After months spent elusively overseas, Jia Yueting resurfaced in mid-December. The chairman and chief executive of LeTV, one of China’s most popular online video platforms, had been out of the public eye since June. This quickly led to speculation that he was involved in a corruption investigation. During his absence LeTV (briefly) lost more than 30% of its market value as well as undergoing a two-month trading suspension (see WiC262).
But no matter, Jia is alive and well. In December, he made a surprise appearance at a Beijing hospital, where he explained that he had been in Hong Kong to receive treatment for a benign tumor – adding he was fine and would complete his recovery in China.
Just because he was on a medical break, however, doesn’t mean he wasn’t working hard. Right after he returned to the limelight, Jia announced that LeTV is developing an electric car and will seek a licence to manufacture the vehicles in China.
The company is so confident that it reckons that it could be China’s answer to Tesla, the US electric carmaker.
“We will build the best electric cars to solve the problems of air pollution and traffic jams in China,” Jia declared on his personal weibo.
It is not the first time LeTV has expanded beyond its roots. The company makes smart televisions and set-top boxes. But electric cars?
Already, industry observers sound dismissive of LeTV’s latest effort. “Internet firms making electric cars is merely a concept and a publicity stunt,” BYD’s Wang Chuanfu told Beijing Morning Post. (A similar remark, in fact, was made about BYD, when the battery maker started producing cars in 2003.)
“LeTV seems to have underestimated the automotive industry, or it is too confident of its own abilities,” 21CN Business Herald agrees. “To succeed in the automotive industry isn’t just about money or fancy technology, but time and tenacity. The auto industry demands consistent investment in fixed assets, huge cashflow and enormous manpower. All this runs contrary to how the internet industry operates.”
If all goes according to plan, the new car will feature multiple touch screens that replace traditional consoles and dashboards. Other futuristic functions include unmanned driving, automatic parking and a route search powered by the company’s operating system, called LeUI Auto. The OS will also boast music streaming, online video and roadside assistance services.
LeTV is not the only tech firm that wants to make electric cars. Smartphone maker Xiaomi has long been interested in developing its own electric vehicle. And last year Xiaomi’s founder Lei Jun met with Tesla’s Elon Musk, a move that further fuelled speculation.
While Xiaomi has yet to make an official announcement, company director Sun Peng hinted on his personal weibo this week that it wouldn’t be long before Xiaomi introduces its first electric car.
Meanwhile, the rivalry between Xiaomi and LeTV has intensified as the two companies trade barbs over each other’s business model. Even though Xiaomi is most well-known for making smartphones, it also competes directly against LeTV in smart TVs and set-top boxes.
The heated exchanges began last week when Xiaomi’s VP for smart TVs Wang Chuan told an interviewer that LeTV’s closed operating system is not a viable strategy. While LeTV operates an OS based on Google’s Android, it is a closed system, which means that the company limits the services, software or hardware that can work on it.
After Wang’s remark went public, LeTV retaliated by saying that Xiaomi has long been copying its business model. On its official weibo it wrote: “I make a TV, and you started making a TV; we operate an online video site, and you decided to invest in online video platforms. I provide cloud computing, and you also invest in a Kingsoft Cloud Group [a unit under Kingsoft, of which Lei Jun is a shareholder]. I think you have a serious crush on me and you can’t even help yourself.”
If Xiaomi starts making electric cars, LeTV may have a point…
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