In Depth: China’s Self-Driving Tech-Makers Downshift
By Yu Cong, Liu Peilin and Ding Yi

There was a time when venture capitalists (VCs) preferred investing in Chinese companies working on fully self-driving vehicles, with the goal of building globally recognized Chinese brands in the smart car space.
Since the middle of 2022, however, VCs have become more cautious about putting money into these companies as advanced self-driving technology has yet to overcome some substantial hurdles in commercialization. Under the circumstances, many developers of self-driving car tech have switched to developing less advanced assisted driving systems for automakers to maintain cash flow, which is crucial to attracting investor interest.
The switch comes as the market for vehicles equipped with Level 2 and Level 2+ assisted driving systems is expected to grow. Data from the Ministry of Industry and Information Technology showed that 55.7% of new passenger vehicles sold in the first half of 2024 were fitted with a Level 2 system, while the share of cars with a Level 2+ system was at 11%.
U.S. engineering standards group SAE International classifies autonomous driving from Level 0 to Level 5, with Level 1 and Level 2 considered driver assistance technology that requires a human to be in control of the car the whole time. Level 4 and Level 5 are deemed automated driving technology that allows a car to drive itself almost independently in most conditions. Level 3 refers to features that enable a car to drive itself only under certain circumstances and requires a person to be ready to take control in the event of an emergency.
Level 2+ technology is regarded as an improved version of Level 2, adding a navigation-assisted feature for highways and urban roads beyond basic functions like self-adaptive cruise control and automatic emergency braking.
Despite the potential of automated driving systems, it is not easy for Chinese self-driving companies to take more of a market dominated by foreign counterparts like Germany’s Robert Bosch GmbH and Israel’s Mobileye Global Inc. In addition, the bruising domestic price war in China’s auto industry has pushed carmakers to go with lower-priced systems, further squeezing profitability of their developers, most of which are still losing money.
And with more and more automakers starting to develop driver assistance systems of their own because they are afraid of losing control of the “soul” of their cars, intelligent driving systems developers are seeking opportunities beyond passenger vehicles.
According to Liu Yudong, an executive general manager of Cherish Capital, the private equity firm has a history of making angel investments in companies developing autonomous vehicles for urban delivery, mining and port operations. It has invested in over 10 such companies so far.
In its strategy, Cherish Capital does not consider investing in self-driving firms working on self-driving systems for cars that transport passengers on public roads due to the significant technological challenges and difficulties in commercialization, Liu said. Developing autonomous vehicles used in mining and port operations, on the other hand, has a lower technological threshold because they tend to operate in less complex driving environments.

Big players
Horizon Robotics Inc., SZ DJI Technology Co. Ltd.-affiliated SZ Zhuoyu Technology Co. Ltd. and Momenta.ai are considered China’s three most promising developers of driver assistance systems based on the adoption of their products and their research and development (R&D) capabilities.
The companies do not all have the same focus. Horizon Robotics and Zhuoyu focus their research on basic Level 2 systems while Momenta is working on a Level 2+ system.
Founded in 2015 by Yu Kai, former head of Baidu Inc.’s deep learning lab, Horizon Robotics started as a developer of artificial intelligence (AI) of things. After China’s new-energy vehicle boom in 2019, the company repositioned itself as a supplier of assisted driving and high-level smart driving systems for passenger vehicles.
Horizon Robotics’ flagship products are Horizon Mono, Horizon Pilot and Horizon SuperDrive, with Mono representing a basic front-camera advanced driver-assistance system (ADAS), Pilot offering more advanced highway driving assistance, and SuperDrive providing a comprehensive, full-scenario smart driving capabilities on the highways and in the cities.
Being the biggest revenue sources, Horizon Mono had been used in more than 200 car models and Horizon Pilot in over 25 car models as of the end of 2023, according to the company.
Horizon Robotics also develops automotive processors. In April, it unveiled its next-generation Journey 6 series that are designed for low-, mid- and high-end smart driving systems.
A group of 10 carmakers including SAIC Motor Corp. Ltd., BYD Co. Ltd. Volkswagen AG, Li Auto Inc. and Chery Automobile Co. Ltd. have agreed to use the Journey 6 chip.
Currently, Horizon Robotics is working with ecosystem partners Qcraft and PhiGent Robotics to develop advanced assisted driving systems based on the Journey 6 chip, with mass production expected to begin this year at the earliest.
Horizon Robotics, which went public in Hong Kong in October, ranked fourth among global providers of both ADAS and autonomous driving systems by installation volume in China in 2023 and the first half of 2024, according to its IPO prospectus. Its market share for those periods was 9.3% and 15.4%.
Established in 2016 as the drone maker DJI’s smart driving system unit, Zhuoyu has a product line that includes an intelligent parking system designed for budget car models. It also has an advanced smart driving system made up of seven cameras, millimeter-wave radars, high-definition maps, and a Qualcomm chip that can function without laser-based radars.
Major components used in its smart driving systems, including monocular cameras, binocular cameras and smart driving domain controllers, have all been designed in-house, which helps reduce the costs of Zhuoyu’s products. The company said that in 2024 alone it signed deals with carmakers including SAIC General Motors Corp. Ltd., SAIC Volkswagen Automotive Co. Ltd., China FAW Group Co. Ltd., Dongfeng Motor Group Co. Ltd. and Chery Automobile. Its systems have been installed in more than 20 car models.
The company has also announced plans to start mass production in 2026 of an integrated sensor system consisting of laser-based radars and cameras. The system is for cars priced at more than 250,000 yuan ($34,000).
Momenta is one of several Level 4 technology-focused companies that have switched to developing lower-tier assisted driving systems.
Counting carmakers including SAIC Motor, BYD, Geely Automobile Holdings Ltd., Mercedes-Benz AG and Honda Motor Co. Ltd. as major clients, Momenta mainly uses costly Nvidia chips to develop navigation-assisted driving solutions for city and highway driving.
The company is also targeting the budget market by offering smart driving systems powered by cheaper chips. In April, Momenta partnered with Qualcomm Technologies Inc. to launch a smart driving system powered by the U.S. giant’s Snapdragon Ride chip, which they said is suitable for mainstream passenger cars priced between 100,000 yuan and 200,000 yuan. The Ride chip is about 30% cheaper than Nvidia’s competing Orin X chip.
In late 2023, Momenta established a chip design subsidiary, which has received investments from Shunwei Capital and ZhenFund, a move that showcases its intention to become self-sufficient in making one of the most important components for smart driving systems.
Future of robotaxis
After numerous rounds of financing, WeRide Inc. and Pony AI Inc., the Chinese startups best known for operating robotaxi fleets powered by Level 4 technology, went public on the Nasdaq in October and November, respectively, securing a bigger funding channel to bankroll their expansions.
But their inability to turn robotaxis into a profitable business thus far have raised concerns among investors who had hoped to see driverless cabs make transportation safer and more efficient.
According to its prospectus, Pony AI has obtained licenses to operate fully autonomous taxis in Beijing, Shanghai, Guangzhou and Shenzhen. It is currently operating 250 robotaxis and 190 autonomous trucks.
However, Pony AI has yet to make a profit. In the first half of this year, robotaxi services generated $1.17 million, accounting for 4.7% of the company’s total revenue. Autonomous truck services brought in over $18 million, making up 73% of total revenue. Technology licensing and related applications contributed another $5.52 million, or 22.3% of the total, according to the prospectus.
Pony AI earns most of its revenue from autonomous trucking, which is a far less complex application of autonomous driving technology than robotaxis, said Wang Erde, a partner of Guangzhi Capital. However, the promise of driverless taxis is what has drawn in investors. And even for autonomous trucking, it will be difficult for Pony AI to gain a strong foothold because there are so many other robotruck operators also struggling to turn a profit in the market, according to Wang.
Pony AI predicts single-vehicle operations of its robotaxi fleet will break even as early as this year, but large-scale commercialization will likely take another three to five years, Caixin has learned.
In its prospectus, WeRide, which is also operating in the red, did not disclose how much it makes from robotaxis, indicating that the business has had trouble turning a profit. Currently, the company is testing or deploying its autonomous driving technology in 30 cities in seven countries, according to its prospectus.
The two companies have yet to establish a sustainable commercial model for their robotaxi businesses, which are still in the promotional phase with symbolic pricing, said a person working at a Chinese self-driving company. Costs for fleet operations and safety personnel exceed those of ride-hailing services, the person said, citing data showing that the cost for hiring a safety operator for robotaxi operations is 7 yuan per kilometer, compared with the 2-yuan-per-kilometer cost of running a ride-hailing cab.
To expand revenue streams, WeRide and Pony AI have been eyeing the Middle East market, where some countries are ramping up efforts to revolutionize their transportation systems with autonomous driving.
Dubai, the most populous city in the United Arab Emirates, has unveiled a plan to make 25% of its transportation fully autonomous by 2030. Saudi Arabia has laid out a similar plan that aims to have 15% of its public transportation vehicles operating autonomously and change 25% of its cargo vehicles into autonomous ones by 2030.
In July 2023, the UAE gave WeRide the country’s first national-level self-driving license, which allows the company to carry out a variety of road tests and operations in the country. In October 2023, Pony AI scored $100 million from the strategic investment arm of Saudi Arabia’s flagship Neom urban development project. Under the deal, Pony AI would set up a joint venture with the Neom Investment Fund to develop, manufacture and operate robotaxis in the Middle East, Caixin learned from sources at the time.
Contact reporter Ding Yi (yiding@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)
caixinglobal.com is the English-language online news portal of Chinese financial and business news media group Caixin. Global Neighbours is authorized to reprint this article.
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