Futu Research | Percentage Drives Share Price Uplift: Radish Runners Order Boosts Market Dive
Recently, Baidu (stock code: $BIDU-SW(09888.HK)$ und $Baidu(BIDU.US)$) The share price has shown an upward trend, which is closely related to the company's significant breakthrough in the field of automated driving. Of particular note is the explosive growth in the number of fully unmanned automated driving bookings for Baidu services under the banner of Apollo Logo in Wuhan, illustrating the significant impact of the market on automated driving technology.
At the end of June, the Beijing Bureau of Economic and Information Technology (Consultation Draft) promulgated the “Beijing Autonomous Driving and Driving Regulations (Consultation Draft)”, which publicly invited the public to comment, which further strengthened the market's confidence in the investment of self-driving related enterprises. According to data disclosed by Baidu at the ApolloDay2024 Congress, as of April 19, 2024, Lube Express has processed more than 600 million units, covering 11 major cities in Beijing, Shanghai, Guangzhou, Shenzhen, etc., and launched fully autonomous vehicles in several cities such as Beijing, Wuhan, Chongqing, Shenzhen, Shanghai, etc. Travel service and testing.
This article will focus on the Unit Economic Model (UE) of the Apollo Logo business. Through a detailed scenario analysis, we aim to explore the breadth of future commercialization of the Kubo Sprint. Emphasizing its continued innovation and steady growth in the field of automated driving, the business model and its perceived economic benefits will be the focus of this study.
Source of Materials: Corporate Banking, Futu Securities Sorting
1. Single vehicle revenue calculation
AS A PIONEER IN DRIVERLESS DRIVING TECHNOLOGY, KOB SPRINTER IS OVERHAULING THE TRADITIONAL BRITISH MARKET AT HIGHLY COMPETITIVE PRICES. Many users are attracted by the prices of its people, especially for the 10-kilometer trip, where the toll range for the Bub Run is only $4 to $16, far lower than the $18 to $30 for a regular bike (all units mentioned in this article are in RMB).
Price comparison list:
Goose Run: Starts at 15-16 USD, costs 2.4-3.5 USD per kilometer.
Ordinary Drip Express: Starting price 10-12 yuan, cost $1.59-2.3 per kilometer.
Taxi: Starting price 10-14 yuan, fee 2.5-3.5 yuan per kilometer.
Although the single price of Poppy Run may seem to be slightly higher than that of e-bikes and taxis, its low price advantage is mainly due to the platform's add-on policy. It's worth noting that it can be challenging to keep prices this low as the promotional period ends. However, as driverless driving saves the cost of manual labor for drivers, Goo Run still hopes to maintain its competitive price advantage and continues to compete fiercely with the driver-driven e-car industry.
Note: Rates vary from region to region across the country
According to the company's disclosure, Wuhan's “Gooseberry Run” has recently launched an order boom, with a peak of more than 20 bikes per day, while the number of e-bikes and taxis is around 16 per day. We assume that the number of kilometers per unit is 5km and the unit volume is 16 units per day, based on the 20% discount on the platform, and the annual revenue of the bike is around $11 million.
2. Calculating the cost of a bicycle
In terms of bike costs, the main costs of the Loob Run are vehicle costs, manpower costs, and other costs are electricity costs and maintenance, insurance, etc.
(1) Vehicle costs: Decreased significantly, launching a new chapter of unmanned driving
Vehicle costs are an important component of Baidu Robotaxi's project and are mainly based on hardware-related depreciation costs. Interestingly, the cost of Baidu's sixth-generation Robotaxi model has been significantly reduced to RMB20.46 million, compared to the $48 million cost of the previous generation RT5. Starting in the first half of this year, the Wuhan region began to gradually deploy the sixth generation model, anticipating that it will become the main force of the Robotaxi fleet, thereby reducing depreciation costs for bicycles. Looking ahead, costs are still likely to fall further, paving the way for widespread application of driverless driving technology.
In the cost analysis, we calculated the purchase cost of the sixth generation Robotaxi at $20.46 million, assuming that the vehicle's waste reporting period is limited to six years, resulting in approximately $3.4 million in bicycle depreciation charges per year.
(2) Human cost: intelligent management, efficient operation protection
There are two types of operating modes for the Po Run. The first is a vehicle equipped with a safety officer, a safety officer intervenes only in an emergency, and the rest of the time the vehicles are in automatic driving mode. The second rule is that cars are completely driverless, although no security personnel are required on site, but every vehicle is remotely monitored by Yundeya to ensure safety and efficiency. IT IS WORTH MENTIONING THAT EACH CLOUD DRIVER CAN REMOTELY CONTROL 2 TO 3 UNMANNED VEHICLES SIMULTANEOUSLY, IMPROVING OPERATIONAL EFFICIENCY AND SAFETY.
For specific assumptions, see the following table:
Based on the above assumptions, we calculated two different scenarios based on the configuration security guy and the cloud driver:
(1) Scenario 1: Under the scenario where one security guard is assigned to each car, the loss of the bike per year is 1.5 million dollars
(2) Scenario 2: Under the scenario of fully autonomous driving, with 2 cars per Yundeo car covering 2 cars, the annual profit of the bike is $2.3 million
3. Calculate the profitability of mature regions using the example of Wuhan
As of the first quarter of 2024, the size of the unmanned aerial vehicle fleet in Wuhan has been between 400 and 500 units, a figure that follows 1,000 inaccuracies that had previously circulated on the Internet. At Baidu's ApolloDay 2024 event, the company's management revealed that completed orders for fully unmanned vehicles reached 55%, up from 45% in the fourth quarter of 2023, showing a marked increase. The rate was more than 70% in April 2024 and is expected to continue climbing over the next few quarters, aiming for a 100% unattended order completion rate.
The goal is to achieve a balance of receipts in Wuhan by the end of 2024 and fully enter profitability in 2025. Based on our scenario analysis, the total number of unoccupied orders represents a steady increase or a positive balance in the Wuhan region. At 70% of unmanned vehicles, the annual profit is around $600 million under the assumption that 500 vehicles are operated per year. If it is increased to 1000 cars in the future, the proportion of 100% unmanned vehicles will be realized, and the profit for the year could reach around 2400 million dollars.
4. Future Outlook
Key drivers of UE enhancement:
1. Advancing fully automated driving: The gradual expansion of national regulatory policies will be key to driving the improvement of the UE (unit economy). As more vehicles are licensed for fully automated driving, the profitability of motorcycles will increase.
2. Declining hardware costs: In the long run, the progressive reduction in the cost of motorcycle hardware is another major driver. The cost of Baidu Robotaxi's sixth-generation model fell sharply to RMB20.46 million, demonstrating its ability to control costs.
3. 24/7 operation: The round-the-clock performance of driverless cars allows them to take more traditional taxis on a daily basis, creating the conditions for improving UE.
4th. Enhanced vehicle efficiency: Advances in technology will allow more vehicles to be remotely controlled by Yundeo, improving overall operational efficiency.
5. Adjustment Policy Adjustment: Reduced surcharges after the promotion period are expected to have a positive impact on bike revenue and improve UE.
6. TECHNOLOGY ITERATION AND CONSUMER APPEAL: CONTINUOUS ADVANCES IN AUTONOMOUS DRIVING TECHNOLOGY WILL IMPROVE VEHICLE TRANSPORT EFFICIENCY, ATTRACT MORE CONSUMERS AND ACCELERATE UE GROWTH.
Diving Risk Factors:
1. Consumer reaction after reduced surcharge: Adjustment of the surcharge policy may lead to a decrease in consumer sentiment and affect the volume of orders.
2. Policy enforcement uncertainty: Inconsistencies in the enforcement of automated driving commercialization policies in cities may limit the advancement of UE.
3. Safety Concern Risks: Traffic accidents can damage brand image and affect consumer confidence.
Medium-short term implications and investment advice for Cabbage Run:
Although there has been limited support for Baidu in the medium to short term, recent share price gains have been driven mainly by events, reflecting the market's recognition of the potential profitability of the Cabbage Sprint business model and the prospect of expanding space for future cities.
Advances in automated driving technology and the support of related policies are expected to continue to increase the company's valuation.
At present, the company's stock price is 11 times the forecast for its 2024 market earnings. Due to the lack of shareholder returns in the long term and the inability to sustain large cash flows in the short term, it is expected that, if BAIDO does not improve in shareholder returns, the breakthrough for this run will be:Baidu Stock PriceThe medium-short term “event driven” means investors can trade on a consistent basis, and long-term investments still require sufficient return on equity and cash flow from Baidu.
