Autonomous driving Many IPOs in China: Real start for autonomous driving or just huge hype?

Autonomous driving has become incredibly popular on the stock exchange overnight, and right in the middle of the hustle and bustle is the company WeRide, which is also applying for an IPO. Is this the breakthrough for autonomous mobility?

Already sold three robot taxis, then off to the stock exchange! This is how - slightly ironically - the prospectus with which the Chinese start-up WeRide advertises its IPO on the tech exchange NASDAQ could be summed up. Whether autonomous driving now belongs to the future of mobility, or whether the whole thing is just a huge hype - the potential buyers of the share have to decide.

The Chinese start-up officially filed for its IPO in New York on July 26, 2024, reports the news agency Bloomberg. The company, founded in 2017, does not reveal how much money it wants to raise. However, unofficial reports speak of 500 million US dollars.

This would make the planned listing the biggest stock market debut of a Chinese company since the ridesharing company Didi sold shares there in 2021 worth 4.44 billion USD—only to withdraw shortly afterwards under pressure from the Chinese government.

WeRide, whose investors include the alliance of Renault, Nissan and Mitsubishi and which sells ADAS driver assistance solutions together with Bosch, apparently sees the right moment for an IPO. Or it urgently needs money to continue financing the expensive research & development in the field dominated by high technology. It could probably be both.

Investment in the future

That money is currently being burned rather than earned with autonomous driving, WeRide makes no secret of this in its prospectus. It sells robot taxis, among other things. In 2021, it sold a total of five, eleven in 2022, and just three last year.

With the sale of ADAS solutions, among other things in partnership with the German supplier Bosch, the Chinese are already making decent money. But overall, the company is still far from profitability.

From 2021 to 2023, as WeRide has now announced, the net losses were first at over one billion yuan (around 130 million euros), then at almost 1.3 billion yuan (around 170 million euros) and last year finally 1.9491 billion yuan (around 250 million euros). "We have not been profitable since our foundation and this situation could continue in the future," writes WeRide in the IPO prospectus.

However, those looking for reasons to buy the stock will also find them. WeRide is one of the more successful among the start-ups in the field of autonomous driving in China. Currently, its products are already being "tested or commercially used" in 30 cities around the world in seven different countries, according to the publication for the IPO.

Autonomous in China

The entire market for autonomous cars in China is also developing very positively at the moment. Internet giant Baidu, which is also rolling out robot taxis, sold 25 percent more rides with driverless taxis in the first quarter of this year than the year before, reports the weekly newspaper Shidao Zhoubao. In total, six million passengers have already used one of these "Apollo-Go" taxis. And China's taxi drivers have begun to worry about their future.

"Due to the popularity of Baidu's Apollo Go, it is expected that companies like WeRide will be able to find ways to monetize the robot taxi business," the economist Pan Helin is quoted in the report. In any case, there are enough people who believe this and are betting on the future when such IPOs take place. Since the beginning of this year, there has been a wave of IPOs from Chinese companies active in the field of autonomous driving.

Hype or sustainable development?

Zongmu Technology, Horizon, and Black Sesame Technology have gone public in Hong Kong one after the other. In July, the Chinese stock market regulator also approved an IPO in New York for WeRide competitor Pony.ai, in which Toyota is involved. Chinese media reports it has also already submitted its application to the tech exchange NASDAQ.

To further develop and sell its autonomous driving robot taxis, or its driverless cleaning vehicles and buses on a large scale, WeRide and its competitors urgently need more money—no matter how much they have already burned through. If the technology really takes off, these IPOs might one day be referred to in retrospect as the beginning of the commercialization of autonomous driving. (sb)

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