Funding-Driven Autonomous Driving — 2020 China Market Review

Selected major funding events in China autonomous vehicle industry

Pony.ai received a $400 million strategic investment from Toyota in February followed by a series C of $267 million led by TIP in November, reaching a valuation of $5.3 billion, №1 among Chinese autonomous vehicle startups.

WeRide received a $200 million strategic investment from the leading commercial vehicle OEM Yutong in December and another $110 million in January 2021.

Comments:
Despite the progress of robotaxi trial operations across multiple cities in China, scaling and eventually profiting from the business is still a long way ahead. Thus, it is crucial to secure funding for the cash-burning journey. One strategy is to expand application scenarios of AV technologies, where Pony.ai went for robotruck and WeRide added robobus. Baidu formed a joint venture called DeepWay with Lionbridge Logistics in December to explore opportunities with robotruck, aside from the ongoing robotaxi and robobus operations.

The other strategy is to aim for removing the safety drivers to ultimately achieve the economic value. WeRide and Baidu have obtained remote control permit for road test.

There are three additional names to mention in the robotaxi category. AutoX and Momenta have both launched their first robotaxi trials in 2020. DeepRoute.ai plans to run robotaxi fleets through Caocao (mobility service platform) in 2021, and meanwhile it is involved a smart port project launched in May 2020.

QCraft raised a seed round in April and a pre-A round in October 2020. It has launched a robobus operation in Suzhou since October, Shenzhen starting December and very recently Wuhan in January 2021.

Comments:
QCraft started out in 2019 by former Waymo engineers. As a latecomer to AV, the company has caught up with funding and robobus commercialization. Together with Baidu and WeRide, we expect the robobus space to get hectic in 2021.

DiDi raised $500 million for its autonomous driving division in May and later in November introduced D1, a purpose-built electric model for ride sharing services through collaboration with BYD. In January 2021, it just raised another $300 million.

Comments:
DiDi seemed to be following the path of Uber ATG with spinning off the autonomous driving division and receiving external funding. However, with Uber ATG’s acquisition by Aurora, a new mobility-as-a-service model will be unveiled.

DiDi’s plan is to deploy 1 million robotaxis by 2025 and D1 is just the first scale production model in the mission. Besides the unique designs on D1, it will also be priced by km usage. D1’s launch indicates an upcoming disruption to how traditional OEMs work amid major shifts towards electric vehicles and pay-per-use models.

Inceptio announced a $100 million funding in April and a $120 million in November in which the battery supplier CATL invested $50 million.

TuSimple was reported to have completed a series E of $350 million by November with a US listing plan in early 2021.

In November, Plus.ai announced a new round of $100 million and was reported to be seeking IPO options either in the US via a SPAC merger or China in early 2021.

Comments:
There is a wave of new generation OEMs and LiDAR startups raising capital on the public markets. In China, besides Nio, Li Auto, and XPeng that are currently listed, WM Motor, Hozon Auto, Leapmotor, ENOVATE, Evergrande Auto, and the LiDAR maker Hesai have all revealed IPO plans.

Investors on the secondary market have assigned high valuations to such technologies, which probably blazed a trail for peers in need of funding. In 2021, the public market is about to welcome companies from the robotruck category.

Check out my earlier post on the long-haul robotruck market in China.

In March, VIPioneers announced the completion of a series A2 financing.

In July, EQ announced the completion of a pre-A round financing.

In October, Tage Idriver raised RMB 200 million in series B, the largest single investment in the smart mining sector by far. It just raised B+ round in January 2021.

Comments:
Workforce safety has been a major issue in the mining field. So is workforce shortage as China is on the downturn of demographic dividend. Revolutionizing mining with autonomous driving has become urgent thus attracting sizable investment throughout 2020.

The mining truck and the wide-body dump truck are usually involved in an upgrade to mining tools. The former has a load capacity of about 200 tons and is quite expensive. It is usually owned by a large SOE so the sales volume is only a few hundred per year in China. The latter has a load capacity of 50 tons for a fraction of the mining truck price to perform frequent deliveries of rock and ore.

Given the complexity of mining process, it is important for smart mining players to cut in from unique angles. Yikong has built a fleet of wide-body dump trucks to offer delivery operations and services to open-pit mining sites. Tage focuses on retrofitting mining trucks. VIPioneers offers a full-stack smart mining solution that includes autonomous mining trucks, automated excavator, intelligent operation and management system, etc.

UISEE completed a B round financing in February 2020. In January 2021 the company just raised over RMB 1 billion in a new round.

Neolix announced a series A+ round of RMB 200 million in February led by Li Auto.

Idriverplus has raised series C in May and September.

Comments:
The three shares a similar model, namely the transfer of goods at low speed with autonomous driving technologies. UISEE targets airport and factories. Neolix combines vehicles with retail and surveillance functions. Idriverplus focuses on outdoor sweeping robots and delivery vans. With funding in place, it is also working on transferring the technologies and expertise to robotaxis.

Conclusion:

The autonomous driving industry is currently in the consolidation phase and more capital is being absorbed by fewer companies with more promising commercial prospects. In 2020, we also noted the following trends:

• Removal of safety drivers
• Launch of trial operations and scaling
• Application of autonomous driving technologies in multiple scenarios

These in turn are indicators of potential commercial values that have attracted investment to support continued development.

There are many more names in autonomous driving to illustrate 2020 progress but I do not seek to be exhaustive.

Like the major innovations in history, autonomous driving will go through ups and downs. The down cycle started around 2018/2019 and the COVID-19 pandemic further challenged the economic momentum of the industry in 2020. However, the ones that survive will be stronger and thrive.