WeRide Sells "Virtual Drivers" Overseas

Local partners own the vehicles and handle operations, as WeRide begins selling its "Virtual Driver" solution overseas.

During the earnings call on the evening of August 12, WeRide outlined its revenue model: instead of taking a commission on ride-hailing turnover, it provides autonomous driving systems that have received regulatory approval and local validation to overseas partners, charging ongoing technical service fees and mileage-based fees. Based on calculations of optimal utilization rates for normalized unmanned operations, the steady-state annual technical service revenue per vehicle is expected to exceed $50,000.

WeRide has adopted a lighter approach for its overseas Robotaxi business: rather than purchasing, maintaining, and operating vehicles itself, it charges technical service fees based on the number of vehicles and mileage.

Financial reports show that in the second quarter, WeRide's revenue reached RMB 232 million, representing a year-on-year increase of 82.2% and a quarter-on-quarter increase of 103.1%. Overseas revenue accounted for nearly 40% of the total, surging 164.4% year-on-year and 169.3% quarter-on-quarter. The gross margin rose from 28.1% in the same period last year to 37.5%. The company attributed the improvement in gross margin primarily to the increased proportion of revenue from high-margin overseas L4 business and L2++/L3 business.

A major obstacle to the expansion of traditional Robotaxi services is that as the fleet size grows, the capital expenditure on vehicle purchases, depreciation, maintenance, and operations becomes increasingly burdensome. WeRide's overseas strategy involves local partners handling vehicle deployment and daily operations, while WeRide sells its "Virtual Driver" technology. Its revenue does not depend on commissions from ride-hailing turnover but comes from technical service fees and mileage fees.

While continuous investment is still required for license applications, local adaptation, and safety validation, WeRide does not need to add a batch of vehicles to its balance sheet simultaneously every time it enters a new city. As the local fleet expands, the company has the opportunity to amplify revenue and gross profit through continuous fee collection.

By the end of July, WeRide's Robotaxi fleet in the Middle East comprised approximately 400 vehicles, and new projects in European markets such as Spain, Switzerland, and Denmark were also progressing. Management expects that the overseas business will fully enter a phase of substantive growth by the end of 2026. Whether this expectation can be realized depends on the speed at which commercial partnerships convert into paid operations, rather than merely adding new city names to its list.

Domestic Robotaxi operations follow a different logic. In the second quarter, the average daily orders per vehicle in China exceeded 21, a 24% quarter-on-quarter increase, with peak daily orders per vehicle reaching 28. Ride-hailing revenue increased by approximately 140% quarter-on-quarter.

Domestic data validates fleet utilization rates, while the overseas model attempts to convert operational experience and autonomous driving capabilities into replicable technology fees.

L2++/L3 solutions provide another monetization channel for this R&D investment. In the second quarter, revenue from this business segment grew nearly 26 times year-on-year and 219.3% quarter-on-quarter, with approximately 30,000 vehicles equipped with WRD 3.0. WeRide expects the installed base to exceed 100,000 vehicles by the end of the year and cumulatively surpass 500,000 vehicles by 2027.

Management stated that L4 fleets generate high-value operational data, while mass-produced L2++ vehicles expand real-world road data, with both businesses sharing models and R&D systems. From a financial perspective, WeRide aims to ensure that the same R&D investment generates revenue both through technical service fees from overseas L4 operations and through mass-production projects with OEMs.

The surge in revenue has not yet reduced core losses. R&D expenses in the second quarter amounted to RMB 434 million, a 36% year-on-year increase, equivalent to 1.87 times the quarterly revenue. Total operating expenses were RMB 533 million, resulting in a net loss of RMB 401 million. The non-IFRS adjusted loss was RMB 338 million, higher than the RMB 326 million recorded in the first quarter.

WeRide stated that operating leverage has begun to emerge, citing that the growth rate of expenses was lower than the growth rate of revenue.

However, the financial report shows that there is still a significant gap between absolute investment and revenue, as the gross profit of RMB 87 million is insufficient to cover R&D expenses.

As of the end of June, the company held cash, time deposits, and other liquid financial assets totaling approximately RMB 5.4 billion. This provides WeRide with the time to continue its investments.

Nevertheless, this financial report clarifies WeRide's path to recouping its R&D investment: installing L2++ solutions in more mass-produced vehicles while charging technical service and mileage fees for overseas L4 operations, thereby aligning high R&D spending with both vehicle installation scale and per-vehicle revenue.

This also provides a metric for evaluating advanced autonomous driving companies: removing the driver solves the technical problem, but recouping R&D costs is what truly makes autonomous driving a viable business.