WeRide (WRD) Wants The World, But Can It Turn A Profit?

Bull Case: A Global Land Grab That Is Actually Making Money

CEO Tony Han said that WeRide is successful talks with Australian regulators and with European countries, connected apical of already eyeing South Korea, Japan and Southeast Asia. The institution entered Denmark earlier successful August, its sixth European country, and its vehicles present run successful much than 60 cities crossed 13 countries. Commercial robotaxi work is acceptable to statesman successful Singapore and Hong Kong. Overseas gross jumped 164% year-over-year successful the 2nd quarter, outpacing 82% maturation successful full gross and pushing planetary income to astir 40% of radical revenue, according to the August 12 net call. That maturation comes from an asset-light model, licensing exertion to section partners alternatively than owning vehicles.

WeRide besides holds autonomous driving licenses successful 8 countries and operates successful 12, a caput commencement absorption says puts it 2 to 3 years up of rivals successful the Middle East and Europe. Its ADAS concern is scaling adjacent faster, with gross up astir 2,600% year-over-year and cumulative deliveries topping 30,000 units, a fig the institution wants astatine 100,000 by the extremity of this twelvemonth and 500,000 adjacent year. Gross borderline deed a grounds 37.5% successful the quarter, and operating expenses grew conscionable 9.2% year-over-year portion gross grew 82%, a spread absorption points to arsenic impervious the exemplary tin scale.

Bear Case: The Losses Have Not Caught Up With The Growth

WeRide is inactive heavy successful the red. The institution posted a nett nonaccomplishment of RMB401 cardinal successful the 2nd quarter, lone 1% narrower than a twelvemonth earlier, a motion profitability is further disconnected than the gross maturation suggests. R&D spending roseate 36% year-over-year to RMB434 cardinal arsenic WeRide keeps backing its AI instauration models, spending that could support pressuring near-term results.

The asset-light strategy driving overseas maturation besides creates a dependency problem. WeRide leans connected level partners specified arsenic Uber and Grab to make robotaxi demand, and if those partners way riders to a rival instead, its leverage successful that marketplace erodes. Competition is creeping successful from different absorption too, arsenic different ADAS companies and automakers reason they tin usage driving information they already cod to physique their ain robotaxi businesses.