The ride-hailing market is indeed too competitive, with drivers oversaturated and scrambling for orders as the norm, while ride-hailing platforms are flocking to list on the Hong Kong stock market.

Recently, platforms that have successfully gone public include DiDi, which took five attempts and nearly four years to succeed, and the industry newcomer Ruqi, which is hailed as the "first stock of Robotaxi"; platforms that are in the queue for listing include Caocao, which has submitted its IPO prospectus to the Hong Kong Stock Exchange, and Xingdao and T3, which are planning to initiate their IPOs.

At the same time, with the continuous breakthroughs in autonomous driving and the gradual improvement of business models, mainstream Chinese mobility platforms such as DiDi, Caocao, T3, and Ruqi are all targeting the Robotaxi track, attempting to enhance their competitiveness through technological innovation, thereby breaking the industry's homogeneous competition pattern.

In this light, it appears that ride-hailing platforms are accelerating their listing pace because their main business has not yet escaped the loss-making situation, and the new autonomous driving business requires investment, indicating a need for funds.

Advertisement

The ride-hailing industry is caught in a rat race, moving forward with a heavy load.Despite the continuous growth in the number of users and market share of ride-hailing platforms, the issue of profitability has always plagued this industry. Taking Ruqi Mobility as an example, from its establishment to its IPO, Ruqi Mobility only took five years. During these five years, Ruqi Mobility expanded in scale and increased its revenue, but it has not yet achieved profitability.

Ruqi Mobility's prospectus shows that from 2021 to the end of 2023, the operating income was 1.014 billion yuan, 1.368 billion yuan, and 2.161 billion yuan, respectively, with a compound annual growth rate of 46%. The losses were 685 million yuan, 627 million yuan, and 693 million yuan, respectively, with a cumulative loss of 2 billion yuan over three years.

The reason for the losses is that when Ruqi Mobility entered the market, there were already several strong competitors, such as Didi Chuxing and Caocao Mobility. These established ride-hailing platforms have occupied most of the market share. To establish a foothold in this environment, Ruqi Mobility had to invest a large amount of resources in market development.

On one hand, long-term subsidies to users and drivers have squeezed the platform's profit margins. From 2021 to 2023, Ruqi Mobility spent a total of 1.58 billion yuan on subsidies for drivers and passengers. Among them, subsidies for passengers accounted for the majority, with a total of 1.15 billion yuan over three years, with an average reward per order as high as 5.78 yuan, 5.62 yuan, and 5.28 yuan, respectively.

On the other hand, fines and R&D expenditures are also fierce "gold-swallowing beasts." From 2021 to 2023, Ruqi Mobility's R&D expenditures were approximately 117 million yuan, 107 million yuan, and 119 million yuan, respectively; the fines were 821,000 yuan, 775,000 yuan, and 1,133,000 yuan, respectively, with a total of about 2.7 million yuan.The competition in the ride-hailing industry is becoming increasingly fierce, with the "involution" phenomenon becoming more apparent, and Ruqi Travel is moving forward with a heavy burden. Ruqi Travel's official financial report frankly stated that it is expected to continue to incur net losses and operating net cash outflows in 2024, 2025, and 2026. Against this backdrop, seeking capital support may be the only way to break the deadlock.

No surprises in the initial public offering (IPO) breakeven

In 2023, Ruqi Travel's submission of its prospectus attracted considerable attention, one important factor being that Ruqi Travel is the first ride-hailing company to articulate the grand vision of "autonomous driving, technology services."

On July 10, Ruqi Travel successfully went public in Hong Kong, with an issue price of HKD 35 per share, raising approximately HKD 969.2 million through the global offering, and became the "first stock of autonomous driving operations technology" as desired. However, on the first day of listing, Ruqi Travel broke even, reporting at HKD 30 per share.

Looking back at Ruqi Travel's financing journey, it can be described as smooth sailing, but the phenomenon of breaking even immediately after listing also reflects investors' lack of confidence in Ruqi Travel. Indeed, Ruqi Travel has shown strong competitiveness and told a beautiful story of autonomous driving in ride-hailing, but the business model of ride-hailing has always been difficult to satisfy the capital market.Firstly, the road to listing for ride-hailing platforms has been quite bumpy, with many ending up with a broken issue. For example, Didi Chuxing was rejected by the Hong Kong Stock Exchange twice, and DiDi was also listed after five submissions, with a broken issue.

Secondly, the capital market has doubts about the business model and profitability of ride-hailing. The ride-hailing industry did not bring the desired profits after low-price competition to gain market share, and many investors worry whether this business model can continue to make a profit.

In addition, there are many uncertainties in the global economic situation, and most investors are cautious about the current economy. It is not the best time to seek listing now.

However, from the perspective of Ruqi's own listing, going public in Hong Kong is just the beginning. After opening up the listing channel and obtaining more financial support, accelerating the layout of the Robotaxi market is the key to getting out of the loss quagmire.

The big move of Robotaxi has not yet become a climate.If we say that Ruiqi Mobility is participating in a technology-driven mobility marathon, then the Robotaxi business is akin to a crucial supply station along the way. Should the Robotaxi business flourish, it will energize and sustain Ruiqi Mobility's technology-driven mobility strategy.

It is well-known that when Ruiqi Mobility was established, the ride-hailing market was already a fiercely competitive red ocean. To avoid direct competition with industry giants, Ruiqi Mobility chose a differentiated strategy as its path to survival, focusing on the Greater Bay Area market as one aspect, and laying out a path in the autonomous driving race as another.

Now, Ruiqi Mobility's Robotaxi business is beginning to take shape. Public information indicates that, as of December 31, 2023, Ruiqi Mobility's Robotaxi service has been in operation for a cumulative 20,080 hours, covering 545 stations, and completing approximately 450,000 kilometers of safe trial operation.

Once an obscure player, Ruiqi Mobility dares to venture into the "no man's land" of Robotaxi, backed by its own confidence.

On one hand, Ruiqi Mobility's investors include Tencent, Didi, and Pony.ai, who possess abundant technology and resources, providing strong support for Ruiqi Mobility's Robotaxi business. It is understood that a total of 281 vehicles have been connected to the Ruiqi Robotaxi operation platform, with 35 owned by Ruiqi Mobility and the rest owned by partners such as Pony.ai and the GAC Research and Development Center.On the other hand, as the world's first mixed operation model of manned ride-hailing and Robotaxi, Ruqi Travel holds a first-mover advantage. This helps Ruqi Travel gain a competitive edge in the Robotaxi field and is expected to promote further expansion of its business scale.

However, Ruqi Travel's Robotaxi business is still in the trial commercialization stage, and the short-term revenue effect remains to be seen. In the prospectus, Robotaxi revenue is categorized under the "Other" section, which includes Robotaxi services, ride-sharing services, and marketing and promotional services. In 2023, the revenue from this segment was 2.0 million yuan, accounting for 0.1% of the total revenue.

It can only be said that Ruqi Travel's "big move" Robotaxi has not yet become a trend. Next, it may continue to carry out pilot programs and small-scale operations to accumulate experience and gradually solve related issues, ultimately achieving large-scale commercialization. As shown in the prospectus, about 40% of the raised funds will be used for the research and development activities of autonomous driving and Robotaxi operation services, which is the largest proportion of fund usage.

For the next decade: paving the way, providing blood transfusion

The trend of ride-hailing moving towards autonomous driving is inevitable, especially after "Carrot Run" has swept the ride-hailing market, the Robotaxi industry is also accelerating its development, and in the near future, ride-hailing will fully enter the era of autonomous driving.It is understood that in the first quarter of this year, the number of autonomous driving orders supplied by RoboTaxi reached approximately 826,000, with a cumulative order volume exceeding 6 million. In addition, according to Frost & Sullivan, the global market size for Robotaxi is expected to reach 810.4 billion yuan by 2030.

The more mature the industry, the greater the value it generates. The rapid growth of the Robotaxi market will promote the rapid development of related industrial chains, which is both an opportunity and a challenge.

For companies like Ruqi Mobility, taking the lead in the Robotaxi market is firstly to gain a differentiated advantage and a broader future for themselves; secondly, it is to go with the trend and pave the way and provide support for the next decade. However, the Robotaxi market is destined to be fiercely competitive, and Ruqi Mobility has a long way to go.

The ride-hailing market is never short of brave contenders, and the competition in the Robotaxi race is fierce. In China, leading companies in the field such as Luobo Run, Didi, and GAC are accelerating their deployment. Abroad, tech giants like Tesla and Waymo are also continuously making new moves, and the Robotaxi storm is brewing.

Furthermore, despite significant advancements in autonomous driving technology, it will still take some time for the commercialization of Robotaxi to reach full maturity and high reliability. Especially in areas such as technology, policy, practical application, and consumer education, further exploration and improvement are needed.In summary, Ruqi's ride-hailing business is under pressure and urgently needs to break through and tell a new story. Therefore, it strategically enters the Robotaxi field with foresight, but the inevitable intensification within the Robotaxi sector still needs time to prove its competitiveness.