behind Didi's “selling food” and “building cars,” how to balance and collaborate in the business is a big problem.

And while Xiaomi's ecological chain is different from LeTV, the same thing is that Xiaomi's current business and the resources of the eco-chain companies have a far relationship with the automotive industry. Choosing an OEM from an automaker is more likely in the future. While previous experience with the components of the supply chain cannot be said to be completely useless, it is also equivalent to relearning a new industry.

Intelligence is also part of this. Take Xiaomi as an example. At present, Xiaomi has cooperated with some car companies on in-vehicle systems, but only in the field of video entertainment. To satisfy the imagination of intelligent driving in the future, it is necessary not only to be reflected in software, but also to involve a high degree of coupling of energy, electricity, and hardware. As a result, as soon as news of Xiaomi's car manufacturing came out, the response from investors in the secondary market was mediocre. The stock price opened lower the next day, rising only 2% at the end of the session. The stock price still hovered around HK$25.

Whether it's EVs or fuel, the automobile market is aimed at C-end consumers. The current electric vehicle market is still a market where consumers don't have enough clear perceptions and purchasing power. Electric vehicles account for 5%. Just like fledgling smartphones that appeared at the beginning of that year, the most important thing is to enlarge the plate before it can enter a period of real rapid development. To a certain extent, there is no such high explosion of Android phones, nor the beautiful performance of Apple later.

The significance of this stage is that you fight against me is not the main contradiction; instead, you need to improve the incremental market, then it's time to compete for the stock market. In 2023, the “back wave” of car building, please build a car before talking about it.