In 2020, TikTok, an U.S.-operated app operated by Chinese internet technology company ByteDance, faced a dilemma: sell or close.
Now this scene is also playing out in the field of autonomous driving.
On March 17, according to Reuters news, Tucson Future (hereinafter referred to as "Tucson"), the world's first share of autonomous driving, is considering selling China's autonomous driving business for $1 billion and focusing on the development of the United States.
According to titanium media, citing people familiar with the matter, Tucson's China business is seeking privatization at a valuation of $1 billion, not selling the company to a third party. After the completion of privatization, Tucson will continue to operate independently in the Chinese market with the existing management and organizational structure as the core.
Whatever the end result, Tucson will become an American self-driving company once and for all.
01
Tucson sells its self-driving business in China for $1 billion
Who is likely to take over?
After more than a year of review by the Committee on Foreign Investment in the United States (CFIUS), Tucson has gradually stripped itself of any connection related to "China":
1. Sina Chairman and CEO Cao Guowei and Sina CFO Zhang Yi will not participate in the election after the expiration of the term of the current Tucson Board.
2. Sun Dream, a Subsidiary of Sina( an Investor in Tucson, agreed not to nominate alternative candidates or increase its existing stake in Tucson.
3. Restrict Tucson China's access to Tucson U.S. autonomous driving data, including: self-driving truck business source code and algorithms.
The $1 billion sale of China's self-driving business can also be seen as a follow-up to CFIUS's tucson review to ensure that Tucson becomes a 100% true American autonomous driving company.
This also leaves the industry with an after-dinner conversation: Tucson's $1 billion sale of China's self-driving business, who is most likely to pay for it?
Tucson deploys autonomous driving business in China and the United States, with different emphases.
In the United States, Tucson's business focuses on road unmanned trucking. In China, Tucson's business is more focused on port driverless.
Since Tucson does not have many businesses in China, if Tucson China wants to sell to a third party, the buyer will most likely acquire Tucson's autonomous driving team in China through talent acquisition (Acqui-hire).
Acqui-hire is a combination of the English words Acquire and Hire, which mainly refers to the acquisition of talent (team) as the main transaction target.
In 2019, Apple acquired Silicon Valley's self-driving company Drive.ai in this way. In October of the same year, Tesla also acquired DeepScale, an embedded computing vision company, in the same way.
In today's increasingly fierce competition for autonomous driving talents, having enough good and sufficient autonomous driving talents is the deepest moat of autonomous driving companies.
So, what types of companies will be potential buyers?
One category is OEM/Tier1 in the commercial vehicle sector. For example, FAW Jiefang, Dongfeng Commercial Vehicle, Beiqi Foton, Shaanxi Automobile, Jinlong, Yutong and other traditional commercial vehicle companies. Due to strategic deployment needs, OEM/Tier1 can fully absorb Tucson's technology in China.
One category is Robotruck. For example, Deepway, Xiaoma Zhika, Didi Autonomous Driving, Ali Damo Academy Autonomous Driving Lab, Yingche, Zhijia, Zhitu, etc.
In addition, there are three self-driving truck startups that were established last year. In November 2011, Auto Heart published an article titled "Xiaoma Zhika "Fission": In the field of self-driving trucks, 3 companies came in in one breath" and mentioned 3 startups, including: Qianhang Technology, Xingjiao Technology, and Kinte Smart Card.
The latest news shows that Tao Ji, former head of Baidu's autonomous driving, intelligent transportation technology and products, joined Qianhang Technology as CEO, and Xue Jiancong, former general manager of Tucson Shanghai, also joined DynaSky Smart Card as a co-founder at the beginning of this year. In order to accelerate the catch-up with the earlier robotruck companies, the above three startups, the desire for talent at this stage is undoubtedly the strongest.
One category is L4 autonomous driving companies. For example, Wenyuan Zhixing, previously through the acquisition of Muyue Technology, laid out the autonomous driving freight market. Yuanrong Qixing also expanded the autonomous driving scenario by laying out autonomous driving of freight in the same city. Of course, if Wenyuan/Yuanrong has enough cash flow on hand, you can also consider merging Tucson's team in China to expand the Robotruck business.
The last category is the logistics scenario party. For example, JD.com/SF has logistics scenarios and related resources, and also recognizes the transformation of the logistics industry by autonomous driving technology.
The problem now, however, is that it is not yet possible to determine whether Tucson's technical capabilities at home are independent and complete.
In addition, how much does tucson China's team rely on Tucson's U.S. R&D technology? How do these techniques cut after that? These will be the core issues that the relevant acquirers are most concerned about.
02
Tucson is under review by the Committee on Foreign Investment in the United States
What can we learn?
In 2018, the United States officially implemented the Foreign Investment Risk Review Modernization Act ("FIRRMA").
Since then, the U.S. has changed its focus and philosophy on foreign investment security reviews.
In February 2022, FIRRMA implemented cfius (Committee on Foreign Investment in the United States) rules. Pursuant to CFIUS Rule 800.211, investments involving critical technologies, critical infrastructure, and sensitive personal technology industries will be subject to CFIUS review, even if they are noncontrolling, as long as they meet the following characteristics:
Gain access to material, nonpublic technical information of U.S. business entities through related investments;
Have the ability to appoint or remove personnel or observer seats on the board of directors or other governing bodies of the U.S. business entity;
Substantive decision-making participation in decisions related to the TID business of the invested U.S. business entity.
According to the relevant regulations, if a foreign enterprise wishes to have access to relevant technical information of the U.S. business entity through investment, or to conduct further technical exchanges, the relevant investment will be regarded as a CFIUS-governed transaction.
Tucson's experience is a good frame of reference for autonomous driving companies doing business in both China and the United States – the U.S.-China dual home strategy is not the best option, and technology companies with Chinese equity participation, R&D facilities in China, and the Chinese market are likely to be scrutinized by CFIUS and have to choose between China and the United States.
Taking it a step further, the scrutiny Tucson has faced over the past year is essentially a matter of "data security."
In CFIUS's agreement with Tucson, we can see:
(1) Tucson needs to transfer the technical supervision of the self-driving truck business to the US government, and Tucson will also use technical control means to restrict Tucson China's access to autonomous driving data, which mainly includes: the source code and algorithms of the self-driving truck business and other information, to avoid the core technology developed by Tucson in the United States from entering China.
(2) Tucson needs to appoint new security officers and security chiefs and establish a "Government Security Committee" under Tucson's Board of Directors, with the Security Chief as the chairman of the committee and reporting regularly to CFIUS.
Regarding the above agreement, former Tucson CEO Lu Cheng previously said in an interview: "In short, I think this is a health certificate issued by the US government." （「I think in short this is a clean bill of health from the U.S. government,」）
The implication is that only by taking these measures can we exchange the U.S. government's sense of security, and Tucson will be recognized by CFIUS as able to conduct business in the United States in accordance with the law.
In fact, whether it is the United States, China or the European Union, they have enacted relevant laws to establish the principle of "local data is not exported".
This has become the norm in the mobile phone space.
In 2017, Apple and Guizhou on the cloud cooperated to hand over the domestic iCloud service to Guizhou on the cloud to operate. From another point of view, it is also a manifestation of compliance.
In the future, this norm will also apply to the field of autonomous driving.
Whether it is overseas autonomous driving related companies entering the Chinese market, or Chinese companies entering overseas markets, as long as it involves autonomous driving data, it must be strictly localized.
For example, if Tesla's FSD wants to land in China in the future, it needs to establish data centers and research and development centers in China. Similarly, if NIO and Xiaopeng want to apply autonomous driving functions such as NAD and Xpilot to models exported to Europe, they also need to implement the same localization strategy.
Perhaps in the future, we will see more and more "Guizhou on the cloud" in the United States and Europe.