According to a research report released by China International Capital Corporation (CICC), with the successive introduction of central and local regulations, unmanned commercial operation continues to expand, and the landing of Robotaxi is timely. CICC estimates that the Robotaxi could potentially achieve a gross margin of over 45% in the long term, and the industry chain upstream and downstream can benefit from it.

The landing of Robotaxi is at the right time: central/local regulations are introduced one after another, and unmanned commercial operation is constantly expanding. The regulatory system for automatic driving in China and the United States is similar. The central government proposes an overall regulatory framework, and local governments carry out corresponding regulatory establishment and pilot according to their own situations. From small-scale human driving to large-scale unmanned driving. At present, many cities in China, such as Beijing, Shenzhen and Wuhan, have started pilot operations of unmanned commercialization. At the same time, many Robotaxi companies in China and the United States have carried out unmanned commercial operation, including Baidu Apollo, iDriverplus, Pony.ai, Waymo, etc. The scale of these fleets varies from hundreds to thousands of units. We believe that the increase in the number of cities that support Robotaxi opening and the number of Robotaxis allowed to be put into operation in a single city may be the two most direct observation indicators affecting the shift from Robotaxi landing from 0-1 to 1-10.

Front-end production is the preferred choice for Robotaxi; algorithm tends to be data-driven, but rule modules still need to be backed up. Robotaxi hardware has shifted from industrial-grade to vehicle-grade components, and the installation method has changed from scattered layout to platform-based kits. With the mass production and cost reduction of vehicle-grade hardware, and the convergence of configuration and commercial landing, mass production of front-loading has become possible. Various Robotaxi companies have reached cooperation with different vehicle manufacturers to support this development. In terms of algorithms, Robotaxi follows the trend of data-driven optimization of perception capabilities using large models, but it is still difficult to replace rule modules in regulatory algorithms in order to ensure safety.

According to CICC's estimates, Robotaxi could potentially achieve a gross margin of over 45% in the long term, and the industry chain upstream and downstream can benefit from it. In terms of revenue, Robotaxi and taxis are both paid by passengers, but Robotaxi has the advantage of longer operating hours. In terms of costs, from an operational perspective, it eliminates driver wages but increases vehicle depreciation and remote security personnel costs. The difference here is the additional income that Robotaxi business can generate. The Robotaxi business chain can be divided into technology-manufacturing-operation-platform-cabin entertainment, and profit distribution depends on the competitive situation in each link and the discourse power of the chain. We believe that mastering the To-C consumer entry and the To-B smart driving technology is the key to obtaining excess profits.

Risks: Regulations are not implemented as expected, smart driving technology does not develop as expected, and Robotaxi promotion does not meet expectations.