Autonomous driving company Wenyuan Zhixing (WRD) officially listed on NASDAQ on October 25th, becoming the "first stock of General Motors autonomous driving". On that day, Wenyuan Zhixing surged to $19.8 per share, an increase of 27.74%. It triggered circuit breakers twice and closed at $16.55 per share, an increase of 6.77% from the issue price, with a market value of approximately $4.49 billion.
Two months ago, Wenyuan Zhixing postponed its IPO on NASDAQ in late August this year. On October 11th, Tesla released a self driving taxi and announced that it will be put into production in 2026 at a cost of less than $30000. This has sparked a new round of attention from the capital market towards autonomous driving.
However, as of the first half of this year, Wenyuan Zhixing has still not achieved profitability. A senior executive from another autonomous driving company told First Financial reporters that the attention of the capital market will bring more resources, but practitioners need to be aware that only achieving large-scale autonomous driving can truly have long-term value.
Autonomous driving is heating up again
According to enterprise investigation, Wen Yuanzhixing is a research and development company of auto auto drive system, which was founded in 2017. Its application scenarios cover smart travel, smart freight and smart sanitation. It has entered the stage of commercial operation of automated driving, and has formed five product matrices, including autonomous taxi, autonomous minibus, autonomous freight car, autonomous sanitation vehicle and advanced driving solution. It provides online car hailing, on-demand public transport, intra city freight, intelligent sanitation, advanced intelligent driving solutions and other services.
Han Xu, the founder of Wenyuan Zhixing, registered and established Guangzhou Wenyuan Zhixing Technology Co., Ltd. in January 2018 with a registered capital of 2.5 billion yuan. Over the past seven years, Wenyuan Zhixing has completed multiple rounds of financing, with a valuation of approximately $5 billion for its D+round financing in 2022. Based on its closing price on its first day of listing in 2024, Wenyuan Zhixing's market value is approximately $4.49 billion, lower than its valuation two years ago.
A senior observer in the technology industry analyzed to First Financial reporters that the Wenyuan Zhixing team led by Han Xu is one of the well-known teams in the popular field of autonomous driving. Large venture capitalists (VCs) want to lay out their positions, and it is normal for Wenyuan Zhixing to raise funds in multiple rounds. The validation of technology and products depends on commercialization and scale, and the commercialization process of autonomous driving has not been very fast in recent years and is still in the exploratory stage of commercialization. Therefore, it is normal for the capital market not to give a higher valuation. In January of this year, Tucson Future, a US company that provides unmanned truck solutions, was delisted due to losses.
The stock price performance of Wenyuan Zhixing on its first day of listing was better than expected, "the senior person mentioned. Although Wenyuan Zhixing has autonomous driving licenses in four countries including China and the United States, Chinese autonomous driving technology companies may encounter market barriers in the United States. The capital market is optimistic about the opportunities for autonomous driving in China and the global market. In September of this year, Wenyuan Zhixing and Uber announced a cooperation in the United Arab Emirates, where their autonomous vehicles will start operating locally. In the future, the cooperation between the two sides has the opportunity to expand to other overseas markets
Recently, in addition to Wenyuan Zhixing's listing on NASDAQ, intelligent driving chip company Horizon Robotics also went public on the Hong Kong Stock Exchange on October 24th. Autonomous driving company Xiaoma Zhixing has also submitted its prospectus to the US Securities and Exchange Commission (SEC) and plans to list on NASDAQ.
The senior experts mentioned above believe that around 2016 and 2017, Waymo, the autonomous driving company under Google's parent company Alphabet, launched its first self driving concept car, which triggered many venture capitalists to enter this field. Horizon, Xiaoma Zhixing, and Wenyuan Zhixing were established between 2015 and 2017. Due to the fact that venture capital generally exits within ten years, companies like Wenyuan Zhixing, Horizon Robotics, and Xiaoma Zhixing, which have been established for seven years this year, need to go public to provide venture capital with exit channels and achieve profitable exits.
A researcher on intelligent driving analyzed to First Financial reporters that the attractiveness of Chinese companies lies in the government's strong support for intelligent driving. Many cities across the country have L3 level experimental areas for intelligent driving, and driving experiments for L4 level autonomous vehicles can also be conducted in Nansha District, Guangzhou. This uniqueness has attracted capital, but if there are no new breakthroughs in hardware and software in the short term, this popularity may decrease
How far is autonomous driving from large-scale operation
Whether autonomous driving is safe, profitable, and will affect driver employment is a hot topic of social concern.
A senior executive of the aforementioned autonomous driving company believes that "safety is the first principle of autonomous driving technology, and we have achieved a certain level of safety before further scaling up. Comprehensive profitability mainly relies on mass production without compromising safety, further reducing vehicle manufacturing and production costs
Researchers in intelligent driving say that even real people and experienced drivers may make mistakes. "As long as automatic driving is safer or as safe as human driving, it can be used normally. If there is a problem, it will be compensated by the insurance company just like the real human accident." At present, driverless cars on the road, such as Apollo Go, will be monitored in the back, and about one person will stare at three cars to deal with emergencies.
Autonomous driving is currently not profitable. This researcher believes that the current operational scale of autonomous taxis alone is not enough to cover the maintenance costs of backend personnel. Moreover, the hardware system of autonomous vehicles is too expensive, making it unable to be rapidly promoted like electric vehicles. The development of advanced autonomous driving is constrained by two factors: hardware prices and limited consideration of software scenarios.
At present, using visual algorithms for mid-level intelligent driving (L2+) is a very likely profit point, "said the researcher. Many domestic and foreign car companies are taking this technological route. This method can achieve a good driving experience with limited funds, but it is still far from reaching the level of safe driving. Capital investment can assist in the continuous innovation of autonomous driving research and development, reducing hardware costs and enhancing software capabilities. In the future, luxury cars may use some advanced intelligent driving.
This year, the First Financial News reporter heard taxi drivers complain that they are worried their jobs will be taken away by autonomous driving. "At present, the total number of autonomous vehicle is far from the level that drivers need to worry about their jobs being robbed. In the longer term, autonomous driving is a technology that can innovate productivity, bring about social progress, and also lead to new jobs." said a senior official of the aforementioned autonomous driving company.
The senior observers in the technology industry mentioned above also said that the implementation of L4 level intelligent driving (autonomous driving) now has constraints, such as in Guangzhou, it is in specific areas, fixed routes, and driving slowly. It is expected that by 2027, more cities in China and the United States will open up L4 level intelligent driving, with improved regulations and a large amount of manual monitoring in the background. So, autonomous driving is a gradual process, and in the future it may also make driving easier for drivers.
Commercial promotion is currently the biggest challenge facing autonomous and self driving vehicles. Business competition is more brutal than technological competition. After Wenyuan Zhixing goes public, the capital market will look at financial indicators, including unit price and usage in specific scenarios, "said the person.