Photo credit: Dugou

Photo taken at the Guangzhou Auto Show in November 2023

The new energy vehicle industry is never short of controversies, and this time, Jiyue Auto and Xiaomi Auto are at the center of attention.

On August 22, the news of "Jiyue's PR head criticizes Xiaomi for selling cars at a loss" went viral on the internet. Screenshots showed that a WeChat account labeled "Xu Jiye, Jiyue Auto" posted a scathing comment in his Moments, accusing Xiaomi and Lei Jun of engaging in dumping by selling cars at a loss, which is the worst kind of business practice.

The reason behind this criticism was that Xiaomi Group (01810.HK) had released its second-quarter 2024 earnings report the day before, disclosing its automotive business performance for the first time. The innovative business, including smart electric vehicles, incurred a net loss of 1.8 billion yuan. Media estimates suggest that Xiaomi Auto loses more than 60,000 yuan per vehicle sold.

The topic "Xiaomi loses over 60,000 yuan per car sold" sparked widespread attention, prompting Lei Jun to share a related post and respond, "Building cars is tough, but success will definitely be cool! Xiaomi Auto is still in its investment phase, and we hope for your understanding."

Perhaps it was this response that perplexed Xu Jiye, who found it hard to comprehend why some companies cannot sell their cars without discounts due to losses, while Xiaomi Auto and Lei Jun's situation was fundamentally different. He even challenged Lei Jun, saying, "Have some ethics and shame, will you? You're losing 60,000 yuan per car, yet you keep selling so many. Why?"

Regarding the authenticity of the Moments screenshot, media outlets reached out to Xu Jiye for verification. He responded, "Moments are primarily for sharing personal opinions with friends. They are confined to that platform, and I will not confirm or deny their contents." This response indirectly validates the authenticity of the post.

In response to the incident, an internal letter from Jiyue Auto emerged online. CEO Xia Yiping stated that Xu Jiye's remarks do not represent the company's views and are inconsistent with its values. He instructed relevant departments to severely criticize Xu Jiye and reminded all employees to strictly abide by the company's communication discipline, refraining from discussing competitors or disseminating opinions contrary to the company's values.

In fact, CarVisibility has noticed that this is not the first time Jiyue Auto has been linked to Xiaomi Auto. There have been several instances this year alone.

Firstly, on April 15, Baidu's founder Robin Li and Xia Yiping live-streamed together, showcasing the advanced autonomous driving capabilities of the AI-powered electric SUV Jiyue 01. When asked about Xiaomi SU7, Xia Yiping noted that the two models target different segments: Jiyue 01 is an SUV, while Xiaomi SU7 is a sports sedan appealing to driving enthusiasts.

He also claimed that Jiyue 01 offers more spaciousness and is ahead of the industry in terms of intelligence, citing voice recognition and autonomous driving capabilities as examples.

Around the same time, a blogger claiming to be a Jiyue Auto employee posted on social media that he was fired for purchasing a Xiaomi car and shaking hands with Xiaomi's founder, Lei Jun. He alleged that he was dismissed five days after buying the new Xiaomi car without any compensation, citing violation of a non-compete agreement as the reason.

On April 17, Jiyue Auto's Legal Department issued a statement denying the claim that the employee was fired for purchasing a Xiaomi car, stating that the employee had violated professional ethics and non-compete obligations by promoting Xiaomi on multiple social media platforms under his personal name. The company also cited repeated unexcused absences as grounds for terminating his employment contract.

Then, at the Beijing Auto Show on April 25, Jiyue Auto set up its booth directly opposite Xiaomi Auto's, expecting to garner some attention. However, the stunt backfired, with more sarcastic comments directed towards Jiyue Auto.

Comments included "When queuing to see the Xiaomi SU7, take a look at the Jiyue 07 behind you," "While Lei Jun was speaking, everyone at the Jiyue booth was looking at the Xiaomi booth," and jokes about Jiyue's booth being full but with people facing away.

Perhaps it was these repeated instances of "love-hate relationships" that fueled the dissatisfaction among Jiyue Auto's executives, leading them to criticize Xiaomi and Lei Jun for selling cars at a loss.

However, simply dividing the total loss by sales volume to conclude that Xiaomi Auto loses 60,000 yuan per car is not rigorous. As Lei Jun and Xiaomi Group President Lu Weibing have stated, Xiaomi Auto is still in its investment phase, and the first vehicle involves significant investments. It will take time to absorb costs.

The automotive industry is inherently scale-driven. As Xiaomi Auto expands its scale, production capacity, and delivery capabilities, it can significantly spread costs and reduce losses. Furthermore, Xiaomi Group reported a gross margin of 15.4% in the second quarter of this year, indicating ample financial resources to support its automotive business. As of June 30, 2024, Xiaomi Group had a cash reserve of 141 billion yuan.

Conversely, Jiyue Auto's current situation is more concerning. In October last year, it launched its first product, the Jiyue 01, offering two configurations: Jiyue 01 Max and Jiyue 01 Max Performance, priced at 249,900 yuan and 339,900 yuan, respectively. Officially, Jiyue 01 received over 15,000 orders within 24 hours of its launch.

However, data from Autohome shows that only 774 units were sold in December 2023, dropping to 218 in January this year, a significant discrepancy from the order numbers. In the first seven months of this year, Jiyue 01 sold a cumulative total of only 3,843 units, making it almost negligible in the industry.

Therefore, CarVisibility believes that mutual supervision among enterprises is a good thing. However, automotive industry leaders typically represent their companies' stances and values. Making inappropriate remarks based on personal emotions can only harm their brand image and interests. They should focus on their products and marketing efforts instead.

Author: Li Li

Source: CarVisibility

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