How much money does autonomous driving, or driverless driving (except for unmanned cars, specific scenarios, and some sections and fleets of roads and fleets that allow testing, burn at present) are actually burning? How hard is it to make money?
In fact, before that, there were only rumors in the industry that Waymo was going to burn $1 billion a year. Until April 16, 2021, with tusimple's IPO in the US stock market, the secrets of the autonomous driving industry were revealed little by little.
As the world's first self-driving company to go public through an IPO, Tucson has a lot of special things to offer in the future.
For example, it is rare for a non-technical chairman/CEO to announce their departures a year after the company went public. It was the company's CTO who took over. The first self-driving company with a Chinese background signed a "national security agreement" with the U.S. government, agreeing to restrict access to certain data and adopt a technology control program. To that end, the company is also looking to spin off its China operations.
In the secondary market, Tucson Future's stock price has fallen from a peak of $71.24 per share to near $10 in the past year, a decline of more than 85%. As of the close of trading on May 3, the company's market capitalization was only $2.342 billion.
However, the biggest significance of Tucson's future for the entire autonomous driving industry and investors is to let more people understand the present and future of autonomous driving.
Strategically shrinking?
At the beginning of May, Tucson Future released its first quarter 2022 financial report, one of the focuses is to clearly postpone the launch time of front-loading mass-produced autonomous trucks from the original 2024 to 2025, and emphasize that it is still mainly dependent on the modification model for test operation.
As early as July 2020, 10 months before Tucson's future IPO was counted down, the company announced a strategic cooperation with American truck manufacturer Navistar (also one of the company's shareholders) to jointly develop L4 driverless trucks and strive for mass production by 2024.
Obviously, the difficulty of mass production of the front loading should not be underestimated. According to the first quarter of this year, the company's cumulative order volume increased from 6975 vehicles at the end of last year to 7475 vehicles, and it is not clear what impact the pre-loading mass production will be extended by one year.
According to the latest statement of the company's chief financial officer, Pat Dillon, the conversation has turned sharply, "Commercialization has nothing to do with mass production of trucks." We will still be using modified trucks until 2024. Hou Xiaodi, the company's new CEO and chairman, said, "All of these are fairly mature technologies, and it's really a matter of time." ”
However, tucson future leaders admitted on an investor conference call that the supply chain of L4 autonomous driving is far from mature, including key first-level components such as braking, steering and on-board computing units. "The purpose of customizing self-driving trucks is to improve reliability. Because the traditional modification mode is not reliable. ”
With the acceleration of the process of first-tier suppliers and chip manufacturers, the vehicle-level hardware that meets the L4 level of automatic driving is no longer a problem, for example, Nvidia's Orin-level car-level large computing power platform has entered the mass production cycle. Similarly, lidar has also entered the front-loading mass production cycle.
Previously, Tucson's future prospectus disclosed that the cost of L4 self-driving trucks is still very high, and it may be necessary to find more financing solutions to help the company's users or buy (and then rent) vehicles to operate on their own.
For example, previously, Yinche Technology set up a financial leasing company to provide autonomous driving heavy truck rental services. But the risk is equally huge, taking Shiqiao (DEEPWAY, a truck autonomous driving company cooperating with Baidu) as an example, its Shiqiao Leasing (a financial leasing platform focusing on the commercial vehicle field) has been at a high level (more than 80%), with leverage at a high level and weak asset liquidity in the past two years.
For a driverless or self-driving truck, hardware is just the first step.
From the management's statement, at present, Tucson is slowing down the map collection process of the driverless freight network (AFN), which is mainly built with high-precision maps, and can also be understood as "drivable area" or ODD, similar to the geofence of Cadillac Super Cruise.
"We don't need to map where there is no business," Hou stressed, adding that the company's cooperation with Union Pacific Corp on freight (rail-to-truck transit) has also been delayed until the third quarter of this year.
According to the time schedule given by most companies in the industry before, it is expected to achieve unmanned driving in closed environments from 2021 to 2022 (at present, scenarios such as mines and ports are already running on a small scale), to achieve limited scene unmanned driving from 2023 to 2024, and to achieve large-scale application of autonomous trucks in 2025.
What is in front of everyone is the continuous investment in research and development, at least until 2025 will be the stage of burning money. Tucson's future operating loss in 2020 was $177.9 million, more than double the previous year's loss ($84.8 million), the data showed. As of December 31, 2020, its cumulative loss was $405.2 million.
According to the company's 2021 financial report, from 2018 to 2021, Tucson's future losses will be 0.45 billion, 0.84 billion, 178 million and 737 million US dollars, and the loss in 2021 exceeds the total loss amount of the previous three years. Among them, the figure of R&D expenditure has increased year by year, from more than $30 million in 2018 to $287 million in 2021.
In addition, the company's revenue increased by 240% year-on-year to $6.261 million in 2021, but sales and administrative expenses increased to $118 million from less than $40 million in the previous year. According to the first quarter of this year's financial report, the company's operating loss was $112 million, which was basically the same as the fourth quarter of last year, although it fell sharply year-on-year.
However, the background of this number is also related to tucson's future slowdown in the expansion of team size.
"From a ROI perspective, we will seek to balance and closely monitor staff growth and spending." At the same time, Pat Dillon revealed that the team in the Chinese market is currently restructuring and cooperating with a newly established self-driving company (previously, the outside world speculated that this company was Turing Future).
The Chinese market, where to go
For the loss and the continuous decline in the company's market value, the spin-off or sale of the Chinese business has long been put on the agenda by Tucson's future. And, of course, there's the inescapable issue of data security.
Pat Dillon said that previously, the company's business in Asia (mainly in China) did not reflect the company's stock price, rather than the rumors that due to the constraints of relevant security protocols, it was impossible to carry out business in China.
At the end of the first quarter, Tucson had more than $1.2 billion in cash on its future books. "Restructuring the China business will reduce the company's cash consumption." The data shows that the company's previous losses in the Chinese market accounted for about one-fifth of the company's total losses. "By the end of this year, there will be no substantial revenue in the Chinese market."
"Geographically, the vast majority of the people we employ are in the U.S., close to 80 percent." According to the company's public information, it also increased the recruitment of R& D personnel in the United States last year. "There is no doubt that we are first and foremost the United States, because in the United States, there are the best policies to promote the commercialization process," Hou Xiaodi stressed.
In June 2021, after Tucson's future successful IPO in the United States, Chen Mo, the former chairman of the company, has established Turing Future Automotive Technology (Shanghai) Co., Ltd.
Around the same time, SEC documents show that the Committee on Foreign Investment in the United States (CFIUS) conducted a 45-day review of the 2017 acquisition of the company's redeemable preferred stock by Sina's subsidiary Sun Dream Inc.
So, does Pat Dillon's statement represent the company's true intentions?
Ahead of the IPO, a future Tucson financing filing showed that the company had expected revenue from its U.S. operations to be $284 million ($171 million for china) in 2020 and nearly $1 billion ($776 million for china) in 2021. Obviously, the Chinese market was originally the main source of business contribution.
At the same time, the company expects to have more than $12 billion in revenue by 2026, of which more than $4 billion in pretax profits will be generated. It now appears that there is a huge gap between the data compiled and the actual situation.
In the Chinese market, the policy and market for truck autonomous driving are at the best point in time.
On December 30, 2020, the Ministry of Transport issued the Guiding Opinions on Promoting the Development and Application of Road Traffic and Autonomous Driving Technologies, which clearly states that it is necessary to strengthen the research and development of autonomous driving technology and promote the pilot and demonstration application of autonomous driving technology.
Among them, in the field of freight transport, the Guiding Opinions encourage the development of demonstration applications of autonomous driving cargo in areas with relatively closed environments such as ports, airports, logistics stations, transportation infrastructure construction sites, and scenes such as terminal distribution of postal express delivery, combined with the needs of production operations.
On November 18, 2021, the official website of the Ministry of Transport released the "14th Five-Year Development Plan for Integrated Transport Services", which clearly accelerates the promotion and use of advanced assisted driving technology and automatic driving technology in operating vehicles and improves the active safety performance of vehicles.
At the same time, the "14th Five-Year Plan" for Scientific and Technological Innovation in the Field of Transportation pointed out that by 2025, new breakthroughs will be made in the research and development and application of transportation technology, and technologies such as automatic driving will be demonstrated and applied in some scenarios in transportation services.
Perhaps, this is why this new company, Turing Future, was founded. After all, in chen mo's team's original vision, the Chinese market was the main source of revenue contribution. Since 2019, China has become the world's largest logistics market, and road freight has occupied an important position in the entire social logistics service.
Too many variable factors
However, in fact, to this day, automatic driving or unmanned driving, there are still landing problems. Although, so far, in specific or closed scenarios such as ports, mines, sanitation, short-distance connections, etc., the relevant technologies have entered the stage of small-scale operation.
"Autonomous driving, which has been in the pilot demonstration stage for a long time, cannot achieve profitability, and if R & D and production enterprises only blindly invest, this is related to the sustainable development of automobiles and related industries." Zhou Wei of the Highway Research Institute of the Ministry of Transport said.
Until then, the industry was talking more about costs and regulations. But in fact, there are six major obstacles to the large-scale deployment of automatic driving, including policies and regulations, standards and norms (especially the relevant standards of network security), testing standards (including institutional identification, unlike assisted driving, automatic driving or driverless, the responsibility is borne by enterprises), vehicle-road coordination, infrastructure, and qualification issuance (for example, cross-regional mutual recognition, most of which are now internally identified by a city or province).
In addition, Zhou Wei also emphasized the issue of business ecology. For example, the rear end of the vehicle repair, maintenance, maintenance and other work. "If only the upstream production and research and development end is hot, the use end will not be used, dare not use, will not form a good ecology." If the product is not used, it cannot be translated into economic benefits, and sustainable investment will also be affected. ”
The opportunity for the commercial vehicle logistics track is also subject to many factors.
Entering 2022, the trend of the domestic commercial vehicle market has taken a sharp turn, and the year-on-year decline continues to enlarge. In 2021, domestic commercial vehicle production and sales were 4.674 million units and 4.793 million units, down 10.7% and 6.6% year-on-year, ending the growth momentum. The main reason is that the policy dividend has gradually weakened and the market has entered a period of adjustment.
According to the monitoring data of Gaogong Intelligent Automobile Research Institute, the insurance volume of new commercial vehicles in China (excluding import and export) from January to March 2022 was 691,200 units, down 42.61% year-on-year. Among them, the amount of insurance on heavy trucks fell the most, down 73.58% year-on-year.
Among them, the insurance volume of new vehicles for heavy trucks (tractors) in January-March 2022 was 46011 units, down 79.53% year-on-year; the insurance volume of new vehicles for heavy trucks (cargo) in the same period was 6510 units, down 69.79% year-on-year. This means that market demand is shrinking sharply.
In fact, there are still many questions about the future value realization of autonomous driving.
Ingentra Technology, a truck autonomous driving company co-funded by logistics digital platform G7, has raised more than $700 million so far. In February this year, G7 announced the completion of a new round of financing of $200 million, with a post-investment valuation of $2.2 billion.
However, Zhang Jielong (who is also the CFO of G7), who was also the CFO of Yingche, believes that "in our minds, G7 is a much bigger thing than automatic driving." "Because the whole logistics operation is not only responsible for the front of the car responsible for autonomous driving, but also the trunk, trading, energy, safety behind.
For example, the G7 manages road freight and logistics services through IoT technology, and identifies drivers' bad driving behavior through cameras. The reality is that the valuation of the G7 is not as good as tucson's future, and it may even be overtaken by Yingche.
As for Zhang Jielong's previous description of "in the trunk transportation, in the future we will manage tens of thousands, tens of thousands, or even 100,000 units, hundreds of thousands of self-driving trucks", we do not know when it will really come.
As of yesterday's close, the share price of Aurora, another U.S. self-driving listed company (logistics is also a key layout), has also fallen by nearly 60% in the past six months. The company generated $83 million in revenue last year (well above Tucson's future), but still lost more than $750 million.