According to the Financial Associated Press on December 26 (Reporter Xu Hao), the continuously upgraded versions of Tesla's FSD and rumors of its entry into China have not only boosted market sentiment but also allowed smart driving companies that have struggled for years to seize the opportunities in the capital markets in 2024.

According to incomplete statistics from the Financial Associated Press, as of December 26, a total of 14 smart driving-related companies have completed their listing or submitted listing applications on the Hong Kong Stock Exchange or Nasdaq. These include smart driving chip suppliers like Horizon and Nanfang Black Sesame Group, smart driving solution providers like Momenta and Pony.ai, as well as Robotaxi operators like Qichu Travel, covering almost the entire smart driving industry chain.

If the relevant news about Tesla's FSD is a spark igniting the smart driving sector, then the market's demand for the transformation of autos towards intelligence and the implementation of advanced driver-assistance policies have become two key driving forces for the capital markets to embrace smart driving companies.

From the perspective of market demand, smart driving capabilities have become an important factor influencing consumers' car purchasing decisions. Data disclosed by the Ministry of Industry and Information Technology shows that in the first half of this year, the penetration rate of new passenger vehicles with L2-level and above driver assistance in China reached 55.7%, among which the penetration rate of new vehicles equipped with Navigation Assisted Driving (NOA) reached 11%. It is expected that the annual sales of smart connected vehicles will exceed 17 million units, with a penetration rate exceeding 60%. To seize the market, automakers undoubtedly need to further accelerate cooperation with smart driving companies.

At the policy level, in June of this year, the Ministry of Industry and Information Technology, the Ministry of Public Security, the Ministry of Housing and Urban-Rural Development, and the Ministry of Transportation issued basic information on the pilot program for the access and road use of smart connected vehicles in Peking, Shanghai, Guangzhou, and six other cities, covering three categories: passenger vehicles, buses, and trucks. This means that China's smart connected vehicles have taken a key step towards the large-scale application of high-level intelligent driving, further promoting the commercialization of advanced intelligent driving.

"Since the beginning of this year, leading companies like Tesla, Waymo, and Baidu have made positive progress in the commercialization of Robotaxi, significantly increasing the attention given to the smart driving sector, consequently boosting the valuations and market recognition of related companies." said Liu Yudong, Executive General Manager of Chentao Capital.

Despite the influx of smart driving companies into the capital markets, the process has been anything but smooth. The widespread issues of funding shortages and performance losses currently faced by the industry are key factors driving smart driving companies to seek IPOs. "Losses are one reason these autonomous driving companies choose to go public," said Zhang Xiaorong, Director of the Deep Technology Research Institute.

Taking Samo Technology, which just passed the listing hearing at the Hong Kong Stock Exchange on December 23, as an example, the company had previously undergone three submissions, with the times being in May of this year, October 2023, and December 2022. The prospectus shows that Samo Technology is a company focused on simulation testing technology for intelligent connected vehicles (ICV), primarily engaged in the design and development of ICV simulation testing products, and providing related testing, verification, and evaluation solutions. In terms of performance, from 2019 to 2023 and the first half of 2024, Samo Technology's revenue was approximately 8.066 million yuan, 71.203 million yuan, 0.107 billion yuan, 0.145 billion yuan, 0.176 billion yuan, and 55.56 million yuan respectively; net income was 5.594 million yuan, 51.579 million yuan, 37.571 million yuan, 48.686 million yuan, 53.431 million yuan, and -4.599 million yuan.

Data indicates that Samo Technology's revenue growth has slowed, with the net margin dropping from 69.4% in 2019 to 35.1% in 2021, 33.5% in 2022, and 30.4% in 2023, with losses appearing in the first half of 2024.

Not only Samo Technology, but several leading companies in the smart driving field are also facing the reality of losses. Among them, Horizon Robotics has accumulated a net loss of over 22.6 billion yuan from 2021 to the first half of 2024; WeRide has accumulated a net loss of over 5.1 billion yuan from 2021 to the first half of 2024; and Pony.ai has accumulated a net loss of over 2.3 billion yuan from 2022 to the first half of 2024.

"Autonomous driving is extremely capital-intensive, it is a capital-intensive industry that requires substantial funding to support R&D and market promotion. Listing can open up necessary financing channels," Zhang Xiaorong believes that companies related to autonomous driving generally face profitability challenges, but by going public, they can obtain funding support to promote technological development and commercialization.

With the market recovering, demand increasing, and policy promotion, in the face of the recovering advanced smart driving sector, there are still many waiters outside the IPO door. "It is expected that the company will update its annual report next year and continue to advance the relevant IPO process." Previously, the autonomous driving solution provider Zongmu Technology, which had submitted three times, expressed its next steps.

In addition to Zongmu Technology, Haomo Technology is also queueing to enter the capital market. "Haomo Technology will continue to advance its IPO plan next year." After rumors in the industry of a suspension of IPOs, Haomo Technology's chairman, Zhang Kai, denied the claims.

McKinsey predicts that by 2030, China may become the largest autonomous driving market in the world, with new car sales related to autonomous driving and mobility services generating over 500 billion dollars in revenue. Behind the heated market is a more intense market competition.

"The competition in China's intelligent driving market will further become fierce, and whether companies can establish competitive advantages will depend on their sustained investment in intelligent driving technology R&D, effective management and efficient use of driving data assets, as well as continuous improvement of their products' performance in safety and reliability," stated IDC China's Senior Analyst Hong Wanting.