Xiaomi built a car factory in three years with 2,000 workers

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 14:04

   Yeah. So I had a number of auto experiences when I was over there. First of all, I was invited to visit BYD. They gave me a nice coat. I met with Stella Lee, who is their number one executive, I think, facing outside of China. She runs all their Europe initiatives. For those people that don't know, BYD is the largest EV manufacturer in the world, had about 4 million vehicles. They started in batteries.

2. 14:38

   They compete with Foxconn to build mobile phones. They bought Jabil Circuit. You remember that old company? I do. And they make lots of things. They make buses and subways and all kinds of different things. But they got into cars over, I don't know, about five to ten years ago. They have a number of models. They gave me this one. This is, you know, a very kind of high-end sports car. In fact, I met a public company CEO that was proudly showing me this was his favorite car that he drives around.

3. 15:11

   They make an SUV you can drive into the water. I don't know exactly why you'd want to do that, but we rode it into the water, drove around in the water, and drove out. They have cars at $10,000 to $15,000 price point on the entry side. They've hired a European designer, which is how they're building stuff like this, on the higher end. And they're very aggressive from a cost perspective. I think BYD more than anyone on the cost side.

4. 15:43

   It's not preventing them from building higher-end cars as well. So that's BYD. I also had a chance to visit Xiaomi. They also gave me a car. Xiaomi is a super interesting story if people don't know. I was fortunate enough to meet Lei Jun back in 03, 04, but about 13, 10 to 13 years ago, he started a phone company, and that's what Xiaomi is, and that company's now third, I think, around the globe in handsets, sold heavy in Europe, heavy in South America, not just China, and three to four years ago, I think around 2021, he decided to build a car, and it was about the same time Apple said they were going to build a car. And, and mind you, this guy was back in 03, ran an e-commerce company called JoYo. Like, like he's, he wasn't, there's no reason he should be able to build a phone and then build a car. So what do you attribute that to, Bill? Like why,

5. 16:45

   you know, when you see that, you know, again, going back to Dan Wang's book, he's like, this is an engineering culture that has built these technological ecosystems that gives rise to a higher velocity of innovation, you know, than we see in the United States that Dan would argue is bogged down by, you know, regulatory capture and lawyers, et cetera. Why do you think, you know, Xiaomi is so successful? And by the way, let me just share with you some numbers. So, so they're making a thousand of these a day. They just came out with a kind of a kind of a thousand cars a day. Yeah. In the factory that I went to, they're sold out. They have like a 30 to 40 week backlog. You have to pay five grand to get on the waiting list. The factory, this is an interesting data point. The factory makes 1,000 cars a day with 2,000 employees. It was highly automated,

6. 17:40

   like really highly automated. I imagine that they plan to improve that number over the next five years. Let's say they took it to a thousand employees for a thousand cars. That'd be employed per car per day. That number is like at six in the U S and that's super interesting for a number of things. Like if you want to bring the jobs back there, by the time you get the jobs back, there may not be any jobs. Like, like at one, because of automation, the entire global, you know, potential for car manufacturing in five or 10 years from now could be like 400 K total.

7. 18:17

   And so, you know, we just need to be really thoughtful about those things. But back to LeJune, he gave a talk in 2024. We're talking about maybe people should be watching and learning in both directions that I would encourage people to watch. It's on YouTube. It's his State of the Union from 2024. And he spends about an hour talking about his approach to building a car. And it sounded like so ridiculously, I don't like, like you ask about entrepreneurial. He, he, he decided that he hadn't been driving a car for 10 years because he had had a driver. So he immediately switched seats with his driver. And then he, um, he went through the parking lot at his company. And if there was ever a car he had not driven, he'd leave a note on it and ask to borrow it.

8. 19:05

   And then he would have the owner of the car tell him what they liked and didn't like. So he claimed he drove 170 cars that way. And then he also, like BYD, they hired a European designer that came in and helped him out. But for an entrepreneur who had never been in the car business to build a factory in a three-year window. And look, the same thing was true. our friend Omid built a factory in Texas, you know, under 40, like just spectacular that these entrepreneurs are capable of doing these things. But it just kind of blows my mind. Like when I was being driven in this golf cart through this factory, just thinking that this person wasn't in the business three or four years ago. And for people that don't know, I'd encourage you to go online and and so uh the ceo of ford farley he went over there

9. 20:00

   and I think had the exact same tour I did, and he insisted they ship him one back to Chicago, and he's been driving it around, and he's made some pretty extreme statements after having experienced Xiaomi. This car sells for about 40K, but he said it's the most humbling thing I've ever seen, and he says even beyond that, their cost, their quality of vehicles is far superior to what I see in the West.

10. 20:26

    We are in a global competition with China, it, and it's not just EVs. If we lose this, we do not have a future at Ford. That's Farley at Ford. By the way, I would take a pause after mentioning that to the people that are going to