Deal focus: WeRide confirms its ascendency

Level four (L4) is regarded by many as a tipping point in autonomous driving technology: there is still a driver in the seat, but the vehicle is fully autonomous in certain environments; and in the event of an accident, the vehicle manufacturer is responsible.

With regulatory requirements still onerous and the path to commercialisation unclear, some Chinese autonomous driving developers have refocused on L2 and L3 solutions - lower levels of autonomy where human intervention is required. These are intended to serve as a stepping stone to L4. 

Wayne Shiong, a partner at China Growth Capital, contends that L4 capabilities are necessary to become globally competitive in L2 and L3. He sees WeRide's recent tie-up with German engineering multinational Bosch, which is predicated on providing L2 and L3 solutions to Chinese original equipment manufacturers (OEMs), as vindication of this view.

“This is like launching an attack from a high dimension to a low dimension. In 2017, WeRide’s team told me that for L2 and L3, they could look at market opportunities and enter at any time," he said. “But if the L4 technology doesn't work well, you can't claim to be an autonomous driving company. And it has been proven that a pure L2-L3 player can't support tier-one OEMs, no matter how much money it has raised.”

WeRide confirmed its L4 credentials in 2019, becoming the first local autonomous driving company to introduce pilot robotaxi services with this capability. Earlier this year, it raised USD 400m as part of a Series D round. The valuation was USD 4.4bn, up from USD 3.3bn at the Series C stage in 2021. Bosch was among the participants, alongside the likes of The Carlyle Group.

Shiong believes WeRide has enough capital in reserve to ride out the current challenging fundraising environment. However, he notes that the company’s development trajectory has been far from smooth. It launched with great fanfare, quickly raising substantial early funding, but two years later was teetering on the brink of bankruptcy. Salvation didn’t come until the second half of 2020.

Xu Han, founder and CEO of WeRide, recalled the dark times of 2019 in a recent video interview: “It was hard to raise money, and had we failed to raise anything after eight months, the company would have closed. It’s not that the company is bad, but it encountered a capital winter. Today, investors chase after us, but are we really better than we were in 2019? In fact, it is the role of capital.”

Growing pains

WeRide – known as JingChi at inception – drew attention from day one in 2017 thanks to its all-star team: Jin Wang had founded Baidu’s autonomous driving division; Han had worked with him as chief scientist; Qingxiong Yang, the vice president for engineering, came from Didi Chuxing’s autonomous driving unit; and Yan Li previously led the unmanned vehicle engineering team at China Auto.

China Growth Capital was an anchor investor in a pre-Series A round that also featured Qiming Venture Partners and Nvidia GPU Ventures. According to Shiong, the target was USD 20m but the round closed on USD 52m in response to strong demand.

However, in December 2017, disaster struck. Baidu sued JingChi, accusing the company and Wang of stealing confidential information. The situation was resolved with Wang’s departure in March 2018 and JingChi joining Baidu’s Apollo initiative, an open driving ecosystem that connects partners from the traditional automaking with the autonomous driving industry. Han stepped up from CTO to CEO.

The company – by then known as WeRide – was stymied by a round of internal disputes later in 2018. It got so bad that the investors convened a meeting to decide whether the company should be wound up. Shiong voted for continuation because he had faith in Han and the underlying technology.

Kai-Fu Li of Sinovation Ventures agreed that WeRide was well-positioned despite the string of crises and his firm led an exclusive round the same year. “He knew Robin Li, Baidu’s founder, very well,” Shiong added. “He actually played the role of lubricant, and this made WeRide’s life much easier.”

The company went on to make its L4 breakthrough in Guangzhou, working with Baiyun Taxi Group and Science City Group (SCG). At the time, it was optimistic that an entirely unmanned robotaxi ride would be possible within three years.

Nevertheless, 2019 was marred by difficulties entwined with those of China’s electric vehicle (EV) manufacturers, which saw sales crumble in response to cuts in subsidies. A government bailout for industry leader Nio and falling battery costs, which made EVs more economically competitive, contributed to a turnaround in 2020. Autonomous driving start-ups benefited as well.

For WeRide, the real game-changer came at the end of 2020 when local electric bus manufacturer Yutong Group led a USD 310 million Series B. It agreed to work with WeRide on a mini robobus – a mass-production model that has no steering wheel, accelerator pedal, or breaks. Yutong was selected to operate Guangzhou's first L4-level driverless bus line, which launched in January.

WeRide’s product portfolio also features robovans and robo street sweepers. The latter are deployed in the early hours of the morning, so the risk is much lower than for passenger vehicles.

“I am very optimistic about the company’s commercialisation ability. With the Bosch deal, WeRide can access large OEMs. Under the same logic, it could also work with, for example, a consumer brand to launch sweeping robots. The collaboration model with Bosch can be replicated in many other application scenarios,” said Shiong.

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• Topics
• Greater China
• Technology
• Expansion
• China
• autonomous driving
• automobiles
• China Growth Capital
• The Carlyle Group
• Growth capital