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Produced by | Chaoqi Network "Yu See Column"
Princes and generals, would you rather have a kind? In the smart car track where players from all walks of life flock to the track, not many entrepreneurs believe that entering this new track must have "noble" blood.
Although ECARX, an automotive intelligent technology company backed by Geely, does not have the "scientific and technological color" that Huawei has when it laid out its cars, it is also unwilling to be ordinary because of its inextricable relationship with Geely Automobile, founded by "car madman" Li Shufu.
According to ECARX's official website, the company's business is to provide core software and hardware solutions for the development of automotive connectivity, automation and electric mobility, including in-vehicle infotainment systems, digital intelligent cockpits, in-vehicle chip module solutions, core operating systems and integrated software stacks.
In addition, ECARX is developing its own full-stack automotive computing platform. It is precisely because ECARX's entrepreneurial "stall" is so large that it is often compared with Huawei's car BU.
In addition to ECARX's official introduction, in March 2023, ECARX released four major solutions, namely Antora, a cross-domain system capability base, Cloudpeak, Makalu, a next-generation intelligent cockpit computing platform, and Super Brain, a series of automotive brain central computing platforms, which also surprised the industry. At that time, some industry insiders said that ECARX's new products were expected to boost ECARX's revenue significantly.
Facts have proved that ECARX's revenue in 2023 will increase by nearly 30%, and the performance pull effect of new product launches is indeed very obvious. However, ECARX still seems to be in the quagmire of "increasing revenue but not increasing profits", and in 2023, it will also hand over a negative report card of net profit attributable to the parent company. Previously, Zhou Jing, CFO of ECARX, also said in an interview with reporters that ECARX's more aggressive internal goal is to achieve breakeven by the end of 2024 and start making profits after 2025. It can be seen that ECARX's operating pressure in 2024 will not be too low.
Continued losses, the secondary capital market is difficult to become an antidote
It is understood that in 2017, ECARX was co-founded by Li Shufu, the founder of Geely Holding Group, and Shen Ziyu, chairman and CEO of Geely Holding Group, with automotive intelligence products and services as its main business, and is committed to building a full-stack automotive computing platform.
According to ECARX's official website, ECARX currently has more than 5 million vehicles in its technology, serves more than 20 car brands, and serves 10 Tier 1 suppliers. Although ECARX's business has grown rapidly, after several years, ECARX has not escaped the predicament of being difficult to make a profit.
Moreover, the goal of achieving a positive net profit in 2024 has long been mentioned in the prospectus before its listing. At that time, ECARX said that it hoped to maintain rapid revenue growth from 2022 to 2024 through overseas expansion, and achieve positive adjusted EBITDA in 2024.
In mid-December 2022, with the successful listing of ECARX on NASDAQ, ECARX was also regarded as gradually "weaning" from then on, but relying on its existing market size, although ECARX gradually became independent of Geely at the capital level, it did not have smooth sailing in terms of development due to the listing.
In fact, ECARX's development before and after its listing is hardly smooth. It is understood that since its establishment in 2017, ECARX has been in a loss-making state, including a loss of 440 million yuan in 2021, a loss of 1.1854 billion yuan in 2021, and a loss of 570.6 million yuan in the first half of 2022.
After going public at the end of 2022, ECARX still did not get rid of the fate of loss. According to its 2023 fiscal year annual report, the revenue from January 1, 2023 to December 31, 2023 was 4.666 billion yuan, a year-on-year increase of 30.99%, and the net loss was 1.015 billion yuan, although it narrowed by 36.82% year-on-year, but the operating pressure is still visible to the naked eye.
It cannot be ignored that ECARX's smart cars and chips are both high-investment, high-risk and even high-leverage tracks, and the early losses can be explained as strategic losses. However, after listing, the capital market will be more sensitive to earnings information, and at the same time, it will also pay more attention to the future development prospects of the company.
Although ECARX has launched new products since 2023, it has brought the possibility of increasing its performance and income, it can still be seen from its annual report card that under the goal of net profit turning positive in 2024, the pressure will not be too small. It is still unknown whether it can rely solely on the secondary capital market to solve the financial difficulties of its future development when it has not yet achieved profitability after achieving independence.
On the surface, it is "weaned", but in reality it is difficult to be "self-sufficient"
Although ECARX seems to have been "weaned" after its listing, in fact, so far, ECARX has not shaken off its dependence on Geely. Even the vast majority of partners are still related to Geely. For example, Geometry Auto, Zeekr, Lynk & Co, Proton, Lotus, Smart, etc. all have deep roots with Geely.
Although the Antora 1000 intelligent cockpit computing platform launched by ECARX has been mass-produced in FAW Hongqi brand models, bringing imagination to its market, and the upgraded version of the Antola 1000 Pro intelligent cockpit computing platform can provide vehicles with L0 to L2 driving assistance levels, ECARX has also had in-depth cooperation with many Tier 1s around the world, and the application of its technologies and services is becoming more and more extensive.
However, ECARX's true self-sufficiency and positive performance cycle may not be sufficient to rely on a very limited number of "related households". After all, the smart car market is currently in its infancy, and countless tech giants are eyeing it.
Compared with Huawei's way of deploying smart cars, Huawei has reached C-end consumers through the vehicle-machine system and human-computer interaction system equipped with Wenjie cars, which not only has a strong voice on the car company's side, but also forms a brand and word-of-mouth advantage among C-end consumers.
As Shen Ziyu believes, the success of B2B companies needs to rely on the success of C-end products. "For ECARX, there will definitely be a few cars in Geely's ecosystem that we can decide to dominate. ”
Shen Ziyu once said frankly that the car of the future is a supercomputer, and the intelligent technology of the car is the core technology of the automotive computer system, and ECARX is a full-stack provider that provides chips, modules, hardware, entire computer system software and upper-layer applications for smart cars.
This also means that ECARX needs to improve its upstream and downstream industrial ecosystem in addition to expanding more customer resources if it is benchmarked against Huawei. In terms of this strategy, ECARX has chosen to bet on technology research and development and business going overseas.
It is understood that in the past year, ECARX and smart have established a joint venture to deepen strategic cooperation with Black Sesame, and continue to deepen strategic cooperation with FAW and Xinqing Technology, while accelerating the expansion of the global market to adjust its product and revenue structure and make up for its shortcomings in ecological layout. However, a series of actions are undoubtedly very money-burning, and the "return on investment" cycle is longer.
In mid-February, ECARX set up a new operation center in Stuttgart, Germany, which is the third new regional operation center in Europe after Sweden and the United Kingdom. In addition, in December 2020, the European headquarters and product development center were established in Gothenburg, Sweden. It is precisely under this strategic arrangement that ECARX's R&D investment has also been rising.
ECARX has established more than 10 operation centers around the world, with more than 2,000 employees, 70% of whom are R&D engineers. According to the financial report data, in 2023, ECARX will spend 1.26 billion yuan on R&D, accounting for 27% of total revenue, nearly one-third, and international R&D investment accounts for a large proportion.
It can be seen that ECARX, which has successfully landed in the secondary capital market, still has a long way to go if it wants to play the game of smart car technology services with the help of full-stack intelligent solutions.
It is difficult to become a Huawei against Huawei, how far is ECARX from profitability?
In interviews with the media, Shen Ziyu, chairman and CEO of ECARX, often compared ECARX and Geely's Meizu to Huawei's smart car ecosystem. For example, Shen Ziyu believes that ECARX's role is equivalent to Huawei's car BU, while Xingji Times and Meizu Technology are equivalent to Huawei's consumer BG, and SiEngine Technology is equivalent to HiSilicon Semiconductor.
While this analogy is easier for people to understand ECARX's business, future development strategies. However, in order to benchmark with Huawei, ECARX is also bound to face a huge system project. Take HiSilicon's SiEngine as an example. It is understood that the company is a subsidiary of ECARX, focusing on automotive semiconductors. It is also Google's premier partner for Early Access and Google automotive services.
It is understood that Volvo has used Google Service in its cars, which is an important bridgehead to help ECARX go international. However, as we all know, even in the smart car track, the current chip semiconductors and other discourse rights are still in the hands of overseas chip giants such as Nvidia and Qualcomm.
Compared with Huawei's car BU by integrating Huawei's ICT capabilities and ecosystem resources to provide full-stack solutions for OEMs, ECARX is also working hard to build its own ecosystem and try to keep up with giants such as Qualcomm and NVIDIA.
For example, in September 2023, after the official launch of the Lynk & Co 08 Super Range Extension, the sales volume exceeded 50,000 in 5 months, becoming a representative work of ECARX's intelligent full-case capabilities, while the Lynk & Co 08 model is equipped with the 7nm process cockpit chip "Dragon Eagle No. 1" developed by Xinqing Technology, and the benchmark is Qualcomm 8155, which can not only achieve cost advantages, but also make up for the lack of advanced processes.
In addition, the second chip product of SiEngine Technology, the autonomous driving chip AD1000, was also officially released, from the perspective of parameters, this product is aimed at NVIDIA Orin X, which also uses 7nm process, and the computing power in all aspects is also amazing, and it supports optimization for BEV and Transformer algorithms.
However, it should not be overlooked that ECARX will face another challenge in commercializing its products. That is, with the increasingly fierce competition in the field of intelligent driving, the application process of chips and AI large models will directly affect ECARX's market position. The gap between ECARX and international giants in terms of technology research and development and advanced chip manufacturing processes will make ECARX face the contradictory situation of needing to cooperate with international giants and compete with each other in the short term.
As a result, ECARX has many more variables in benchmarking Huawei's automotive BU, which is more independent in terms of technology.
epilogue
As the saying goes: it's good to enjoy the shade with your back against a big tree. ECARX has long relied on Geely in terms of customer resources, and has also been ridiculed by some industry insiders as "gnawing at the old". In fact, ECARX has also bluntly stated that it is its development strategy to maintain the business foundation through the Geely ecosystem.
Although this is understandable for ECARX in the initial stage. However, it is not a good sign for ECARX, which has already been listed and has served many well-known car brands and even more than millions of vehicles.
ECARX estimates that the revenue contribution of its third-party automaker customers, in addition to Geely's related customer resources, will increase significantly to 26% by 2024. However, according to this revenue structure, even ECARX has achieved revenue balance. Its ability to develop the market independently is still very doubtful. According to ECARX's ideals, the pattern is not limited to this. Therefore, although ECARX's future is very promising, it must be a long road, and it will be difficult to reach the end in a short time.