Produced by | Frontier of Entrepreneurship

Art Editor | Xing Jing

Reviewed by | Song Wen

Just half a year after its initial listing application expired, DeepRoute Technology submitted another application to list on the Main Board of the Hong Kong Stock Exchange in May 2026.

As a new player in the smart heavy truck sector jointly incubated by Baidu and Lionbridge Group, this company, dubbed the “Tesla of trucks” by the outside world, is attempting to reopen the door to the capital market with an impressive “second attempt.”

Looking at its updated prospectus, the company’s revenue surged from RMB 426 million in 2023 to RMB 3.961 billion in 2025, a nearly ninefold expansion in just three years. More importantly, it achieved a crucial cash flow turning point—operating cash flow turned positive for the first time, reaching RMB 835 million.

This marks that the once cash-burning new carmaker now has preliminary self-sustaining capabilities in its core business.

However, behind this growth-driven performance lies a severe (you can replace it with "formidable" or "severe" based on context) profitability test for DeepRoute Technology.

During the reporting period from 2023 to 2025, DeepRoute Technology accumulated a net loss of RMB 1.713 billion, with an overall gross profit margin of just 4.9% in 2025.

In the capital-intensive and cost-heavy new energy vehicle manufacturing industry, a gross profit margin of less than 5% means that selling vehicles is almost a “loss-leading” endeavor, with slim profit margins heavily squeezed by the upstream supply chain.

This financial dilemma of “revenue growth without profit increase” and the supply chain model highly dependent on external contract manufacturing pose the biggest uncertainties on its path to an IPO.

(Image / Jiemian Gallery)

As industry competition enters a fierce “knockout” phase, whether DeepRoute Technology can break free from the passive situation of being “choked by suppliers” and translate its technological advantages into tangible profitability will be a make-or-break battle for its foothold in the trillion-dollar road freight market.

1、A Tale of Two Extremes in Performance

DeepRoute Technology’s three-year financial performance presents a stark “tale of two extremes.”

On the “hot” side, its core business has demonstrated explosive growth potential.

During the reporting period, the company’s revenue soared from RMB 426 million to RMB 3.961 billion, achieving a nearly ninefold expansion in three years. In 2025, deliveries of new energy heavy trucks surpassed 8,000 units, surging 167% year-on-year. The sharp increase in heavy truck sales was key to the company’s revenue expansion.

(Image / Shetuwang, based on VRF protocol)

Net cash flow from operating activities also turned positive for the first time, reaching RMB 835 million. This reversal of a key metric marks that DeepRoute Technology’s core business has finally moved beyond relying solely on external financing, demonstrating preliminary self-sustaining capabilities and officially transitioning from “high-investment expansion” to “high-efficiency operation.”

However, behind the impressive revenue and delivery figures, DeepRoute Technology’s profitability remains in the “deep freeze.”

Data shows net losses of RMB 389 million, RMB 675 million, and RMB 649 million over the three years, with cumulative losses exceeding RMB 1.713 billion. Despite a narrowing loss ratio, the absolute loss figures remain substantial, keeping the company mired in losses.

Moreover, according to the prospectus, the company expects to continue recording net losses in 2026.

In terms of gross profit margin, there has been a consistent upward trend. During the reporting period, gross profits were RMB 1.8 million, RMB 9.8 million, and RMB 195 million, with the overall gross profit margin rising from 0.4% and 0.5% to 4.9%.

However, it is alarming that DeepRoute Technology’s gross profit margin remains below 5%. Typically, the automotive industry’s gross profit margins range from 10% to 20%, making its current margin uncompetitive in the fierce market.

This financial dilemma of “revenue growth without profit increase” is closely tied to DeepRoute Technology’s unique development strategy.

To quickly capture market share amid fierce competition, DeepRoute Technology adopted a lightweight asset contract manufacturing model in its early stages, rapidly bringing its forward-defined pure electric heavy trucks to market.

In an interview with *Frontier of Entrepreneurship*, DeepRoute Technology stated that it employs a strategy of forward-defined design, Integration of software and hardware (you can translate it as "software-hardware integration"), and a Progressive path (you can translate it as "progressive approach"). In the RoboTruck sector, it prioritizes large-scale deployment of L2 autonomous driving to achieve self-sustaining operations, using cash flow and real-world data from vehicle sales to fuel R&D, forming a “laying eggs along the way” business closed loop (you can translate it as "closed loop"). The Large scale delivery (you can translate it as "mass delivery") of L2 heavy trucks has accumulated vast amounts of data in real-world operations, creating a data flywheel effect that drives continuous evolution of L4 autonomy—a proven successful path validated by Tesla.

From DeepRoute Technology’s perspective, every heavy truck sold is not just a transportation tool but also a 24/7 data collection terminal. While the gross profit from vehicle sales is slim, the vast amounts of planning and control data generated during actual freight operations serve as the most valuable fuel for training next-generation autonomous driving algorithms.

However, in the reality of manufacturing, the slim profit margins leave its supply chain extremely vulnerable—any upstream cost fluctuations or lower-than-expected sales could pose significant challenges to this fragile profit model.

The widening losses and extremely low gross profit margin not only reflect the high R&D and operational costs during the production ramp-up phase but also represent the biggest uncertainty on its path to an IPO. Whether the capital market will continue to buy into this unfulfilled “data closed-loop” story will be key to DeepRoute Technology’s successful listing.

2、Strangled by Suppliers

Compared to other early-stage smart heavy truck startups, DeepRoute Technology’s business model can be highly summarized as “cross-border integration of top-tier resources” and “rapid breakthrough through lightweight asset contract manufacturing.”

This approach allowed it to grow from a concept on a PPT to an industry dark horse with nearly RMB 4 billion in annual revenue in just a few years.

Its resources come from its “well-connected” investors. Besides Lionbridge Group, backed by founder Wan Jun, Baidu, another founding shareholder, has injected its foundational DNA into the company.

As a strategic investor, DeepRoute Technology secured Baidu Apollo’s exclusive “white-box” autonomous driving technology authorization in the commercial vehicle sector. This means DeepRoute received not just a packaged black-box interface but also the underlying source code and core intellectual property.

This enabled it to directly leverage Baidu’s decade-plus technological accumulate (you can translate it as "accumulation"), allowing deep customization and optimization for specific scenarios in heavy truck long-haul logistics, significantly lowering R&D barriers and shortening technology validation cycles.

Founder Wan Jun injected Lionbridge’s years of experience in the commercial vehicle supply chain into DeepRoute. Lionbridge not only brought nationwide logistics scenarios and operational data from truck drivers but also provided mature vehicle financing, after-sales service, and risk control models. This helped DeepRoute Technology avoid the “lab mentality” of pure technology teams and better address the real pain points of cost reduction and efficiency improvement in the logistics industry.

This cross-border integration background allowed DeepRoute Technology to break free from the traditional automaker’s “technology-first” mindset from its inception, instead adopting a strategy of “prioritizing commercial value and data-driven outcomes.”

In the manufacturing phase, DeepRoute Technology opted for a “factory-less model” similar to early-stage NIO, XPeng, and Li Auto, relying on established automakers like JAC Motors and Shandong Leichi for vehicle customization and contract manufacturing while retaining control over vehicle engineering, system architecture, and core components.

The “dividends” of this model are immediately apparent. First, it swiftly avoided the hundreds of billions in heavy asset investments and lengthy qualification approval cycles required for traditional automakers. In just two and a half years, DeepRoute Technology achieved mass production and delivery of its first model, the “DeepRoute Stellar.”

However, the direct consequence is the lack of independent production capabilities, leaving the company with extremely weak control over its supply chain.

The prospectus reveals that during the reporting period, DeepRoute Technology’s purchases from its top five suppliers amounted to RMB 839 million, RMB 3.372 billion, and RMB 6.903 billion, accounting for 88.1%, 92.3%, and 79.4% of total annual purchases, respectively. During the same period, purchases from its largest supplier were RMB 608 million, RMB 2.230 billion, and RMB 2.336 billion, representing 63.8%, 61.0%, and 26.9% of total annual purchases, respectively.

In its risk disclosures, DeepRoute Technology admits that if suppliers fail to fulfill their obligations in terms of timing, quality, or specifications, leading to insufficient or delayed supply of raw materials and components, vehicle production could be hindered, adversely affecting the sales and delivery of its new energy heavy truck solutions.

If suppliers terminate their cooperation with the company and establish partnerships with competitors, DeepRoute Technology would face uncertainties in maintaining its partnerships and might struggle to find suitable alternatives promptly on commercially acceptable terms. “Once these suppliers encounter operational issues or adjust their cooperation strategies, DeepRoute Technology’s supply chain would face significant disruption, potentially even affecting its entire production operations,” analysts pointed out.

The heavy reliance on external manufacturing for vehicle production leaves DeepRoute Technology with almost no bargaining power upstream, resulting in cost control challenges—a core reason for its consistently low single-digit gross profit margin.

More critically, vehicle delivery schedules and batch quality are entirely subject to the contract manufacturers’ production flexibility and quality control levels. Any capacity constraints or strategic shifts by partners could directly impact DeepRoute Technology’s business foundation.

On the other hand, a highly concentrated supplier base may also limit the company’s technological innovation and product upgrades. Since suppliers’ technological and production capabilities largely determine the company’s product standards, if suppliers fail to provide new technologies or products timely, the company will struggle to maintain market competitiveness.

(Image / DeepRoute Technology’s official Douyin account)

In its response to *Frontier of Entrepreneurship*, DeepRoute Technology also mentioned the importance of supply chain and scale improvements for boosting product gross profit margins. The company stated that it aims to reduce the bill of materials (BOM) through vertical integration, optimize its product mix, leverage overseas market premiums, achieve economies of scale, and optimize its supply chain to further support margin expansion.

3、Breaking Through in a Red Ocean Competition

Competition in the new energy heavy truck industry has shifted from early-stage “policy-driven” and “first-mover advantage” to a “marathon-style” systemic competition centered on total lifecycle costs, technology route suitability, ecological collaboration, and business models.

With penetration rates exceeding 30%, the track (you can translate it as "sector" or "race") has become increasingly crowded.

Traditional OEMs, desperate to capture limited market share, have resorted to undercutting bid prices below BOM cost thresholds.

Currently, CNHTC, FAW Jiefang, and Dongfeng Commercial Vehicles, leveraging their deep supply chain systems and customer bases, have quickly launched models covering pure electric, hybrid, and hydrogen routes, dominating the market. Construction machinery giants like XCMG and Sany Heavy Industry, building on their first-mover advantages and electrification experience in the construction machinery sector, are keeping pace.

(Image / DeepRoute Technology’s official Xiaohongshu account)

Simple vehicle performance comparisons are now a thing of the past. Competition has escalated to a full industrial chain ecosystem battle encompassing “vehicles + core components + infrastructure + operational services.”

According to DeepRoute Technology, CIC data shows that over a assumed five-year lifecycle, its heavy truck products reduce costs by 22.8% and 10.8% compared to diesel trucks and retrofitted electric trucks, respectively, maintaining economic advantages throughout the product lifecycle.

DeepRoute Technology has built a comprehensive road freight service ecosystem covering telematics management and energy replenishment support, offering customers one-stop solutions and creating network effects.

Of course, leading companies no longer just sell vehicles but provide integrated solutions of “vehicles + energy replenishment + finance + management.” Traditional players like Sany and XCMG are also experimenting with bundling vehicle sales with photovoltaic, energy storage, and charging/swapping station construction, even collaborating with highway investment firms and energy companies to build long-haul energy replenishment networks.

Unlike passenger vehicles, heavy trucks serve as production tools. The future competition hinges on who can fastest help customers balance costs through technological cost reductions and business model innovations.

Against a backdrop of relentless industry price wars and cascading cost pressures, DeepRoute Technology’s current low gross profit margin offers little reassurance. In an even more cutthroat market, it risks being overtaken at any moment.

Under these circumstances, DeepRoute Technology must urgently find effective ways to boost its gross profit margin to survive fierce market competition; otherwise, it risks being eliminated.

Facing supply chain constraints and profitability pressures, DeepRoute Technology must accelerate its integration capabilities. Currently, the company is make every effort to advance (you can translate it as "fully committed to") the launch of its “Three Electrics Smart Factory” in Changxing, Huzhou, shifting from “outsourcing” to “in-house R&D and production” for core components like battery packs, electric drive axles, and electronic control systems, which account for roughly 60% of total vehicle costs.

In *Frontier of Entrepreneurship*’s view, only by securing autonomous production rights for core components can DeepRoute Technology break free from external supplier dependence, significantly reduce vehicle costs through technological iteration and economies of scale, and establish a more reliable profit structure to withstand price wars and control its own destiny.

On the software front, DeepRoute Technology is actively deploying intelligent driving and telematics technologies, empowering vehicles with more intelligent functions (you can translate it as "intelligent functions") through software development. Backed by Baidu, DeepRoute Technology should further leverage its software algorithm strengths to transition into a high-margin intelligent driving technology service provider.

From the current perspective, DeepWay, having achieved positive cash flow, has gradually demonstrated to the capital market and the entire industry the feasibility of its business model of 'electrification first, followed by intelligence'.

However, in today's unpredictable market, with the further expansion of sales volume and cost reduction of self-produced components, DeepWay needs to achieve a turnaround from losses to profits as soon as possible, establish long-term barriers to survival, and prove its sustainable development capabilities in this ecological 'marathon'.

*Note: The featured image and unsigned images in the article are from the official WeChat public account of DeepWay.