Tech startup Horizon Robotics, owned by former Baidu AI autonomous driving scientist, debuts in Hong Kong

Horizon Robotics, a Beijing-based company that develops both the software and hardware needed for autonomous cars, saw its shares soar in its long-awaited debut on the Hong Kong Stock Exchange on Thursday, increasing its market capitalization to $6.9 billion.

Horizon Robotics ended its first day of trading at HK$4.1, up 2.8% from its IPO price of HK$3.99 per share. In intraday trading, the company’s shares increased by as much as 38%. The company raised HK$5.4 billion ($696 million) from the sale of 1.4 million shares at the high end of the market’s HK$3.73-3.99 range.

Its initial public offering, Hong Kong’s largest so far this year, has attracted a host of key investors, including Baidu, Alibaba, the government fund of the Chinese city of Ningbo and the family office of French shipping billionaire Rodolphe Saadé. In its prospectus, Horizon Robotics stated that it would use the proceeds mainly to finance research and development activities over the next five years.

“The completion of the Hong Kong Stock Exchange listing is a key step towards entering the international market,” Yu Kai, the company’s co-founder, chairman and CEO, said at the Hong Kong Stock Exchange listing ceremony on Thursday. “Going forward, Horizon Robotics will remain committed to a people-centric approach, continue to increase investment in research and development, and continue to create value for users through technological innovations that make travel safer and better.”

Before the company went public, Horizon Robotics had no shortage of famous investors. These include Chinese state-backed carmaker SAIC Motor; Baillie Gifford, a Scottish investment firm backed by Amazon and Tesla; Intel Capital and three players on the Forbes Midas list: Richard Liu’s 5Y Capital, Zhang Lei’s Hillhouse Investment Management and Neil Shen’s HongShan (formerly Sequoia China). German automotive giant Volkswagen spent over $2 billion in 2023 and acquired a 60% stake in a joint venture with Horizon Robotics, which focuses on developing autonomous driving technology for Volkswagen vehicles sold in China.

The list of billionaire investors is long: Jean Salata’s EQT Private Capital Asia; Chey Tae-won’s Korean memory chip giant SK Hynix; YF Capital, a private equity firm co-founded by Jack Ma; CATL, electric vehicle battery manufacturer Robin Zeng; and Wang Chuanfu’s Chinese electric car maker BYD.

Horizon Robotics was founded in 2015 by Yu, an artificial intelligence scientist who started the autonomous driving project at Baidu, as well as former Baidu chief R&D architect Huang Chang and deputy director Tao Feiwen. The most advanced system is called Horizon SuperDrive and, according to the company, it is intended to provide autonomous driving at a human-like level in cities, on highways and in parking lots. Launched in April, the system “theoretically supports” level 4 automation, one level below full automation, and – as we read in the prospectus – is able to make decisions under certain conditions without human intervention.

Other Horizon Robotics systems offer features such as automatic emergency braking and parking assist. The company also licenses its proprietary algorithm and software to its customers so that they can develop their own customized products. The customer list includes 27 car manufacturers, including Volkswagen, South Korea’s Hyundai Motor, and China’s BYD, Geely, Li Auto and NIO.

Horizon Robotics claims in its prospectus that it is China’s largest supplier of assisted and autonomous driving systems by number of installations as of June, citing China Insights Industry Consultancy. The company said it installed 900,000 systems in passenger cars in the first half of the year, giving it 15.4% market share in China, after three other foreign suppliers.

That said, Horizon Robotics has not yet achieved profitability. In the first half of this year, the company’s net loss almost doubled year-on-year to 5.4 billion yuan ($758 million), partly due to rising research and development costs. During the same period, the company more than doubled its revenue to 934.6 million yuan, 74% of which was generated from licensing agreements, and then sold autonomous systems and non-automotive systems such as those for home appliances. The company said it plans to break even “in the coming years” by increasing sales, expanding into Japan, South Korea and Europe, and introducing more advanced autonomous driving systems.

The auto industry has long wanted autonomous cars to become the new norm, but crashes and even fatalities have brought the nascent technology under increased safety scrutiny. In October, Tesla unveiled a prototype of its autonomous “Cybercab,” but disappointed investors with a lack of details about the technology behind the robotaxi. Meanwhile, Apple in February reportedly abandoned its autonomous electric car project after a decade-long effort.

Despite these setbacks, some companies are moving forward. Chinese autonomous vehicle startup Pony AI, founded by former Baidu employee James Peng, filed for a U.S. initial public offering last week. It is one of a select group of companies that have received permits to test autonomous transport services on roads. Others include Baidu, whose robots are available in several Chinese cities; China’s WeRide, which has obtained driverless driving permits in California, Singapore and the United Arab Emirates; and Alphabet’s Waymo, which is undergoing testing in several U.S. cities.

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