Holding the "trump card" of cabin-driver integration! Can Nezha Automobile's IPO succeed?

Recently, Nezha Auto's parent company , Hozon New Energy, submitted an application for listing to the Hong Kong Stock Exchange. Hozon New Energy was founded in 2014. If all goes well, Nezha Auto will become the fifth new car-making force to be listed on the Hong Kong Stock Exchange after Ideal, Weilai, Xiaopeng, and Leapmotor. But is it so easy to be listed on the Hong Kong Stock Exchange, and what confidence does Nezha Auto have?

Income is not enough, and the loss of 18 billion yuan in three

years . This application for listing to the Hong Kong Stock Exchange is not the first time that Nezha Auto has sought to go public. In 2020, Nezha Auto was ready to sprint to the Science and Technology Innovation Board. It was originally planned to complete the listing in 2021, but was forced to suspend it. Now it has turned to the Hong Kong Stock Exchange.

In 2023, Nezha Auto CEO Zhang Yong said, "Nezha Auto has sufficient cash flow, and even if it is not listed, it can support the company to achieve profitability." Nezha Auto mainly sells models of about 110,000 yuan, which brings low profits. Judging from the business situation shown in the prospectus, Nezha Auto has not achieved profitability in the past three years, and its cash flow is under pressure.

The prospectus shows that in 2021, 2022 and 2023, Nezha Auto's revenue will be 5.087 billion yuan, 13.05 billion yuan and 13.555 billion yuan respectively, with an annual compound growth rate of 63.2%; but the company's revenue increased but not its profit in these three years, with net losses of 4.84 billion yuan, 6.666 billion yuan and 6.867 billion yuan respectively, with a total loss of more than 18.3 billion yuan.

Figure: Nezha Auto’s financial situation (Nezha Auto’s prospectus)

In terms of sales, from 2020 to 2022, Nezha Auto's sales were 15,100, 69,700 and 152,100 respectively. In 2022, Nezha Auto became the annual sales champion of new car-making forces, which was also its highlight in the past three years. Starting in 2023, Nezha Auto's sales continued to decline, with annual sales of only 127,500 vehicles, a year-on-year decline of 16.16%. In May 2024, Nezha Auto delivered only 10,100 vehicles, a year-on-year decline of 22.38%, which is less than that of competitors such as Weilai, Ideal, and Leapmotor.

Currently, the official website shows that Nezha Auto has 5 models on sale, with Nezha X priced from 99,800 yuan, Nezha GT priced from 188,800 yuan, Nezha S priced from 154,800 yuan, the pure electric Nezha AYA priced from 65,800 yuan, and the family smart super extended-range SUV priced from 129,900 yuan. In 2023, the company's overall average selling price was only 109,000 yuan. With poor sales now, Nezha Auto can hardly make up for the huge losses by buying cars, which has also become one of the reasons for the continued decline in performance.

However, Nezha Auto's performance in overseas markets is still good, with models such as Nezha X and Nezha GT entering overseas markets. In 2023, 17,019 new energy electric vehicles were exported, accounting for 13.7% of the total sales of new energy electric vehicles in the same year, contributing 12.0% of revenue. From January to May this year, Nezha Auto exported 16,458 new energy vehicles, becoming the first exporter among the new forces in car manufacturing. Today, Nezha Auto has become one of the top three brands of new energy passenger cars in Southeast Asia . Next, Nezha Auto will focus on Latin America, the Middle East and Africa, and expand to Europe.

The domestic new energy vehicle market is highly competitive, and automakers are looking for opportunities in overseas markets. Among the new forces in car manufacturing, Weilai, Xiaopeng, and Leapmotor are all planning overseas markets. However, the domestic market is their main base at present.

From the perspective of cash flow, Nezha Auto is also under great pressure. The prospectus shows that the company's cash flow has been negative for three consecutive years, with net cash used in operating activities of -2.99 billion yuan, -5.408 billion yuan, and -4.354 billion yuan in 2021, 2022, and 2023, respectively.

Financing gives Nezha Auto a chance to breathe. According to data from Qichacha, Hozon New Energy has completed 11 venture capital financings, the most recent of which was an equity financing of over 5 billion yuan in April this year, and the last financing was a Pre-IPO of 7 billion yuan in August 2023. Looking closely at Nezha Auto's multiple financings, the scale of financing has reached more than 1 billion yuan, with a cumulative amount of more than 27 billion yuan. This may be one of the reasons why Zhang Yong is confident that "the company can achieve profitability without going public."

But with huge financing, if Nezha Auto does not solve the problem of profitability, how long it can last is still unknown.

After completing the layout of the cabin and the driver, the first AI large model will be equipped with Nezha L for the first time . While everyone is paying attention to the financial situation of Nezha Auto, let's take a look at the technical advantages of Nezha Auto and how much research and development costs the company has invested in order to build its technical advantages in the automotive field. Nezha Auto has set a goal to transform into a global high -tech company in 2026 , focusing on "technological services" and achieving sales of one million in the global market. Therefore, it can be seen that Nezha Automobile focused on "low price and cost performance" in the early days. In the second half of 2022, it launched the Nezha S priced at 199,800 yuan, and in April 2023, it launched a pure electric sports car priced at 178,800 yuan, claiming to be "the best sports car within 2 million yuan". From the perspective of product positioning, Nezha Automobile has plans to enter the high-end market. But the high-end market requires strong technical strength. In terms of research and development, as of the end of 2023, the company had 2,132 R&D personnel, accounting for 26.9% of the total number of employees. The three-year R&D expenses (including expensed and capitalized parts) were 775.9 million yuan, 1,723.2 million yuan, and 2,263.3 million yuan, respectively. Nezha Automobile has launched two core self-developed intelligent vehicle platforms-Shanhai platform and Yunhe platform, which can be compatible with the parallel development of pure electric/extended range, front-wheel drive/rear-wheel drive/four-wheel drive, left-hand drive/right-hand drive, sedan/SUV and other different models. Shanhai platform models provide advanced technical solutions such as integrated chassis, integrated die-casting, 800V high-voltage architecture, AI large model and high-level intelligent driving. Yunhe platform supports the development of A0-B pure electric vehicles, is in a leading position in AD AS technology, and provides comprehensive battery safety solutions. In addition, Nezha Auto has also launched its self-developed NETA OS underlying operating system , multi-language full-natural voice interaction system, and intelligent driving assistance system NETA AD. Specifically, Nezha Auto's R&D strategy is based on the "core self-development + ecological cooperation" model. In terms of ecological cooperation, Nezha Auto's chip suppliers include NVIDIA , Qualcomm , NXP, Huawei, etc. The following will look at the two major aspects of intelligent driving and intelligent cockpit to see what technical competitive advantages Nezha Auto has created. In terms of intelligent driving, Nezha Auto's NETA AD LITE intelligent driving system provides functions such as adaptive cruise control system ( AC C) and traffic congestion assistance (TJ A), which can be used for selected models of the Nezha AYA series. Nezha Auto also launched the ETA AD PRO system, which uses 5 radars and 11 cameras (5R11V) to achieve seamless point-to-point driving on highways and urban expressways. In addition, Nezha Auto is also developing a more advanced NETA AD MAX system, which will be equipped with a domain control platform Or in-X, as well as 5 millimeter-wave radars , 11 cameras and a lidar. This is not the first time Nezha Auto has cooperated with NVIDIA. In 2022, Nezha Auto announced a partnership with NVIDIA to build a high-performance computing platform based on NVIDIA DRIVE Orin. Like all new car-making forces, Nezha Auto has entered the era of software-defined cars. The cooperation with NVIDIA can help Nezha Auto seize the market share of smart driving. In terms of smart cockpits, the Nezha L smart cockpit is equipped with Qualcomm Snapdragon 8155P chips, and the Nezha S series is equipped with Qualcomm Snapdragon 8155 chips. Smart driving and smart cockpits are the key to winning the battle for automotive intelligence, and Nezha Auto is constantly stepping up its efforts in this regard. In 2024, the technological development trend of smart cars has moved towards cabin-driver integration and cross-domain integration. Cabin-driver integration requires the integration of the cockpit domain and the intelligent driving domain into a high-performance computing unit, and chips are the key. Today, through cooperation with Qualcomm, Nezha Auto has initially completed the layout of cabin-driver integration. At the Beijing Auto Show in April this year, Nezha Auto announced that Qualcomm's Snapdragon Ride Flex (SA8775P) cabin-driver fusion platform will be first installed on Nezha Auto, and will be officially implemented on mass-produced vehicles in the second quarter of 2025. The Snapdragon Ride Flex (SA8775P) cabin-driver fusion platform can support digital cockpit and intelligent driving functions through a single SoC at the same time, and has strong performance in terms of CPU , GPU , and NPU processing capabilities, which not only improves integration but also reduces costs. Nezha Auto has also launched an in-vehicle supercomputing platform product-Haozhi Supercomputing. According to the application requirements of the entire vehicle, the integration of computing power and functions can be continuously improved, thereby realizing the deep integration of intelligent driving, intelligent cockpit and intelligent control at the chip level. With continuous technological upgrades, the computing power of Haozhi Supercomputing has been upgraded from 254Tops of computing power on the 1.0 platform to more than 1000Tops of computing power on the 2.0 platform. It is supported by a central controller and interacts with two or three domain controllers. The 2.0 platform is fully adaptable and is expected to achieve deep integration of intelligent driving functions. Just in June this year, Nezha Automobile, NXP , Hirain, and Wind River Advanced jointly released the first integrated gateway domain control product: Haozhi Supercomputing XPC-S32G. Haozhi Supercomputing XPC-S32G is built on the growable electronic and electrical EEI architecture of Nezha Automobile's Shanhai platform, and is equipped with NXP S32G3 automotive network processors based on Arm Cortex-M7 and Cortex-A53 . Nezha Automobile said that Haozhi Supercomputing XPC-S32G will be used as the whole vehicle network





























The product will be first installed on the new Nezha S model, and the new car will be launched in the second half of this year. Nezha Auto also plans to move from integrated domain control to central supercomputing through the iteration of Haozhi supercomputing, and the Shanhai platform (Gen2 EEI) will be mass-produced and launched in 2025.

In terms of other intelligent vehicle technologies, we have to mention the hot AI big model. Nezha Auto and 360 jointly released the big model NETA GPT, integrating 360 intelligent brain, search and digital human and other advanced AI technologies in the cockpit field. In April this year, Nezha Auto released the big model product NETA "Qiankun Circle", which will soon be launched on Nezha L.

Through technical layout, Nezha Auto has created its own "three heads and six arms" and also created a "technical moat" for itself. But whether these technical strengths can open a bright road for Nezha Auto in the fiercely competitive new energy vehicle market, and before it goes public, relying on the amount of financing on hand, how long can Nezha Auto last? Survival will be the top priority.