Step into your car, set your destination, and let it navigate autonomously—once a sci-fi dream, this scenario is now gradually becoming a reality. From the peak of end-to-end technology rivalry to the nation's continuous release of policy dividends, 2024 marked a rare period of developmental opportunities for intelligent driving.

Against this backdrop, enterprises within the intelligent driving industry chain have successively unveiled listing plans, aiming to secure additional financial support via the capital market and expedite commercialization. Following the successful IPOs of companies like Black Sesame Technology (02533.HK), RoboSense (02498.HK), Ruqi Chuxing (09680.HK), Horizon Robotics (9660.HK), and WeRide (WRD.US), Pony.ai listed on Nasdaq on November 27th, with Momenta, ZM Vision, XiDi Intelligent Driving, and YouJia Innovation also racing towards IPO.

Despite the surge of Chinese intelligent driving enterprises seeking public listings, turning losses into profits remains challenging in the short term due to the nascent stage of commercialization.

Autonomous taxis become an online sensation, with local and foreign players vying for supremacy

This summer, the self-driving taxi "Luobo Kuai Pao" emerged as a new online celebrity in Cyber Wuhan, not only navigating city streets but also capturing the attention of foreigners through online broadcasts. Riding this wave of popularity, both WeRide and Pony.ai, both originating from Baidu's "Autonomous Driving Huangpu Military Academy," have gone public in the United States.

As one of the earliest entrants into the Robotaxi (autonomous taxi) field in China, WeRide successfully listed on Nasdaq at the end of October, becoming the "world's first general autonomous driving stock." Han Xu, the helmsman of WeRide, was once a tenured professor at the University of Missouri and later served as the chief scientist of Baidu's Autonomous Driving Business Unit. He founded WeRide in 2017.

A month later, Pony.ai, also from the same school, listed on the US stock market. The company was founded in 2016 by Peng Jun and Lou Tiancheng, former chief architects of Baidu's Autonomous Driving Business Unit, and has established R&D centers in Silicon Valley, Beijing, Shanghai, Guangzhou, and other locations.

Currently, Pony.ai has deployed over 250 Robotaxi vehicles in Beijing, Shanghai, Guangzhou, Shenzhen, and other cities, achieving commercial fare-paying operations for fully autonomous Robotaxis. Additionally, Pony.ai has expanded its autonomous driving business to countries and regions such as South Korea, Luxembourg, Saudi Arabia, and the United Arab Emirates, realizing the export of technology and products overseas. This US stock market listing allows Pony.ai to compete directly with Robotaxi giants like Tesla in a battle between local and foreign players.

Industry analysis reveals that among pre-IPO and successfully IPO'd intelligent driving enterprises, three unicorns have emerged in the chip field: Black Sesame Technology, Horizon Robotics, and CorePilot Technology; leading enterprises in the lidar field include Hesai Technology and RoboSense; the autonomous driving solution field is more vibrant, with numerous enterprises competing, such as Zhixing Technology, YouJia Innovation, ZM Vision, WeRide, Pony.ai, and Momenta; and the field of intelligent and connected simulation testing is represented by SAIMO Technology.

There's no smoke without fire. The rush of intelligent driving enterprises to go public this year is driven by favorable industrial policies and relatively mature technology.

As new energy vehicles have emerged as a strategic emerging industry, and intelligent driving serving as the second half of their development, it has naturally become a key area of national focus and support. Last November, the "Notice on Piloting the Access and Road Travel of Intelligent and Connected Vehicles" was officially released, marking the first time that a policy channel for the access and road travel of intelligent and connected vehicles equipped with L3 and L4 higher-level autonomous driving functions has been opened up at the national regulatory level. The formulation of policies and regulations not only ensures the safe, legal, and orderly development of autonomous driving technology but also stabilizes confidence in capital flows and market changes.

In the market, all ports of the industrial chain's upstream and downstream are filled with expectations for the entire intelligent driving market. According to estimates by the China Academy of Information and Communications Technology, China's intelligent driving automobile market will approach one trillion yuan by 2025. According to IDC data predictions, the global scale of autonomous vehicles will reach 89.3 million by 2026, with a five-year compound annual growth rate of 14.8%. According to Zooth Research data, the proportion of new vehicles equipped with L2 and above has long exceeded 50% in 2024.

Not only in China but investment institutions, OEMs, technology companies, and local governments globally are paying attention to the intelligent driving market. Super companies like Google, Tesla, and NVIDIA are also heavily investing. During Tesla's earnings call, Musk stated, "Even if aliens kidnapped me tomorrow, Tesla would still solve the problem of autonomous driving," emphasizing Tesla's commitment to intelligent driving.

"It is better to make mistakes than to miss out." This radical attitude once became a consensus among industry stakeholders in deploying the intelligent driving track. However, there is a significant gap between capital market expectations and technology commercialization. Early investor enthusiasm has significantly inflated some project valuations, but corporate performance lags behind these expectations.

As new energy vehicles and intelligent driving companies expand overseas, the competition between local and foreign players in the intelligent driving field will no longer be confined to the domestic market. Close-quarters combat in the global market is also imminent.

Continuous capital expenditure and difficulty in balancing losses, "bleeding" IPOs becoming the norm

For the capital market, the timing of going public is crucial, and the title of "the first stock of something" holds significant value. IPOs can potentially redraw the competitive landscape. Thus, capitalizing on momentum to rush to public markets and secure a position is currently the shared strategy of major players and investors.

However, it is widely acknowledged within the industry that "intelligent driving is too costly," and going public may not necessarily resolve the financial loss issue faced by intelligent driving companies. Data shows that from 2021 to 2023, the total revenue of Horizon Robotics, WeRide, and Black Sesame Technology was 2.925 billion yuan, 1.058 billion yuan, and 537 million yuan, respectively, but their adjusted total losses far exceeded their revenues, amounting to 4.626 billion yuan, 1.33 billion yuan, and 2.568 billion yuan, respectively.

From prospectus data, it is evident that over the past three years, the R&D expenses of these three enterprises have far surpassed their respective revenues. In the first three months of 2024, Black Sesame Technology's R&D expense was even more than 10 times its revenue. According to development plans, these enterprises currently prefer to allocate more funds raised from IPOs towards R&D rather than commercialization.

Heavy investment in R&D leading to insufficient profitability is a common challenge for intelligent driving enterprises. In the previously vibrant venture capital market, enterprises could still secure adequate financial support through primary market financing. However, due to factors like the pandemic and international situation changes, coupled with valuation bubbles for leading enterprises, it has become increasingly difficult for intelligent driving enterprises to raise funds in the primary market. The entire sector has truly shifted from competing on concepts and demos to competing on fixed-point projects and mass production.

For enterprises themselves, under the pressure of significant losses, "going public" may have become one of the few avenues to address corporate survival issues. Due to the unstable developing intelligent driving market, breaking issue prices, stock price declines, and substantial market value shrinkages have become commonplace for "bleeding" IPOs. For instance, both RoboSense and Ruqi Chuxing, which IPO'd earlier this year, exhibited market values below their post-investment valuation from the previous round.

As the first company to list on the Hong Kong Stock Exchange in 2024, RoboSense's share price surged continuously after listing, peaking at over 40 billion Hong Kong dollars in total market value. On July 4th of this year, some restricted shares of RoboSense expired, causing the share price to collapse, with the maximum decline exceeding 70%. After Ruqi Chuxing's IPO in July this year, its total market value peaked at 7.1 billion Hong Kong dollars but subsequently fluctuated downward, currently falling to 3 billion Hong Kong dollars.

Pony.ai also staged a "high open and low close" drama on its listing day: it opened up 15% but closed down by over 7%. Currently, Pony.ai's total market value is around 4.5 billion dollars, nearly half of its post-investment valuation of 8.5 billion dollars from the final round of financing. This stark contrast is likely unexpected for those optimistic about the company.

Huawei's Crossover into Intelligent Driving: How It Gained Influence in the Automotive Industry

The reason for the phenomenon of market value shrinkage lies in the immaturity of the intelligent driving industry's commercialization model, with high R&D and hardware costs becoming pain points hindering its move towards commercialization. Beyond the lively scene of intelligent driving enterprises rushing to go public, whether upstream component manufacturers like chips and sensors or intelligent driving service and solution providers, they are all constrained by the downstream practical application end.

On the application side, domestic auto OEMs have successively achieved the implementation of high-level intelligent driving in cities, with high-level intelligent driving systems gradually becoming a standard configuration for new cars. Logistics autonomous driving for heavy trucks, container trucks, food delivery vehicles, etc., is rapidly iterating. In terms of autonomous driving, robotaxis have been deployed on a large scale, and scenarios such as robotrucks and autonomous mining vehicles are becoming important exploration directions for the industry.

However, facing this new technology called intelligent driving, users from both the C-end and B-end still harbor many concerns, making it challenging for enterprises to deliver perfect application solutions. Thus, what may help enterprises "steadily" occupy the top spot is not the short-term crisis resolution brought about by going public nor relying on major customers to eliminate losses and achieve small profits. Instead, it is continuously making breakthroughs in key and difficult technologies and services while controlling costs to achieve mass production of products. Only by maintaining the advancement of technology and services can one respond swiftly when intelligent driving applications truly explode and secure more market share.

While intelligent driving enterprises are flocking to go public, Huawei, which has shied away from the topic of going public, has transformed from a bystander in the new energy vehicle market to a leading player under the spotlight within a year.

On November 26th, 2023, one year ago, Huawei, which does not produce cars, announced the establishment of "HarmonyOS Intelligent Driving" and has successively launched four "AITO" brands with Thalys, Chery, BAIC, and JAC, with a cumulative delivery of 500,000 new cars to date. The AITO series equipped with Huawei HarmonyOS Intelligent Driving has become the most successful product series among domestic high-end new energy SUVs. Thalys' (AITO's manufacturer) share price has also surged from 8 yuan in 2020 to exceed 100 yuan, and Huawei's overhaul of Thalys has become an industry legend.

Without producing any auto parts, Huawei has become a giant in the automotive industry through its intelligent driving system. Behind the seemingly effortless achievement of results that most automakers can only aspire to is the success of Huawei's Smart Selection Car model. As an information and communication enterprise, Huawei's experience and technology accumulation in the automotive industry are inferior to traditional automakers. However, Huawei began developing intelligent driving technology a decade ago and has accelerated its efforts in automotive intelligence over the past five years, investing billions of yuan in R&D expenses annually and employing over 7,000 R&D personnel. Unlike other new carmaking forces that follow a development logic from easy to difficult (from high-speed scenarios to urban scenarios), Huawei's intelligent driving starts from difficult to easy (from urban scenarios to high-speed scenarios) and has finally gained influence in the automotive industry.

Reflecting on this intelligent driving case at the end of 2024, the core competitiveness of Huawei-series models clearly lies in their advanced intelligent capabilities. When the new AITO M7 was introduced, its intelligent cockpit and "mapless" autonomous driving technology were highlighted as two key selling points, emphasizing its cutting-edge intelligence. This pioneering intelligent configuration, coupled with the strong support of the Huawei brand, has enabled it to distinguish itself among numerous competitors and attract numerous tech-savvy consumers.

Written at the end...

Intelligent driving has transcended the realm of automakers and has become a fiercely contested arena for numerous technology companies. This "reshuffle moment" presents both opportunities and challenges. To survive, thrive, and excel in the long run, it is imperative to establish robust, independently controllable technologies. Integral components of the industrial chain, such as chips, software, hardware, and ecosystem, are indispensable. Amid the surge of intelligent driving industry development, Initial Public Offerings (IPOs) represent a pivotal juncture for the industry's commercialization. Post-IPO, how can enterprises secure their position in the fiercely competitive market? How can they strike a balance between short-term profit pressures and long-term technology investments? And, how can they seize opportunities and mitigate risks in their globalization strategies? Answering these questions adeptly signifies a successful "overtaking" maneuver on the curve; failing to do so risks a "flip" on the same curve.

——The End——