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Produced by | Tan Ke Travel Author | Wei Shuai Editor | Feng Yu

After seven years, WeRide was finally "lifted" to the point of listing.

On July 27, autonomous driving solution provider WeRide submitted its prospectus to the Nasdaq. According to information disclosed by foreign media, WeRide is expected to officially list on the U.S. stock market at the end of August, becoming the "first stock of the world's general autonomous driving company."

As the news of its listing came out, its valuation in the last round of financing before its listing was also exposed - US$5.1 billion (approximately RMB 37.1 billion).

As one of the few general autonomous driving players in the industry today, WeRide's business covers L2 to L4 autonomous driving, and its products include a variety of solutions including driverless minibuses, Robotaxi, and advanced intelligent driving.

However, the breadth of business cannot change the common problem of losses in the autonomous driving industry. Its prospectus shows that from 2021 to 2023, WeRide's adjusted net losses will be 427 million yuan, 401 million yuan and 502 million yuan respectively, with a cumulative loss of more than 1.3 billion yuan.

In fact, with the internal competition of the new energy vehicle industry chain, the autonomous driving solution providers, as upstream suppliers, are also under much higher competitive pressure than before. Problems such as long service cycle, slow payment cycle, and profit compression have begun to spread throughout the industry chain.

In addition, the capital market seems to be re-examining the development prospects of the autonomous driving industry. According to Tanke Travel, the share prices of LiDAR companies RoboSense and Hesai Technology, both in the autonomous driving industry chain, have experienced a cliff-like decline, and the expected investment returns are far less than before.

Half is seawater, the other half is fire. When intelligence and autonomous driving become indispensable labels for the new energy vehicle industry, the capital market has calmly predicted the bubble of the industry.

With a valuation of over 30 billion, WeRide’s test has just begun.

1. Wearing the halo of a star, spending money continuously

Public information shows that WeRide, founded in 2017, was formerly known as Jingchi Technology, and its founder is Wang Jin, a well-known figure in China's autonomous driving field.

At that time, Wang Jin left the Baidu Autonomous Driving Division he founded and co-founded Jingchi Technology with Han Xu, then Baidu's Chief Scientist for Autonomous Driving. But soon after, Wang Jin withdrew from Jingchi Technology due to a non-compete agreement with Baidu. Jingchi Technology was later renamed WeRide, with Han Xu as the co-founder.

Although it experienced some twists and turns in its early days, the presence of star figures in the industry has always added a lot of industry appeal and capital favor to the company.

According to Qichacha data, WeRide has received ten rounds of financing since its establishment in 2017, with a publicly disclosed financing amount of more than US$1.09 billion. The boosters behind it include not only leading investment institutions, but also upstream and downstream companies in the industry chain such as Yutong Bus, GAC, and Bosch.

Even with continuous financing, going public at a loss has become a common "pain" for today's autonomous driving companies.

Image/Photography Network, based on VRF protocol

Data shows that even with its IPO imminent, WeRide’s operating conditions are not optimistic.

Information in the prospectus shows that from 2021 to 2023, WeRide's revenue was 138 million yuan, 528 million yuan and 402 million yuan respectively, and its net losses were 1.007 billion yuan, 1.299 billion yuan and 1.949 billion yuan respectively. The company's adjusted net losses in non-international financial reports were 427 million yuan, 401 million yuan and 502 million yuan respectively.

As a technology-intensive industry, high R&D expenditures make losses a normal occurrence for companies.

In the three years from 2021 to 2023, WeRide's R&D expenditures will be 443 million yuan, 759 million yuan and 1.058 billion yuan respectively. R&D expenditures are much higher than corporate revenues.

WeRide also stated in its prospectus that research and development expenses are expected to increase as the company's autonomous driving technology is tested, trialed and commercialized.

Zhang Xiang, secretary-general of the International Intelligent Transportation Technology Association, said that the nature of the autonomous driving industry has led to high research and development costs for companies, and the industry is constantly inward-looking, so continuous transfusions have become a must.

In fact, the continuous investment in R&D expenses is a pressure faced by the entire industry, but for WeRide, the greater pressure lies in the slowdown in revenue growth, or even negative growth. The prospectus data shows that WeRide's revenue in the first half of 2024 will decline by 17.81% year-on-year.

At the same time, its book capital situation is not optimistic. The prospectus shows that WeRide currently holds about 1.8 billion yuan in cash and cash equivalents.

"We have not been profitable since our inception, and this situation may continue in the future," WeRide was quite frank in its prospectus.

According to the current revenue growth rate and loss situation, entering the capital market and seeking new financial support has become a must for WeRide.

2. Supported by partners, but commercialization is still difficult

Looking at the undercurrents in China's autonomous driving field today, every company is trying to forge a unique path.

Among a number of autonomous driving startups, WeRide's uniqueness lies in its extensive layout of business lines, including various types of autonomous driving products such as passenger cars, trucks, driverless minibuses, and multi-purpose vehicles.

According to reports, WeRide's business currently consists of five main segments: Robotaxi (autonomous driving taxis), Robobus (autonomous driving minibus), Robovan (autonomous driving freight truck), Robosweeper (autonomous driving sanitation vehicle), and ADAS (advanced intelligence) solutions.

This capability that can be applied in various segmented autonomous driving scenarios and levels is general autonomous driving.

At present, WeRide is the world's first company to provide L4 Robotaxi services to the public, and the first company to provide self-driving minibus services to the public. In 2019, WeRide launched the first Robotaxi fleet in the country's first first-tier cities and officially started operating services in Guangzhou.

The early first-mover advantage allowed WeRide to accumulate a large amount of data advantages. However, with the development of policies and the acceleration of development of competitors in the same industry, WeRide's first-mover advantage is no longer obvious.

Even more surprising is that the prospectus data shows that between 2021 and 2023, WeRide's self-driving taxis will sell a total of 19 units, including 5 in 2021, 11 in 2022, and 3 in 2023. The sales of driverless minibuses were 38, 90, and 19 in the three years respectively, with a total of less than 200 units.

As for the autonomous minibus business, it has to benefit from Yutong Bus. As early as 2020, Yutong Bus made a strategic investment in WeRide to promote the latter's application in autonomous driving commercial scenarios such as minibuses and buses. In addition, WeRide's commercialization of autonomous freight trucks is also inseparable from the support of its partner Jiangling Motors.

Image/ WeRide official website

However, this level of commercialization makes it difficult to prove the success of its business model.

Zhang Xiang also believes that the future business development of WeRide is also full of uncertainty. "From the recent market feedback, consumers' trust in autonomous driving has further decreased and their confidence is insufficient. The technology and management level actually demonstrated by autonomous driving companies are not as high as imagined."

In addition to the limited application effects of its driverless products, WeRide is also highly dependent on its partners in terms of high-end intelligent driving software.

After participating in WeRide's equity financing, WeRide teamed up with Bosch, the world's largest Tier 1, to develop advanced intelligent driving solutions in May 2022. Two years later, the two parties quickly mass-produced the "Bosch China Advanced Intelligent Driving Solution", which was also installed on Chery Xingtu Xingjiyuan ES and ET.

However, it should be noted that while the cooperation with Bosch has brought in orders, it has also made WeRide's high-end intelligent driving business "dependent" on Bosch to a certain extent.

In the first half of 2024, the company's overall revenue fell by 17.81% year-on-year, and ADAS R&D service revenue decreased by 43.9 million yuan compared with the same period last year. WeRide admitted that the decrease in revenue from the customized R&D services provided by the company to Bosch was one of the reasons for the overall decline in performance.

3. Large-scale commercialization is imminent, and the test has just begun

Although WeRide predicts that the global autonomous driving market will reach US$1.7 trillion by 2030, with China's autonomous driving market reaching US$639 billion, the "money prospects" may not come so soon.

Today, the autonomous driving industry is still defined as being in its early stages, but some companies have already died on the beach.

In April this year, Ghost Autonomy, an autonomous driving software startup invested by Open AI, announced that it would shut down its global business and close the company on April 3, 2024, considering the current financing environment and the long-term investment required for autonomous development and commercialization, as the long-term path to profitability is uncertain.

Life and death are just a matter of moments. This company was founded in the same year as WeRide and successfully went public last year, but it collapsed before it could truly commercialize.

This also proves that sustained blood-making ability and financial status are always a test for every company in the industry.

A closer look at WeRide's revenue situation shows that the prospectus shows that WeRide's revenue pillar has changed significantly, from being mainly product revenue to being mainly service revenue.

Data shows that from 2021 to 2023, WeRide's product revenue dropped from 102 million yuan to 54.19 million yuan, while service revenue increased from 36.57 million yuan to 348 million yuan, a year-on-year increase of 850%. It can be said that the growth in business revenue all comes from the growth in service revenue.

Image/Photography Network, based on VRF protocol

This shift means that customer needs are changing as products are launched.

However, unlike the one-time transaction of product revenue, service revenue requires long-term project docking services, and customers have higher requirements and the docking is more complex.

An autonomous driving software service provider told Tanke Travel that providing services to customers now requires almost 24-hour standby time, and the project time is fully in line with customer needs.

Even with this kind of service, there is great competition in signing cooperation agreements, and collecting payments is even more difficult.

As for WeRide's business, its current business model of cooperating with car companies and parts suppliers is more dependent on customers.

What is quite embarrassing for WeRide is that as the self-developed technologies of car companies mature, external procurement has become less and more sophisticated. As far as intelligent driving solutions are concerned, Tesla, Xpeng, Ideal, and NIO are gradually promoting full-stack self-development.

The time left for WeRide to commercialize on a large scale is getting shorter and shorter. With the space for domestic players being squeezed out, WeRide plans to develop overseas projects and open up new frontiers overseas.

According to financial reports, according to information released by the Ministry of Commerce, WeRide successfully obtained the first preliminary license for driverless car operations issued by the UAE in 2023. However, its current operating scale in the area is still relatively limited, with only 10 driverless cars deployed, including 8 driverless taxis and 2 driverless buses.

According to the plan, WeRide plans to launch hundreds of driverless cars in the UAE market by 2025 in an effort to expand its overseas operations.

However, the speed of industry change is far beyond imagination. In Zhang Xiang's view, if the company is successfully listed, WeRide needs to further seek support from major customers in the next three to five years to achieve large-scale commercialization as quickly as possible.

*The title image in the article comes from WeRide’s official website.