Tucson sells its China business in the future
On the evening of March 16, the news that Tucson will sell its business in China for $1 billion in the future has aroused great concern.
It is reported that Tucson's future sale of china business is for data security reasons. Tucson Future said in February that it had reached an agreement with U.S. authorities to address safety concerns related to its self-driving truck business.
More interesting, however, is the capital story behind Tucson's future. Tucson will remain the darling of capital markets in the future. After completing 10 rounds of financing of more than $600 million, Tucson Future officially listed on the NASDAQ in April last year, known as the "first stock of autonomous driving".
However, in less than a year, the company's chairman and CEO both resigned. On March 3, Tucson Future announced that former CEO Lu Cheng and former chairman Chen Mo resigned, and both positions were taken over by the current CTO Hou Xiaodi.
From the full year 2021 results, Tucson's future revenue was $6.261 million, compared to $1.843 million in the same period last year, an increase of 240% year-on-year, and net loss attributable to common shareholders was $732 million, compared to $178 million in the same period last year. The company expects the loss ratio to rise significantly over the coming period. The company also has more than $1.3 billion in cash reserves by the end of 2021.
Affected by high R&D expenses and profitability difficulties, Tucson will always be in a state of loss in the future, and its stock price will continue to fall.
This inevitably makes people wonder: can autonomous driving, a good story in the eyes of capital, still be told?
The "dimensionality reduction landing" of automatic driving
Autonomous driving is an important application scenario of artificial intelligence, and it is also the most complex technology, the most difficult to land, and the most challenging field, which is why a large number of enterprises have been involved in risks. For a time, Google, Apple, Tesla, Baidu, Huawei and other giants in the Internet and technology fields have been involved in it. As the self-driving track becomes more crowded, capital also hears the news and tells one story after another.
Among them, due to factors such as closed scenes and relatively low technical requirements, autonomous trucks are generally considered to be the scenes closest to commercial landing of automatic driving, also known as "dimensionality reduction landing".
Self-driving truck, Image source: tusimple
Since 2022, the autonomous driving industry has ushered in a new wave of financing. Since February, Xijing Technology, Huituo Intelligence, Kinte Smart Card, Mainline Technology, Hongjing Smart Driving, Yunji Zhixing, Yingche Technology, Xiaoma Zhixing and other leading enterprises have obtained financing.
Judging from the disclosure information, the financing amount of Huituo Intelligent, Hongjing Intelligent Driving, Yunji Zhixing and Yingche Technology has exceeded 100 million yuan, including Sequoia China, Hillhouse Venture Capital, Legend Capital, Wuyuan Capital, Weilai Capital, Country Garden Venture Capital, Meituan, BAIC Production and Investment and other well-known investment institutions and enterprises have increased their size.
In addition to the highway scene, self-driving trucks have significant similarities with ports, mining areas, urban freight, etc. Especially in scenarios such as ports and mining areas, self-driving trucks have gained good applications, attracting companies that originally focused on passenger cars, such as Xiaoma Zhixing and Yishi Technology, and have also begun to get involved in the truck business.
The pain of commercialization
While capital continues to increase, commercialization is still a hurdle.
Tucson Future, which was the first to go public, is a typical example. Founded in 2016, Tucson Future is a startup focused on creating a complete L4-level driverless truck (i.e., self-driving truck) solution that realizes the truly driverless truck in the trunk logistics scenario.
In terms of business model, Tucson will mainly be in two categories in the future, one is technology output, that is, to create autonomous driving heavy trucks for logistics companies and provide on-demand subscription paid services; the other is to operate, with its own fleet, to provide transportation capacity services for logistics companies. In addition, the overall solution of the autonomous freight network is also the "killer" of Tucson's future.
Trucks have always been an important means of transportation in the United States, but truck drivers have always been seriously short-lived, accounting for a growing proportion of logistics costs. The American Truck Association estimates that the shortage of truck drivers in the United States will widen to 175,000 in 2024. Therefore, in theory, self-driving trucks have a broad market prospect in the United States. This is also an important reason why Tucson chose to use the United States as a breakthrough point in the future.
However, the commercialization of self-driving trucks is not an easy task. Although automation and unmanned can help logistics companies save manpower and operating costs significantly, after all, autonomous driving is a cutting-edge technology, and it is still difficult to make the rapid transformation of traditional enterprises such as logistics.
According to Tucson's future earnings report, as of December 31, 2021, the number of truck reservations totaled 6,975 units, an increase of 100 units from the previous quarter, but it has not yet entered the delivery mass production stage. According to its third-quarter earnings report, Tucson still has only 80 trucks in the future.
At the same time, Tucson's future research and development, management and other costs have remained high. In the fourth quarter of 2021, R&D expenses were as high as $82.393 million and sales, general and administrative expenses were $31.91 million, both of which increased significantly.
In addition to the growing test mileage, Tucson's future data is difficult to satisfy, which directly reflects the pain of commercialization of the entire industry.
Is self-driving trucks a good story?
All success stories require rigorous logic and structure, and the commercialization of self-driving trucks is a gradual process.
2021 is called the "first year of large-scale mass production" of autonomous driving.
"Mass production" means that trucks with autonomous driving technology are really off the line and on the road; "scale" means that it must reach a certain scale. Therefore, large-scale "mass production" is considered to be the only way before commercialization is landed.
Tucson Future L4 self-driving truck, Source: tusimple
For self-driving truck start-ups, they are still on the technology export side, and only by maintaining close cooperation with industry chain partners in logistics and other fields can they achieve a win-win situation, while promoting large-scale mass production and moving towards commercialization.
For example, Zhijia Technology has built self-driving trucks for Amazon and FAW Jiefang; Mainline Fast Technology has cooperated with Heavy Duty Truck, XCMG Machinery and Jiefang to develop them. At the same time, enterprises such as Yinche Technology and Zhijia Technology also cooperate with some downstream partners in the industrial chain such as logistics enterprises and supermarkets to build a network of commercial operations.
In addition, reducing costs is also an important way to promote large-scale mass production. In particular, through the maturity and optimization of technology, it is necessary to reduce the cost of mass production of autonomous driving software and hardware and operation, thereby accelerating the process of large-scale mass production.
Self-driving trucks are still on the road to commercialization and are currently in the process of large-scale mass production. Judging from public information, Zhijia Technology, Tucson Future, and Yinche Technology are expected to achieve mass production of L4-level autonomous trucks in 2023, 2024, and 2025, respectively.
The industry generally believes that the commercialization of self-driving trucks, that is, the real road, still needs 5-10 years. Of course, in this process, all autonomous driving companies have to go through one hurdle after another, and large-scale mass production at this stage is the primary task.
So, whether self-driving trucks are a good capital story is still inconclusive, because it hasn't been told yet. ■
Forbes China exclusive manuscript, without permission, please do not reprint
Pay attention to the "Forbes" WeChat public account
The highlights are never to be missed
▽
Great content