A large number of IPOs are a desperate struggle for autonomous driving
Author : Feng Hua
Editor: Zhao Tong
Source: Yidianchuhai
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■ What is the reason for the surge in domestic autonomous driving IPOs?
■ What are the similarities and differences among the situations of various companies going public at a loss?
■ What problems need to be solved to promote the implementation of Robotaxi?
Looking back many years later, 2024 may be regarded as the first year of Robotaxi.
Recently, the autonomous driving companies Horizon Robotics and WeRide went public one after another, which once again attracted the attention of the outside world to the autonomous driving industry.
Previously, there were laser radar company RoboSense and autonomous driving chip company Black Sesame as pioneers, and later companies such as Pony.ai, Momenta, ZongMu Technology, and Ujia Innovation are rushing to go public.
Since the beginning of this year, the field of autonomous driving has been extremely hot. In the first half of the year, Baidu's Carrot Run went viral online, bringing Robotaxi into the public eye. In October, Tesla released its unmanned car Robotaxi, which sparked heated discussions around the world.
Robotaxi is the most promising application field for L4 autonomous driving. After years of development, autonomous driving companies have finally entered a new stage of commercialization.
However, due to objective difficulties such as large initial investment, long payback period and high technical difficulty, all companies are still trapped in the quagmire of losses.
The concentrated rush for IPOs is not only a thirst for funds, but also an inevitable requirement to further accelerate commercialization. "Bleeding listing" is not the end, but the starting point of a new stage.
Time is of the essence
Since the beginning of this year, Robotaxi has caused unprecedented popularity and may be the best time for autonomous driving companies to go public.
Although L4 autonomous driving has many scenarios such as unmanned trucks, unmanned delivery cars, and unmanned buses, Robotaxi is the best choice for the commercialization of L4 autonomous driving considering market demand and prospects. The current view is that 2026 will be the first year for large-scale mass production of Robotaxi.
The dawn of light on the other side is calling. Autonomous driving companies focusing on L4 technology have been running wildly for seven or eight years. Now they have entered the sprint stage. Everyone wants to be the first. Going public means being the first to obtain more funds and attention.
After Hesai Technology and Zhixing Automotive Technology went public in 2013, several autonomous driving companies have started the process of going public this year. During this period, companies such as RoboSense, Ruqi Mobility, Black Sesame, Horizon Robotics, and WeRide have successfully IPOed, and well-known companies such as Pony.ai, Zongmu Technology, and Mushroom Automotive are waiting for the opportunity.
Behind the hot listing trend, there is a sense of urgency that time is running out - the autonomous driving industry has been developing for seven or eight years, and it will be too late if it is not listed.
Autonomous driving has experienced a financing process that was hot at first and then cold. Now that financing in the primary market has cooled and the influx of hot money has decreased, domestic unicorns have reached a critical juncture in commercialization and seeking capitalization.
Tianyancha APP shows that judging from the amount and frequency of financing, the commercial return of autonomous driving is difficult to achieve in the short term. Financing is becoming more and more difficult. Capital has a more rational attitude towards autonomous driving, and projects with unclear prospects for implementation are unlikely to attract capital. The last wave of intensive financing for most autonomous driving companies was still in 2021 and 2022.
From 2015 to 2022, Zongmu Technology completed 10 rounds of financing, with the most recent round in March 2022; Heizhima Intelligence, which has been successfully listed, completed 9 rounds of financing from 2016 to 2022, with the most recent round in December 2022; WeRide and Pony.ai both completed new financing this year, but this is probably also due to their upcoming listings.
IPO is the key to solving the above problems - as long as the listing is successful, investors can successfully exit with profits, and startups are relieved of the pressure of high share repurchases while obtaining new development funds.
However, even if the IPO is successful, you must be mentally prepared for a price drop below the issue price. Just look at the performance of the predecessors who entered the capital market in the past two years.
In August this year, Heizhima Intelligence was listed on the Hong Kong Stock Exchange as an unprofitable "special technology" company, and its stock price plummeted by 32.9% after opening. As of November 12, Heizhima Intelligence's market value was HK$14.5 billion, lower than its previous valuation of HK$17 billion; Hesai Technology's stock price has been falling since its listing, and is now US$4.5 per share, lower than the issue price.
Obviously, IPO is the end of the previous stage of development and the beginning of a new journey. What kind of curve it will take ultimately depends on its commercial strength.
Same track, different
The investment is huge, the return is small, and moving forward under a heavy burden is the common portrayal of current autonomous driving companies.
From 2021 to the first half of 2024, WeRide's revenue was RMB 138 million, 528 million, 402 million and 150 million respectively, and the corresponding net losses were RMB 1.007 billion, 1.298 billion, 1.982 billion and 882 million respectively. The cumulative loss in three and a half years exceeded RMB 5 billion.
It can be seen that its revenue has been declining since it reached its peak in 2022, with the decline in the first half of this year being particularly obvious; the net loss has been expanding and has not been narrowed in the first half of this year.
Pony.ai is also under pressure to make profits. Its prospectus shows that its net losses before adjustments in the past two and a half years were US$148 million, US$125 million and US$51.78 million, respectively, with a cumulative loss of US$325 million, or about RMB 2.307 billion.
There is also the highly-watched intelligent driving chip technology company Horizon Robotics, which has suffered cumulative losses of more than 22 billion yuan in the three and a half years since 2021.
From autonomous driving technology to chips, and then to the implementation of RoboTaxi operations, moving forward at a loss is the main theme of the entire industry chain. The reason is that the autonomous driving industry requires large initial investments and a long payback period.
For example, WeRide's cumulative R&D expenditure from 2021 to 2023 is 2.26 billion yuan, more than twice its revenue. In its prospectus, it predicts that R&D expenditure is expected to increase as the company's autonomous driving technology is tested, tested and commercialized. In other words, if revenue does not increase significantly, losses will continue to expand.
Behind the common struggle to move forward, each company's situation is different.
WeRide mainly relies on two types of business: the first is sales, which mainly involves the sales of L4 level autonomous driving cars, including robot buses, robot taxis and various types of robot vehicles and sensor kits; the second is services, which provide L4 autonomous driving and advanced driver assistance system services, including operations, technical support and ADAS research and development and other full-service services.
Pony.ai's main businesses include three major sectors: autonomous driving travel services, autonomous driving trucks, and technology licensing and application services.
Both companies' businesses cover Robotaxi, but neither is able to use it as the main source of revenue, mainly due to objective conditions such as complex implementation scenarios and the need to improve technology.
In 2022 and 2023, Pony.ai's technology licensing and application services accounted for 54.2% and 54.5% of total revenue respectively, followed by the autonomous driving truck business, which also accounted for more than 32%. In the first half of this year, the majority of revenue has become the autonomous driving truck (Robotruck) business, accounting for as much as 73% of revenue.
The Robotaxi business accounted for the highest proportion in 2022, reaching 13.1%, but has dropped to 4.7% in the first half of this year. WeRide's Robotaxi revenue is included in the service category and no details are disclosed.
The goal of autonomous driving companies is Robotaxi, an open scenario with great imagination space, but the reality is Robotruck, a closed scenario with limited growth space. The story of L4 autonomous driving has become less sexy in the short term.
The difference in business has also led to a debate on "who deserves to be the first Robotaxi stock". At present, Pony.ai is more focused on Robotaxi than WeRide and is currently making faster progress.
Pony.ai has more than 250 Robotaxi vehicles, with a total of more than 33.5 million kilometers of autonomous driving road test mileage, including 3.9 million kilometers of unmanned driving road test mileage, and the average daily order volume for each vehicle has exceeded 15. In comparison, the popular Luobo Kuaipao has an average daily peak of just over 20 orders per vehicle.
However, WeRide's progress in the Robotaxi business has not been outstanding, and not much information has been disclosed. In addition, due to the unsatisfactory sales of self-driving taxis and driverless minibuses, its operational focus has shifted from product sales to services. This is also the key reason why the outside world questions the value of the "first Robotaxi stock".
In any case, companies such as Pony.ai, WeRide, and LoBo are all moving forward towards the long-term goal of Robotaxi. Whoever can be the first to achieve a qualitative breakthrough will have to undergo tests in many aspects such as technology, products, and operations.
Scaling is key
Everyone knows that Robotaxi has a bright future, but how to get to the other side is a difficult problem.
Frost & Sullivan predicts that China is expected to become the largest Robotaxi market, with its market size expected to reach US$200 million and US$39 billion in 2025 and 2030, accounting for approximately 58.5% of the global autonomous driving travel service market in 2030.
However, in the view of Pony.ai CTO Lou Tiancheng, the current situation is still far from the envisioned L4 popularization: "Today's high-level intelligent driving, even with end-to-end technology, can only achieve L2.99, and it is difficult to reach L4."
For autonomous driving companies, they should look up to the sky but also keep their feet on the ground. In other words, making big money is a matter for the future, and the most important thing now is to survive. Therefore, various companies have cooperated in the L2 field to "make money to support the family."
In January 2023, Pony.ai officially announced its passenger car intelligent driving business product line, and later reached a cooperation with JBL to realize intelligent driving for mass-produced cars by jointly developing intelligent driving solutions with OEMs; Black Sesame Intelligence, which started out in the smart chip business, has provided intelligent driving solutions for passenger cars since 2022; Momenta, which is rushing to go public, announced in June 2024 this year that it had reached a cooperation with GAC Toyota to deploy intelligent driving solution business.
However, the relationship between autonomous driving companies and vehicle manufacturers is that of both enemies and friends, with both cooperation and competition.
Whether it is new car-making forces such as Wei, Xiaoli, or leading traditional car companies, they all have their own intelligent driving teams and even dabble in self-developed chips. After all, no manufacturer is willing to hand over its "soul" to others.
Moreover, from a technological perspective, autonomous driving companies are not clearly ahead.
In October, Yu Chengdong, chairman of Huawei's Intelligent Automotive Solutions BU, said: Huawei ADS 4.0 is planned to be launched next year, which will bring commercial experience of high-speed L3 autonomous driving and pilot projects of L3 autonomous driving in urban areas.
Robotaxi, which has a broader prospect, is also a place where cooperation and competition are intertwined.
GAC's RuQi Mobility has cooperated with Pony.ai and WeRide; SAIC's Xiangdao Robotaxi is based on Momenta's autonomous driving technology; new energy vehicle giant BYD has also reached a cooperation with Dongchao Technology Travel Company and will deploy Robotaxi in Shenzhen.
Autonomous driving companies and online ride-hailing platforms purchase vehicles from car companies. Car companies can combine their operational capabilities and autonomous driving technologies to jointly build Robotaxi, forming a mutually beneficial cooperation model.
For autonomous driving companies, if they want to stand out in various competitions, the most important thing at present is to improve the level of scale.
On the one hand, increasing the number of operating vehicles and achieving economies of scale as soon as possible will hopefully help achieve break-even sooner. The vehicle purchase cost, maintenance cost, and operating management cost will decrease as the scale expands, which is crucial to the sustainable development of the business.
On the other hand, scale is also conducive to improving service quality. Robotaxi relies on a large amount of data training. More vehicles and longer total operation time mean more data sources, which is conducive to improving the intelligence level of autonomous driving, optimizing scheduling algorithms, and further improving operational efficiency.
The industry has already seen the emergence of outstanding players. In the second quarter of this year, Luobo Kuaipao provided about 899,000 trips, a year-on-year increase of 26%. Chen Zhuo, general manager of Baidu's autonomous driving business unit, said that by the end of this year, Luobo Kuaipao is expected to break even in Wuhan and enter a period of full profitability next year.
Time waits for no one. IPO can ease the financial pressure of autonomous driving companies, but the real competition may have just begun. In the competition and cooperation, all parties jointly promote the large-scale popularization of Robotaxi and let autonomous driving truly change people's travel methods, which is of more far-reaching significance.
Conclusion
After seven or eight years of hard work, the upstream and downstream of the autonomous driving industry have been feeling their way forward and finally stood on the IPO stage.
With the rapid iteration of AI technology, the autonomous driving related industries are becoming more mature. Participants including government agencies, chip manufacturers, automobile manufacturers and technology companies are jointly promoting the large-scale application of autonomous driving technology.
Today, autonomous driving has become a global industrial competition. Domestic autonomous driving companies are determined to win Robotaxi, a commercial scenario with broad prospects.
By combining mature commercial monetization models with long-termism, and addressing the maturity of technology, the soundness of policies, and the clarity of business models one by one, the real turning point of the autonomous driving industry will be in the near future.
Note: The cover image is from the Douban movie "The Martian" stills
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