Produced by Radar Finance Hongtu | Written by Mo Enmeng | Edited by Shenhai

Although ByteDance has yet to enter the capital market, its "adopted son" may be the first to "taste the fruit." Recently, media reports claimed that ByteDance is seeking financing for its automotive information and trading platform Dongchedi, indicating that this move is in preparation for Dongchedi's independent IPO.

Radar Finance found that in January this year, media disclosed the news that Dongchedi was "divesting" from ByteDance to become an independent entity. Along with the adjustment of the shareholding structure at the end of last year, the controlling shareholder of Beijing Dongchedi Technology Co., Ltd., Dongchedi's affiliated company, changed from Toutiao Limited to Xiamen Dongchezu Technology Co., Ltd.

Since its launch in 2017, Dongchedi started as a channel under the ByteDance ecosystem, continuously improving its functions and expanding its business territory. However, the rapidly growing Dongchedi has also faced doubts from the outside regarding its professionalism and fairness. At the same time, due to related issues in service, Dongchedi has also received complaints from some users.

Compared to its predecessors like Autohome and Yiche, Dongchedi, although born later, has gradually grown into a leading player in the automotive information platform race. According to foreign media reports, after this round of financing for Dongchedi, its valuation of $3 billion is close to Autohome's $3.301 billion.

Since its listing on the Hong Kong stock market, Autohome's share price has fallen by nearly 70%. If Dongchedi can successfully go public, it will also face the severe test of the capital market.

Is ByteDance's "adopted son" Dongchedi preparing for its IPO?

The news that Dongchedi is preparing for its IPO originated from a report by foreign technology media The Information. According to the media, citing three informed sources, ByteDance is raising $700 million to $800 million for its automotive information platform Dongchedi, preparing for an IPO for this part of the business.

According to insiders, after this round of financing is completed, Dongchedi's valuation may reach $3 billion. For reference, as of 15:00 EDT on June 10, the market capitalization of Autohome, founded by Li Xiang, the head of NIO (who left in June 2015), was $3.301 billion on the US stock market, meaning that Dongchedi's valuation is closely following that of its industry leader.

The insiders also said that ByteDance promoted this financing to a few shareholders, with Hongshan China leading the investment, expected to contribute $400 million to $500 million. Another insider said that KKR and General Atlantic would also invest in this round.

It is said that the ultimate IPO plan is part of ByteDance's larger plan, which aims to spin off businesses that are no longer considered core and abandon unsuccessful diversification efforts. However, ByteDance has not yet publicly responded to this financing and IPO news.

In fact, as early as January this year, there were rumors that ByteDance would spin off Dongchedi into an independent company. According to the "LatePost" report, ByteDance was then relocating Dongchedi-related employees to a newly established wholly-owned subsidiary, with the legal representative served by Dongchedi's strategic head, and a small number of former ByteDance employees would be the first to transfer their labor relations to the new company around the end of January. In the future, Dongchedi will have an independent office location.

Radar Finance learned through Dongchedi's official website that Chongqing Dongchedi Technology Co., Ltd. is currently responsible for operating Dongchedi. Tianyancha shows that the company was founded in October last year, with Beijing Dongchedi Technology Co., Ltd. as its controlling shareholder.

Beijing Dongchedi Technology Co., Ltd. was founded in December 2018 and was originally wholly owned by Toutiao Limited. At the end of last year, the shareholder list of Beijing Dongchedi Technology Co., Ltd. underwent changes.

After the equity change, Xiamen Dongchezu Technology Co., Ltd. became the new wholly-owned shareholder of Beijing Dongchedi Technology Co., Ltd. Xiamen Dongchezu Technology Co., Ltd. was founded in December last year, with He Jian and Zhao Jing holding 60% and 40% of the shares, respectively. According to media reports, He Jian is Dongchedi's president.

At that time, ByteDance explained that the registration of an independent company was based on the normal development needs of the business. However, many voices outside believe that ByteDance's true purpose in letting Dongchedi "fly solo" is to promote Dongchedi's future spin-off and listing or for independent accounting, cost reduction, and efficiency enhancement.

Until this financing news was released again, the voice of ByteDance wanting to push Dongchedi for an independent listing has increased once again. If Dongchedi can successfully land on the capital market in the future, it will likely become the first member of the ByteDance system to achieve a listing.

However, Tianyancha shows that before this financing news was released, Dongchedi had not received any external financing rounds. Therefore, if this round of financing reported by the media is successfully implemented, it will be Dongchedi's first round of financing. If Dongchedi's IPO progresses rapidly, this round of financing may also be Dongchedi's last round of financing before going public.

Born from ByteDance's automotive channel, Dongchedi has faced doubts due to its winter testing

Since its inception in 2017, Dongchedi has a history of 7 years. Regarding its positioning, Dongchedi claims to be a one-stop automotive information and service platform, covering content, tools, and communities, committed to providing users with authentic and professional automotive content and efficient car selection services, while providing efficient solutions for automakers and dealers.

Looking back at Dongchedi's development history, its initial prototype originated from the automotive channel under Toutiao. In August 2017, Dongchedi's independent App officially launched. In January of the following year, Toutiao renamed its automotive channel as the Dongchedi channel. In June of the same year, Xigua Video also launched the Dongchedi channel.

In the subsequent development process, Dongchedi continuously expanded its business boundaries and expanded its business territory from online to offline. In November 2019, Dongchehao was officially launched. In April 2020, Dongchedi launched the "4S Plan" to support dealers. In August of the same year, Dongchedi's real-world testing officially launched. One month later, Dongchefen was launched.

In February of the following year, Dongchedi's used car channel officially launched. In March 2021, Dongchedi launched its car products business. In May 2022, Dongdong Used Cars, a subsidiary of Dongchedi, opened its first offline store in Chongqing. In November last year, Dongchedi's offline trading stores were upgraded to Dongchedi Auto Mall, with the Hefei store officially opening.

Radar Finance learned from the official website that Dongchedi's official website currently has menu entries for car selection, used cars, videos, news, car clubs, rankings, live broadcasts, etc.

Dongchedi's ranking function allows users to view not only sales rankings, new energy rankings (winter range, winter charging, winter energy consumption, summer range, etc.), popular rankings, and price reduction rankings, but also data from Dongchefen rankings such as comfort rankings, appearance rankings, configuration rankings, handling rankings, power rankings, space rankings, and interior rankings.

Although Dongchedi continuously expands its business boundaries, it has also faced doubts from the outside due to its automotive evaluations. In December last year, Dongchedi released a series of videos titled "2023 Dongchedi Winter Test." In these videos, Dongchedi tested hybrid models on the market, including indicators such as "pure electric driving range" and "pure electric achievement rate."

However, the test results published by Dongchedi have been questioned by multiple automakers, including Wenjie, Great Wall, Geely, Lantu, and Kia.

At the same time, several automotive industry leaders also expressed their views. For example, Yu Chengdong, the Chairman of Huawei's Intelligent Automotive Solutions BU, "criticized" the test on WeChat Moments, calling it a "deceptive test" and stating that "science and rigor should be the basic rules to follow."

Yang Xueliang, Senior Vice President of Geely Group, also expressed on Weibo that he does not agree with Dongchedi's evaluation results, believing that the evaluation process is unscientific and imprecise, and the conclusions are not convincing. He believes that it not only misleads consumers but also harms Dongchedi's credibility.

In response to the doubts raised by automakers and automotive industry leaders, Dongchedi responded that this test was a full-load endurance test in extremely cold weather below -20°C. All participating vehicles departed after preparation and formation, using uniform standards that conform to users' winter driving scenarios, without any discrimination.

A subsequent Weibo post by Sina Auto once again put Dongchedi's professionalism and fairness to the test. Sina Auto quoted a blogger's information, stating that "Dongchedi's winter test prices are indeed shocking. Relatively speaking, DxO in the mobile phone industry is simply child's play."

Attached to this Weibo post is a promotional page with a black background. In the top right corner are the logos of "Dongchedi" and "Judongche," while in the top left corner is written "Winter Test Commercial Cooperation Levels." In the center of the page is "Brand Cooperation Benefits Display."

Among them, for independent brand cooperation benefits, there is one seat at 16 million yuan for the Winter Test Driving Fun Edition, one seat at 10 million yuan for the Winter Test Energy Storage Edition, and one seat at 6 million yuan for the Winter Test Basic Edition. For luxury/joint venture brand cooperation benefits, there is one seat at 10 million yuan for the Winter Test Energy Storage Edition and one seat at 6 million yuan for the Winter Test Basic Edition.

Subsequently, Dongchedi's original host "Dongche Dakeji Dongmen" responded on Weibo to Dongchedi's commercialization doubts about its winter test, stating, "This is pure nonsense. None of the 53 cars in the 2023 Dongchedi Winter Test had any commercial cooperation, and no automaker could interfere with the test or influence the test results."

Apart from the aforementioned controversy, there have also been some complaints from users on the Heimao Complaint Platform against Dongchedi. As of press time, there have been over 340 complaints related to the Dongchedi App on the Heimao Complaint Platform. These complaints include issues such as "telephone harassment," "unrealistic online quotes that defraud consumers," "recommended dealers failing to fulfill contracts," and "false promotional activities."

Ranking among the top, "flying solo" for better development

Although Dongchedi has relied on ByteDance since its inception, compared to ByteDance's two star products, Douyin and Toutiao, Dongchedi's luster is significantly dimmer.

According to QuestMobile data, Dongchedi's daily active user count grew by 57% from 2021 to the first half of 2023, reaching 7.32 million. However, Douyin's daily active user count has already reached hundreds of millions, and the user scales of the two are clearly not on the same level. Nevertheless, as a member company under ByteDance, Dongchedi can leverage the various traffic entrances under the ByteDance ecosystem.

At the Auto Creator Conference in July last year, Dongchedi announced that it had fully integrated its automotive content with Douyin, Toutiao, and Xigua Video, with Dongchedi serving as the overall operator and coordinating resources across all platforms. After the integration, the daily active users of the four platforms' automotive content reached 310 million, with an average daily browsing volume of over 5.6 billion and over 6.34 million automotive creators covered.

According to the "Q3 2023 Mobile Internet Industry Data Research Report" released by data research agency Aurora, in the third quarter of 2023, Autohome ranked first in the automotive information platform sector in terms of average daily active users (DAU), with 14.148 million DAU taking the lead.

Dongchedi ranked second, with an average quarterly DAU of 10.041 million in Q3 2023. Although it has entered the top tier of automotive information platforms, Dongchedi still lags behind Autohome, with its average quarterly DAU equivalent to 70% of Autohome's.

In addition, Yiche, originally founded by Li Bin, the CEO of NIO, ranked third on the comparison list, with an average quarterly DAU of 8.255 million.

However, according to a 2022 report by Jiemian News, it exclusively learned from sources close to ByteDance that Dongchedi's daily active user count had surpassed Autohome and Yiche since October 2021, ranking first in the industry, with revenue growth higher than the industry average. This data comes from a non-public industry report previously released by Analysys.

As Dongchedi has not disclosed its financial data, the outside world cannot yet know its true and specific operating conditions. However, Autohome, which is already listed on US and Hong Kong stock markets, has disclosed financial data that can provide some reference for the outside world.

According to Autohome's financial report, it earned a total revenue of 7.184 billion yuan in 2023, representing a year-on-year increase of 3.51%. In terms of profits, Autohome recorded a net profit of 1.925 billion yuan last year, an increase of 5.52% compared to the previous year.

Further breakdown shows that Autohome's revenue mainly comes from media services, lead services, online marketing, and other segments. Last year, the aforementioned three segments contributed 1.871 billion yuan, 3.112 billion yuan, and 2.202 billion yuan to Autohome's revenue, accounting for 26.04%, 43.31%, and 30.64% of total revenue, respectively.

Among them, media services mainly include advertising services for automakers and regional marketing activities conducted by regional offices of several automotive brands. Lead services generate revenue through dealer subscription services, advertising services sold to individual dealer advertisers, and used car information display services. Online marketing and other businesses mainly include data products, new and used car transactions, auto finance, and others.

Some analysts believe that whether it was during the dominance of traditional fuel vehicles or the current popularity of new energy vehicles, the large-scale automotive market has supported the development of automotive information platforms. As players in the same race, Dongchedi and Autohome's businesses overlap in many areas.

However, even if Dongchedi can successfully go public in the future, it will still face severe tests from the capital market. As of the close of trading on June 11, Autohome's Hong Kong stock price closed at HK$52.55 per share, down 68.51% from its first day of listing.

In the view of Zhang Xiang, a researcher from the Automotive Industry Innovation Research Center of North China University of Technology, Dongchedi's spin-off and independence are in line with its own development trend. On the one hand, Dongchedi has already reached a considerable scale. If it remains within ByteDance in its current state for a long time, it may limit its development speed to a certain extent. On the other hand, for ByteDance, spinning off different businesses can avoid risks to a certain extent, as the failure of one business will not affect others.