Core Viewpoint - Xiaomi's CEO Lei Jun has recently made strong statements regarding the safety of Xiaomi cars, responding to previous criticisms and controversies surrounding the brand's safety standards and public relations approach [2][5][15]. Group 1: Safety Concerns and Public Response - Lei Jun emphasized the importance of safety in his recent social media posts, stating that "safety is the foundation" and "safety is paramount," while addressing previous comments that were perceived as prioritizing aesthetics over safety [7][8][10]. - The company faced significant backlash following two serious accidents involving Xiaomi vehicles, which resulted in fatalities and raised concerns about the cars' safety features, such as the inability of doors to open after collisions [10][11][31]. - Despite a recent quarterly report showing profitability in Xiaomi's automotive and AI sectors, the stock price fell over 4%, indicating that public sentiment remains affected by safety concerns [5][6]. Group 2: Changes in Public Relations Strategy - Reports suggest that Xiaomi's public relations head, Wang Hua, may be reassigned, indicating a potential shift in the company's communication strategy in response to recent controversies [16][20]. - Wang Hua has been a key figure in managing Xiaomi's public image, often countering negative rumors and defending the brand's reputation [21][22][25]. - The anticipated change in leadership within the public relations department may lead to a new approach in how Xiaomi engages with consumers and addresses public concerns [26]. Group 3: Consumer Sentiment and Brand Loyalty - Xiaomi has historically built a loyal customer base, known as "Mi Fans," who have supported the brand due to its reputation for high-quality, cost-effective products [27][28]. - However, recent issues, including poor customer service and product quality complaints, have led some former supporters to become critical of the brand, expressing their dissatisfaction on social media [30][31]. - The company's handling of safety issues and customer grievances will be crucial in regaining the trust of its consumer base, as many former fans have voiced their disappointment over the lack of adequate responses to safety concerns [31][33].

Core Viewpoint - The article discusses the recent legal victory of Xiaomi against a counterfeit brand "Xiaomi Zero Degree," highlighting the ongoing battle against trademark infringement and the prevalence of counterfeit products in the market [4][14][48]. Group 1: Legal Case Overview - Xiaomi sued "Xiaomi Zero Degree" for trademark infringement and unfair competition, resulting in a court ruling that awarded Xiaomi 30 million yuan in damages [4][14]. - The counterfeit brand generated 1.3 billion yuan in sales over two years by misleading consumers with a similar name and logo, as well as a confusing voice command [10][30]. - The court recognized the similarity in voice commands as a form of consumer confusion, which is protected under the Anti-Unfair Competition Law [13][14]. Group 2: Broader Implications of Counterfeiting - The case reflects a larger trend of counterfeit products in the consumer market, where brands often face challenges from imitators [19][20]. - Other notable cases include a 50 million yuan penalty against a manufacturer using the "Xiaomi Life" trademark and a 30 million yuan penalty for a company named "Shenzhen Xiaomi Trading Co." [17]. - The article emphasizes that the counterfeit phenomenon is widespread, affecting various industries, including household products and food [26][32]. Group 3: Economic Impact of Counterfeiting - Counterfeit products often have significantly lower production costs, leading to high profit margins for counterfeiters, which incentivizes their continued existence in the market [32][33]. - Despite legal victories, the ongoing battle against counterfeiting is costly and time-consuming for legitimate brands, as they must continuously invest in legal actions to protect their trademarks [43][47]. - The article suggests that while counterfeiting may never be completely eradicated, strong brand identity and product quality can serve as effective defenses against imitation [48][49].

Investment Rating - The report maintains a "Buy" rating for Xiaomi Group [11][13]. Core Insights - The "Self-Pleasing" new consumption concept supports the successful launch of the SU7, with the YU7 expected to replicate this success. Xiaomi is accelerating its layout of extended-range models, entering a strong product cycle, and is expected to achieve rapid sales of one million vehicles. Based on Xiaomi's steady growth trend in high-end penetration in its smartphone and IoT businesses, as well as the rapid ramp-up of its automotive segment, the projected net profit attributable to shareholders for 2025, 2026, and 2027 is estimated to be 35.404 billion, 51.653 billion, and 65.531 billion yuan respectively [4][11]. Summary by Sections SU7 Initial Success and YU7 Potential - The 200,000 to 300,000 yuan price segment for cars is continuously expanding, with the SU7 positioned accurately and establishing a mid-to-high-end brand tone, achieving an average monthly sales of 23,000 units since its launch. The YU7 is expected to target a larger market and leverage its comprehensive strengths to potentially become another bestseller [7][34]. Xiaomi's Methodology and Automotive Success - Xiaomi's success in the smartphone and IoT sectors has led to the development of a unique "User + Product + Technology + Efficiency" methodology. This includes a large fan base, self-developed motor and control technology, supply chain management to reduce production costs, and a focus on creating blockbuster products [8][9]. Strong Model Cycle and Sales Projections - The high-end market is expanding, with significant opportunities for domestic alternatives in the electric and intelligent vehicle sectors. The projected sales for the high-end passenger car market (priced above 200,000 yuan) in 2024 is 9.443 million units, a year-on-year increase of 4.8%. The CAGR for high-end market sales from 2020 to 2024 is 14.6%, with domestic brands expected to capture a growing market share [9][10]. Brand Synergy and Ecosystem Integration - The launch of the SU7 not only marks the realization of Xiaomi's car manufacturing plans but also extends its "Smartphone + AIoT" ecosystem strategy into the automotive sector. The interconnected ecosystem enhances user stickiness and drives revenue growth across other product lines, with the lifetime value of automotive users exceeding 230,000 yuan [10][11]. Investment Recommendations - The report emphasizes the potential for Xiaomi to replicate Tesla's profitability rhythm, with expectations for the automotive segment to turn profitable by 2025, and a projected net profit per vehicle exceeding 10,000 yuan [9][10].