On September 26, Horizon Robotics revealed in a Hong Kong Stock Exchange (HKEX) filing its intention to issue roughly 639 million shares at HK$9.99 each, anticipating net proceeds of approximately HK$6.339 billion (about RMB 5.814 billion). This share price reflects a discount of around 5.75% compared to the closing price on September 25.

Horizon Robotics clarified in the announcement that the net proceeds from this share placement would be allocated to bolster its overseas market footprint and expedite domestic market expansion; invest in research and development (R&D) to further hone its technological prowess; venture into emerging sectors, such as initiatives related to Robotaxi; and undertake strategic investments in upstream and downstream business partners.

The allocation of funds from this financing round once again highlights Horizon Robotics' strategic focus on the Robotaxi business.

1. Venturing into Robotaxi

Horizon Robotics' entry into the Robotaxi sector is not an impromptu decision. On September 11, Horizon Robotics announced that at the 2025 Inclusion·Bund Summit, it would formally ink a strategic cooperation agreement with Hello Inc. Leveraging their respective technological strengths, the two entities aim to jointly develop intelligent driving technologies that are exceptionally cost-effective, highly safe, reliable, and user-friendly, thereby achieving commercial success for Robotaxi and creating industry-leading benchmark products.

The partnership with Hello Inc. marks Horizon Robotics' formal foray into the Robotaxi sector. However, unlike most players in this field, Horizon Robotics does not directly manufacture vehicles, leading some to dub it the 'Tesla without car manufacturing.'

Specifically, Horizon Robotics will supply Hello Inc.'s Robotaxi fleet with core software and hardware systems, encompassing L4 autonomous driving software algorithms, automotive-grade domain controllers, and associated hardware. Hello Inc., acting as the operator, will concentrate on scenario data accumulation, operational optimization, and commercialization. This collaboration represents a formidable alliance between a 'technology foundation company' and an 'operator.'

As an intelligent driving solutions provider, Horizon Robotics' strategic move into the Robotaxi sector, while seemingly abrupt, is not entirely unexpected.

The current acceleration from L2 to L4 in intelligent driving has garnered industry-wide consensus. Robotaxi stands as a pivotal application and commercialization scenario for L4 autonomous driving, boasting immense market prospects and development potential. According to a UBS report, by the late 2030s, the potential market size for Robotaxi services in China is projected to reach US$183 billion, with approximately 4 million Robotaxis in operation nationwide.

Moreover, propelled by policies, technological advancements, cost reductions, and market demand, the inflection point for Robotaxi commercialization has arrived. A report by Soochow Securities titled 'AI + Automotive Intelligence Series 10: The Inflection Point for Robotaxi Commercialization Has Arrived' predicts that by 2030, the Robotaxi market size will reach RMB 200 billion, accounting for roughly 36% of the B-end shared mobility market.

Yu Kai, the founder and CEO of Horizon Robotics, stated in an interview that he envisions assisted driving becoming hands-free within three years, eyes-free within five years, and allowing drivers to sleep within a decade. He anticipates that within three to five years, the general public will be able to reap the benefits of assisted driving.

Thus, for an intelligent driving company, the Robotaxi market not only holds the potential to become Horizon Robotics' 'technological moat' but also serves as a new growth engine.

2. Real-World Challenges Facing Horizon Robotics

In the first half of this year, Horizon Robotics reported revenue of RMB 1.567 billion, marking a year-on-year increase of 67.6%. However, its losses expanded from RMB 5.098 billion in the same period last year to RMB 5.233 billion. Adjusted operating losses surged by 34.9% year-on-year to RMB 1.111 billion.

A closer look at the financial report reveals that increased R&D expenses and sales and marketing expenditures were major contributors to Horizon Robotics' widening losses. During the period, R&D expenses rose by 62% year-on-year to RMB 2.3 billion, while sales and marketing expenses climbed by 37.1% year-on-year to RMB 272 million. The combined total far exceeded the revenue generated during the same period.

Horizon Robotics explained that the year-on-year spike in R&D expenses was primarily attributable to higher cloud service fees and purchases of other technical services, as well as increased share-based compensation for R&D personnel. The rise in sales and marketing expenses was mainly due to higher share-based compensation and other employee benefits for sales and marketing staff, coupled with increased spending on marketing, conferences, branding, and product promotion, reflecting its intensified promotional and marketing efforts.

During this pivotal phase of intelligent driving technology development and commercialization, escalating R&D costs are not unique to Horizon Robotics. However, in terms of financial performance, while Horizon Robotics has achieved revenue growth in recent years, its profitability has lagged behind, resulting in a scenario where revenue has increased without a corresponding rise in profits.

Publicly available data indicates that from 2021 to 2024, its revenue grew steadily from RMB 467 million to RMB 2.384 billion. However, it incurred losses for three consecutive years from 2021 to 2023, with losses widening by 323.01% to RMB 8.719 billion in 2022. Although it reported a profit of RMB 2.347 billion in 2024, it is noteworthy that this profitability relied on gains from changes in the fair value of financial instruments. After excluding non-operating factors such as fair value changes, Horizon Robotics reported an adjusted net loss of RMB 1.681 billion.

Given its continued losses in the first half of 2025, Horizon Robotics has not yet achieved self-sufficiency in its core business. This leaves its survival and development heavily reliant on external capital infusions. According to the Tianyancha platform, since its inception in 2015, Horizon Robotics has undergone 17 rounds of financing, with investors including Alibaba, Baidu, Chery Automobile, and FAW Group. The total disclosed financing amount exceeds US$2.6 billion.

From a revenue structure perspective, Horizon Robotics' performance remains highly dependent on major clients. The prospectus reveals that from 2021 to the first half of 2024, the top five clients accounted for over 50% of total revenue in each period, with the highest proportion exceeding 70% in the first half of 2024.

In the first half of 2025, revenue from Horizon Robotics' top five clients accounted for 52.48% of the total revenue during the period, with the largest client contributing 19.7%.

Industry insiders suggest that this heavy reliance on major clients exposes Horizon Robotics to certain risks. If these clients reduce their business scale with Horizon Robotics or even terminate their cooperation, the company's financial performance will be directly impacted.

Currently, the instability of client business is already becoming apparent. Li Auto, a significant client of Horizon Robotics, equipped its Li L9 Pro with Horizon Robotics' Horizon Pilot solution. However, Li Auto is intensifying its efforts in the autonomous driving sector and recently reorganized its autonomous driving department. As Li Auto's self-developed technologies mature, its demand for external suppliers may diminish.

According to Yu Kai, nearly all mainstream Chinese automakers collaborate with Horizon Robotics. Besides Li Auto, automakers like BYD, NIO, and XPeng are already key players in China's intelligent driving landscape. Additionally, technology companies focused on autonomous driving, such as Huawei and Momenta, as well as enterprises like Baidu Apollo and Pony.ai, which are heavily invested in the Robotaxi sector, are intensifying competition in China's intelligent driving industry.

While the blueprint for the Robotaxi market is undoubtedly attractive, the path to commercialization is fraught with challenges. Against the backdrop of an industry still awaiting widespread profitability, Horizon Robotics faces persistent losses and increasingly fierce competition. Whether it can establish a sustainable profit model in the Robotaxi arena will directly determine whether its vision becomes a reality or remains a mere bubble.