Who will be the next in the smart driving IPO relay race?

Recently, China's autonomous driving industry has ushered in a grand IPO boom.

According to Zhitong Finance APP, on October 24th, HORIZONROBOT-W was listed on the Hong Kong Stock Exchange, opening with a surge of 28.32%, and its market value once exceeded HKD 66 billion, setting a record for the largest technology IPO in Hong Kong this year. The next day, WeRide landed on NASDAQ, claiming the title of "the world's first publicly traded autonomous driving stock," opening with a 27% increase and a market value soaring to USD 5.34 billion.

With the collective warming of market sentiment, the "brilliant start" of HORIZONROBOT-W and WeRide not only boosts confidence but also leads everyone to ponder: Who will be the next dark horse to take over?

In the tide, who is taking the exam?

2024 is set to be a "big year" for autonomous driving companies entering the capital market, with heavyweight players in segments such as chips, lidar, and solutions collectively showcasing their strengths, launching a breakthrough battle for listing.

According to incomplete statistics, 8 companies in the autonomous driving industry chain have initiated the IPO process this year, with 4 having taken a key step, knocking on the door of listing, including: SuTong JuChuang, HeiZhiMa Intelligent, HORIZONROBOT-W, and WeRide.

Among the unicorns still battling for IPO, Youjia Innovation, with rich mass production experience, is making the final push for its listing on the Hong Kong Stock Exchange. It is reported that the company has completed the overseas issuance listing filing, and only lacks the final step to ring the bell; Pony.ai, targeting L4 advanced autonomous driving, and Momenta, which operates on both L2+ and L4 tracks, are looking towards the U.S. stock market.

If we delve into the reasons behind this wave of IPOs, it intertwines multiple considerations of policy dividends, market expectations, and corporate survival. Policy winds are blowing favorably. From the release of the "Notice on the Pilot Work for the Access and Road Use of Intelligent Connected Vehicles" in November last year to several cities promoting legislation for intelligent connected vehicles this year, supportive policies from central to local levels have been continuously implemented, injecting strong confidence into the industry and reassuring the capital market.

Industry expectations are optimistic. Currently, the global automotive industry is undergoing an unprecedented revolution. From traditional transportation tools to mobile intelligent terminals, from mechanical structures to software-defined, each iteration and upgrade is reshaping the genes of this century-old industry. Intelligence not only brings a huge incremental market but also spawns a brand new industrial chain, with different levels of autonomous driving technology gradually penetrating various sub-markets, becoming the "second growth curve" for major mainstream automakers.

Data shows that in 2023, the penetration rate of vehicles equipped with L2 (including L2+/L2++) intelligent driving solutions reached 32.1%, and it is expected to reach 61.1% by 2028. This means that intelligent driving solutions are gradually transitioning from "optional" to "standard configuration for new cars." It is evident that the autonomous driving industry, backed by half of the venture capital circle, still has a long way to go.

Companies are riding the wave. Since last year, autonomous driving technology and business have blossomed simultaneously, especially driven by the passenger car market, with companies like Youjia Innovation and SuTong JuChuang experiencing explosive growth in performance in 2023. While the rush to go public has some factors driven by funding, for the old players rooted in the field for over a decade, it is more of a strategic choice in line with industry development  

At the Current Windfall, Who Will Take Over?

Currently, the companies YuJia Innovation, Pony.ai, and Momenta are lined up for IPOs, all of which are involved in high-level intelligent driving solutions and L4 autonomous driving for passenger vehicles, but each has its own characteristics.  

In terms of technical pathways, Momenta adopts a "one flywheel, two legs" strategy, emphasizing AI data-driven approaches, using data generated from L2 mass-produced models to feed back into L4 autonomous driving, seeking a balance between the present and the future.

YuJia Innovation, on the other hand, has chosen a more robust and pragmatic "incremental" approach. The company starts from a low base and gradually explores iterations towards L2 and L2+ through the mass production experience of ADAS systems, while also laying out L4 research and development to reserve space for future technological evolution. This development strategy allows YuJia Innovation to thoroughly validate each technical level, giving it a certain advantage in mass production implementation. In addition to intelligent driving, YuJia Innovation has extended its reach into the fields of intelligent cockpits and vehicle-road collaboration, forming a mutually supportive and collaboratively developed business ecosystem that empowers smart vehicles from different domains. This coordinate system, centered on core technology, unfolds "vertically"—across different levels of autonomous driving, and "horizontally"—across various functional scenarios of smart vehicles, providing further imaginative space for YuJia Innovation's technological ceiling and market landscape.  

Moreover, it is noteworthy that all three companies are making moves in overseas markets, including mass-produced models and autonomous driving solutions. YuJia Innovation's solutions have already been deployed in multiple models exported to Europe, Southeast Asia, and other regions, and it is one of the first domestic suppliers to help automakers obtain EU DDAW certification, while also being the first to assist Chinese car manufacturers in achieving E-NCAP five-star ratings. Recently, it has also made new breakthroughs in intelligent driving exports through the SAIC MG ES5 project.  

From a data performance perspective, YuJia Innovation also exhibits typical characteristics of a technology growth stock.

According to the prospectus, from 2021 to 2023, its operating revenue grew from 175 million yuan to 476 million yuan, with a compound annual growth rate of 64.9%. Particularly in 2023, revenue increased by 70.4% year-on-year, demonstrating strong growth momentum. As of the last feasible date, YuJia Innovation has engaged in mass production cooperation with 29 automakers, including seven of the top ten domestic automakers by sales.

Who Can Laugh Last Through the Cycle?

From a macro perspective, the autonomous driving sector is still full of imagination and development space. However, from the perspective of capital performance, the industry has undergone a cyclical adjustment and has now entered a moment of value reassessment: the narrative is no longer hard currency, and the "burning money to build dreams" model is becoming unsustainable, replaced by a deep reflection on the sustainability of business models.

Undoubtedly, autonomous driving remains an industry that requires dreams and visions, but dreams must eventually land.

The current wave of autonomous driving IPOs is both a carnival of the capital market and an inevitable choice at a specific stage of industry development. In this process, we have witnessed a strong collision of capital and technology, as well as a profound shift of the industry from conceptual speculation to rational development For autonomous driving companies, an IPO is not the end, but a new starting point. With the support of the capital market, companies need to accelerate the transformation from technology to business and achieve true "self-sustaining" capabilities.

As tides rise and fall, and the sands are sifted, the future winners are likely not those who shout the loudest slogans, but those companies that put in the effort and make breakthroughs in technology accumulation, mass production implementation, and global layout, allowing them to go further and ultimately succeed in this marathon