On July 26, 2023, the stocks of King Long Motor Group surged, closing at 14.11 RMB per share, leading to a market capitalization of a whopping 10.1 billion RMBOver a span of 13 trading days since July 10, the company’s shares experienced a near-manic rise, with an accumulated growth exceeding 93%. This remarkable ascent in stock value can be attributed to the burgeoning interest in autonomous driving technologies, particularly emphasized in the company’s announcements regarding its involvement with self-driving vehicle concepts.
As of the market closing on July 26, King Long’s price-to-earnings ratio (P/E) stood at an astounding 123, a stark contrast to the automotive industry index, which averaged just 28.6. This significant discrepancy raises questions about King Long's valuation relative to industry standardsThe driving force behind this interest appears to be related to the increasing coverage of autonomous driving technology in public media and partnerships that align with government efforts to commercialize smart driving vehicles.
In cities like Wuhan, the self-driving ridesharing app “LuoBo KuaPao” has gained significant attention, frequently trending in social media discussionsCoupled with government incentives and regulatory frameworks aimed at fostering the commercialization of intelligent driving vehicles, the hype around autonomous driving has solidified, and companies like King Long are keen to ride this wave of excitementThe question now is whether King Long can emulate the successes of “LuoBo KuaPao” in the passenger bus sector.
Interestingly, King Long Motor Group has been developing autonomous vehicles for some time now; their foray into self-driving technology began in 2017. The company announced back then that it had worked alongside tech giant Baidu to create a four-meter autonomous bus named “ApoLion,” which even made an appearance during the 2018 Spring Festival Gala
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By July of the same year, “ApoLion” had entered mass production and began demonstration operations in several key cities, including Beijing and Guangzhou.
Subsequent innovations followed quickly; in 2018, an eight-meter self-driving bus developed by the Suzhou subsidiary was one of the first to receive testing licenses in Jiangsu ProvinceThis particular model, nicknamed "Xing Chen," underwent optimization and was designed for both autonomous and sightseeing vehicle functions, leading to significant batch orders by 2019. By that year’s end, “ApoLion” had safely operated across 30 different scenarios in 25 regions nationwideIts L4 autonomous version “Shen Lan,” developed in tandem with the China Automotive Technology and Research Center, showed promise with demonstrations in multiple cities.
The excitement continued into 2020 as King Long partnered with both JD.COM to produce automated logistics vehicles and Baidu to launch a mid-sized bus featuring L4 autonomous driving capabilitiesFurthermore, their “Xing Chen” model offered customizable products, experiencing a substantial sales figure of nearly 1500 unitsDespite three years of sustained efforts in advancing their autonomous vehicle lineup, by 2021, King Long seemed to pause in the race for innovation in the self-driving bus realm.
Post-2021, updates regarding King Long’s other autonomous vehicles diluted significantlyThe corporate reports shifted attention toward “automated driving,” diminishing mentions of once-prominent models like “ApoLion,” signaling possibly a strategic pivot in the company's focusThe gradual decline in the frequency of the term “autonomous driving” in their annual documents raises eyebrows about King Long’s ongoing commitment to this once-critical area of development.
The apparent stagnation in sales figures for their self-driving bus models raises questions regarding the lucrative prospects of this market
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King Long highlighted that the sales derived from their autonomous buses have remained minimal since the launch of relevant products, attributing this to the overarching exploratory nature of the autonomous bus sector, which it views as not yet fully maturedThe variables contributing to this uncertainty include fluctuating market demands, evolving industry guidelines, and national regulatory conditions.
The dual cardinal factors hindering growth in the self-driving bus market are essentially technology and policyFrom a technical perspective, existing capabilities must be upgraded to meet the safety and operational demands seen in environments like crowded roadwaysMeanwhile, policy requirements for commercial passenger vehicles in China remain rigorous, mandating a higher standard of driver certification compared to less regulated areas.
In contrast, “LuoBo KuaPao” operates on a Level 4 (L4) autonomy standardUnlike its pedestrian-level autonomous vehicles, which still have cloud-based “safety officers” monitoring from a distance, King Long's self-driving buses would require tackling far more unpredictable scenarios, especially in urban areas mixed with complications like mountainous terrainsPassenger safety is paramount, posing questions of accountability and emergency responsiveness should autonomous technology encounter unforeseen situations.
Delivery of passenger services such as those offered by King Long faces an uphill battle against the backdrop of stringent governmental policies that favor the presence of qualified personnel at the controlsKing Long’s investor relations department underscored the necessity for regulatory clarity before it can commence widespread operations of its autonomous models, such as “ApoLion.”
Nevertheless, there's a wave of optimism surrounding the future of autonomous driving, evidenced by new local policies being introduced, such as the recent initiative from Beijing’s Economic and Information Bureau which outlines the potential roles of various levels of autonomous vehicles, including buses and ride-hailing services
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