Meizu's entry into the automotive industry is fueled by GEELY AUTO's courage | Insight Research

On the one hand, Huawei is making efforts to expand its circle of automotive friends, entering the field of new energy vehicles as a leading player in the smart driving sector. On the other hand, XIAOMI-W is deeply involved in car manufacturing, entering the new energy vehicle industry with its fully self-produced electric vehicles. Clearly, more and more smartphone companies are crossing over from the saturated smartphone industry into the new energy vehicle industry, and this trend is not limited to just the top smartphone companies.

Recently, at the 2023 Meizu Autumn Unbounded Ecological Release Conference, Meizu officially announced its entry into the car manufacturing industry. Meizu's first new energy vehicle, the MEIZU DreamCar MX, will be a mass-produced car that is deeply customized by users.

Following in the footsteps of Huawei and XIAOMI-W, Meizu has also announced its entry into the car manufacturing industry. Why are smartphone companies collectively entering the car manufacturing industry?

1. Why are smartphone companies collectively entering the car manufacturing industry?

According to Wall Street News and Intelligence Research, smartphone manufacturers are actively exploring the field of new energy vehicles and crossing over into this industry for several reasons:

Firstly, the main force in the automotive industry is gradually shifting from traditional fuel-powered vehicles to electric vehicles, significantly enhancing the electronic product attributes of automobiles. Smartphone manufacturers have the capability to enter the electric vehicle manufacturing field, while the previously highly valued mechanical attributes such as engines, chassis, and transmissions have become background elements.

Electric vehicles are equipped with an increasing number of electrification devices such as powertrains, heads-up displays (HUD), and LiDAR. The basic microcontroller units (MCUs) have also seen a significant increase in quantity, from tens or hundreds in traditional fuel-powered vehicles to thousands in electric vehicles. Therefore, smartphone manufacturers, who are also involved in the production of electronic products, have the ability to enter the automotive industry.

Secondly, compared to the sluggish growth of the smartphone market, the new energy vehicle market continues to show incremental growth, especially with the rise of plug-in hybrid models this year, which has further driven the overall sales of new energy vehicles. In addition, automobiles themselves have a higher value proposition compared to smartphones, providing manufacturers with greater growth potential.

Lastly, with the development of technology and changes in market trends, smartphones and automobiles are becoming closely connected as two major consumer electronic products. Smartphones are not only the center of personal communication but also the key gateway for internet interaction. New energy vehicles are increasingly becoming an important part of mobile travel and smart living.

By entering the new energy vehicle industry, smartphone manufacturers can leverage their technological expertise and brand influence in the mobile internet and smart device sectors to create cross-device ecosystems. This cross-industry collaboration can provide consumers with a more integrated and seamless smart living experience, potentially becoming a significant competitive advantage for manufacturers.

2. Meizu's confidence in car manufacturing comes from Geely

Looking at the three major smartphone companies that have confirmed their entry into the new energy vehicle industry, each has its unique advantages.

Meizu's automotive business is actually part of Geely's strategy to expand into new markets through the Meizu brand. Geely is now Meizu's wholly-owned parent company, and Meizu can directly benefit from Geely's mature new energy vehicle manufacturing system, platforms, and technologies. Currently, Geely's four major new energy brands - Geely, Lynk & Co, Zeekr, and Geometry - except for Zeekr, which cooperates with CATL, the models of other brands, such as Geely, have mostly been converted from gasoline to electric, only changing the powertrain while not making many modifications in terms of body structure, appearance, and electrification and intelligence. They have not completely rid themselves of the shadow of traditional fuel vehicles.

Meizu will leverage Geely's technology and manufacturing resources to create new models focused on the young market and technological attributes. These products will have distinct positioning from Geely's existing brands, forming a complementary rather than competitive relationship, thereby enriching and improving Geely's new energy vehicle brand system and continuously expanding its user base. Huawei, entering the automotive market, is entering the industry through intelligence and continuously expanding its coverage to expand the market.

Although Huawei does not have the qualification to manufacture cars, its layout in the new energy vehicle industry is becoming increasingly deep. By establishing a dedicated subsidiary to handle new energy vehicle business, Huawei has increased business flexibility. Its core strategy is not to directly manufacture cars, but to provide high-end automotive components and intelligent driving solutions, and establish cooperative relationships with more and more automotive manufacturing partners.

This model not only allows for rapid market share growth but also helps Huawei establish a strong competitive position in the field of new energy vehicles, achieving long-term self-growth and development. Xiaomi-W, which aims to create the first car for young people, has the advantage of integration and a more precise target group goal. It is also the first smartphone manufacturer to obtain the qualification to manufacture cars.

Xiaomi-W has already proven its understanding of the needs of young people in the smartphone field, maintaining positive growth even in the case of overall negative growth in smartphone shipments. Therefore, Xiaomi-W's car products are expected to attract attention from a larger group of users. At the same time, Xiaomi-W, with the qualification to manufacture cars, also has higher autonomy in car manufacturing and can make choices based on its understanding of consumers, making it easier to create popular models.

Smartphone manufacturers are increasingly entering the field of new energy vehicles, and this trend will continue. However, for smartphone companies to manufacture cars, it cannot be just a gimmick for promotion. Without core technology and deep involvement, even well-known brands will quickly be overwhelmed by the influx of new energy vehicles with various new models.