WeRide Inc. is redefining its international expansion by selling a "virtual driver" service, shifting away from traditional vehicle ownership. During its earnings call on August 12, the company outlined its fee structure: rather than taking a cut of ride-hailing fares, it charges overseas partners a recurring technology service fee and a per-mileage fee for its autonomous driving system, which is already certified and locally validated. Based on optimal utilization rates for normal unmanned operations, the annualized technology service revenue per stable vehicle is projected to exceed $50,000.
WeRide Inc. has adopted a lighter approach for its overseas Robotaxi business, avoiding the costs of purchasing, maintaining, and operating its own fleet. Instead, it generates revenue by charging technology service fees based on vehicle count and mileage. In the second quarter, WeRide Inc. reported revenue of 232 million yuan, a year-on-year increase of 82.2% and a sequential increase of 103.1%. Overseas revenue accounted for nearly 40% of total sales, surging 164.4% year-on-year and 169.3% quarter-on-quarter. Gross margin improved to 37.5% from 28.1% in the same period last year, which the company attributes to a higher share of high-margin overseas L4 business and L2++/L3 operations.
A key challenge for traditional Robotaxi expansion is that larger fleets require heavier investments in vehicle purchases, depreciation, maintenance, and operations. WeRide Inc. mitigates this by having local partners handle vehicle deployment and daily operations, while it simply sells its "virtual driver." Its revenue is not tied to ride-hailing fare splits but comes directly from technology service and mileage fees.
While continuous investment is needed for licensing, local adaptation, and safety verification, entering a new city no longer requires WeRide Inc. to load vehicles onto its own balance sheet simultaneously. Only as the local fleet expands does the company have the opportunity to amplify its revenue and gross profit through ongoing fees. As of the end of July, WeRide Inc. had approximately 400 Robotaxi vehicles in the Middle East, with new projects advancing in European markets such as Spain, Switzerland, and Denmark. Management expects a full transition to a substantial growth phase for overseas operations by the end of 2026. Whether this forecast materializes depends on the speed at which commercial partnerships convert into paid operations, rather than the number of new cities added.
Domestically, WeRide Inc. operates a different financial model. In the second quarter, the average daily orders per vehicle in China exceeded 21, a 24% increase from the previous quarter, with peak daily orders reaching 28 per vehicle. Ride-hailing revenue grew by approximately 140% quarter-on-quarter. Domestic data validates fleet utilization, while the overseas model aims to transform operational experience and autonomous driving capabilities into a replicable technology fee.
The L2++/L3 segment provides another revenue stream for these R&D investments. In the second quarter, this business's revenue surged nearly 26 times year-on-year and 219.3% quarter-on-quarter, with approximately 30,000 vehicles equipped with WRD 3.0. WeRide Inc. expects this number to exceed 100,000 vehicles by year-end and accumulate over 500,000 vehicles by 2027. Management states that the L4 fleet generates high-value operational data, while L2++ production vehicles expand real-world road data, allowing both businesses to share the same model and R&D system. Financially, WeRide Inc. aims to use the same R&D expenditure to simultaneously generate revenue from overseas L4 technology service fees and from mass production projects with original equipment manufacturers.
Despite rising revenue, core losses have not yet narrowed. In the second quarter, R&D expenses reached 434 million yuan, a 36% increase year-on-year, and were 1.87 times the quarter's revenue. Total operating expenses were 533 million yuan, leading to a net loss of 401 million yuan. The adjusted non-IFRS loss was 338 million yuan, higher than the 326 million yuan in the first quarter. WeRide Inc. claims that operating leverage is beginning to show, as expense growth is slower than revenue growth. However, from the financial statements, a significant gap remains between absolute spending and revenue, with a gross profit of 87 million yuan insufficient to cover R&D expenses. As of the end of June, the company held approximately 5.4 billion yuan in cash, time deposits, and other liquid financial assets, providing time for continued investment.
Nevertheless, this earnings report clarifies WeRide Inc.'s path to recovering R&D investments: installing L2++ into more mass-produced vehicles while charging overseas L4 operations based on technology service and mileage fees. This allows the high R&D expenditure to be offset by both vehicle installation volume and per-vehicle revenue. This approach also provides a metric for evaluating high-level autonomous driving companies: removing the driver solves the technical problem, but recovering the R&D costs is what truly makes autonomous driving a viable business.
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