The year 2024 is around the corner, and with it comes a burgeoning interest in the autonomous driving sector, primarily fueled by a series of Initial Public Offerings (IPOs) from various related companiesThis surge of activities marks a notable moment for the industry as it transitions into what many believe to be a new era of innovation and investment.

On December 20, a significant development took place when Tuda Technology announced its intent to merge with the special purpose company TechStar, aiming for a formal listing on the Hong Kong Stock ExchangeThe momentum for IPOs has been palpable this year, with a roster of autonomous driving companies on the brink of going public, including names such as Momenta, Pony.ai, WeRide, Horizon Robotics, and Black Sesame TechnologiesSome of these firms have successfully made their entries into the public market, which speaks to the vibrancy of the industry as it aims to capitalize on public interest and investor appetite.

Among these companies, Frtitech has emerged as a darling of the capital markets, backed by multiple rounds of financial investment

This company has been making headlines not just for its strong financial backing but also for its impressive business model, commercial capabilities, extensive customer base, and the strength of its investor groupAccording to their prospectus, Frtitech has formed partnerships with 46 original equipment manufacturers (OEMs), which include all top 10 domestic OEMs by sales in 2023. They have amassed over 280 fixed-point projects and sky-high production projects exceeding 200 in numberFrtitech's shareholder base also includes notable industry players like SAIC, BAIC, Dongfeng, Geely, and Shaanxi Automobile, alongside various government industrial funds and well-known professional investment institutions.

Industry insiders have remarked that Frtitech's market appeal to OEMs is partly due to its innovative approach that contrasts with the traditional Tier 1 suppliers that focus solely on hardware or software.

Frtitech has carved a niche by integrating both hardware and software within a single ecosystem

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This full-stack development capability enables the optimization of overall system performance while leveraging a data closed-loop platform for continuous upgrades and efficient iterations of its autonomous driving solutions.

This unique structure allows Frtitech to create the ODIN smart base platform, which encompasses various components, such as controllers, sensors, software algorithms, and a data closed-loop platformConsequently, they provide customizable, efficient, iterative, and cost-effective intelligent driving solutions that cater to a variety of customer needs.

As stated in their prospectus, Frtitech can deliver comprehensive hardware-software integrated intelligent driving solutions to OEMsThey have successfully developed three distinct autonomous driving solutions: the FT Pro, FT Max, and FT Ultra, each catering to different vehicle levels ranging from L0 to L3 degrees of automated driving capability

Current trends indicate that new car development cycles among domestic automotive brands are shrinking dramatically, with some brands achieving cycles of nearly 12 monthsFrtitech’s platform technology provides numerous distinct advantages to automotive manufacturersIt enhances compatibility, facilitates rapid modular configurations, and ultimately increases efficiency in addressing diverse vehicle demandsThe prospectus indicates that their solutions can be delivered in as little as eight months, substantially less than the industry averageThis feature could enable clients to speed up new model development cycles and adapt quickly to fast-evolving market conditions.

Additionally, Frtitech's combination of software and hardware development capabilities has substantially increased resource utilization efficiency, decreasing their dependency on computational powerFor instance, they can achieve high-level autonomous functions such as Navigation on Automated Driving (NOA) and Advanced Parking Assist (APA) with only 13 TOPS of computing power, showcasing their competitive edge in algorithm optimization and cost-efficiency

By continually optimizing hardware and software performance through system-level upgrades, Frtitech allows automotive manufacturers to enhance their vehicles’ intelligent functionalities economically, thereby improving user experiences and accelerating the proliferation of intelligent driving technologies.

Turning to production scaling, it's widely recognized that the ability of an autonomous driving enterprise to shift towards mass production represents a vital indicator of its maturity in technology, market competitiveness, capital attractiveness, data accumulation, consumer awareness, and policy supportMass production not only reflects a company’s technological prowess but is also a key determinant of commercial success.

Frtitech has chosen an incremental approach focused on L2 automated vehicles, emphasizing the mass production vehicle marketBy providing OEMs with comprehensive hardware-software integrated intelligent driving solutions, Frtitech can realize more extensive commercialization sooner

Observers in the industry have pointed out that the capability of mass production and commercialization serves as a benchmark for assessing Tier 1 company strength, underscoring Frtitech’s advantages in terms of delivery capacity and quality control and establishing trust with OEMs.

In 2020, Frtitech launched its smart manufacturing facility in Tongxiang, Wuzhen, and by 2022, they completed a significant expansion of their smart manufacturing base, adding full-automated production lines for millimeter-wave radar, cameras, camera modules, and domain controller assembly linesBy 2023, Frtitech achieved a landmark milestone with the completion of its millionth smart driving productAs they approached their eighth anniversary in 2024, the company announced they had reached another significant point with the rollout of their three millionth Advanced Driver Assistance Systems (ADAS) product, further heightening their business scale and profitability.

Industry data illustrates the robust growth potential for globally mass-market L0 to L2+/L2++ level autonomous driving solutions, with revenue projections soaring from 108.3 billion yuan in 2019 to 277.1 billion yuan in 2023, and expectations pointing towards 650.3 billion yuan by 2028. As the largest market for intelligent driving solutions, China's projections reach 210.3 billion yuan by 2028.

The persistent growth in market demand calls for stronger, more stable, and mature delivery capabilities

According to the prospectus, Frtitech aims to bolster intelligent manufacturing to enhance both its mass production capabilities and commercial profitabilityThe funds raised through their IPO in Hong Kong will focus on strengthening the R&D of innovative intelligent driving solutions, significantly enhancing production manufacturing capabilities, and expanding the sales and service networkBy integrating its R&D framework, product slate, and intelligent manufacturing, Frtitech is set on creating a virtuous cycle in its business development, production, and commercial strategies.

Another critical aspect in the transition to smart vehicle technology is the power of integrating local supply chain systemsAmidst the competitive landscape dominated by the theme of "intelligentization," Chinese firms have made significant strides in replacing and upgrading core suppliers with domestic alternatives.

According to data from the Gaogong Intelligent Automobile Research Institute, during 2022, more than 5.85 million L2-level auxiliary driving systems (including L2+) were delivered, representing a staggering incremental growth of 61.66% year-on-year

Among these, local ADAS suppliers and companies with proprietary developments captured a share of 9.86%. In 2023, the market share of domestic suppliers for ADAS systems (excluding panoramic view and parking assistance) grew to an impressive 19.60%, achieving a twofold increase compared to the previous year.

In its prospectus, Frtitech stated that as its sales scale expands, it anticipates significantly reducing costs through bulk procurement and optimized production processesBy negotiating better terms regarding raw materials and components, the company can further drive down costs and elevate economies of scale, enabling them to provide comprehensive, flexible, and cost-effective solutions to capitalize on the growing opportunities for localized smart driving solution replacements and higher market penetration.

Simultaneously, L2-level intelligent driving solutions are becoming mainstream, and their penetration rates are expected to further increase, driving widespread deployment of ADAS within China’s autonomous OEMs

According to Zhi Shi consultancy, Frtitech ranks third among local suppliers for the installation volume of L2 and L2+/L2++ intelligent driving solutions in China in 2023, with a market share of 14.6%. In terms of L2+/L2++ solution installation volume, Frtitech holds an 11.5% market share, making them the third largest supplierTheir highest-tier FT Ultra solution has reached L2+/L2++ and L3-level automation, witnessing rapid growth in 2023, which simplifies the company's entry into a new phase of growth.

As automobile manufacturers intensify their focus on promoting intelligent driving experiences, users’ acceptance of smart driving technologies is also steadily risingThe enhancement in technological capabilities, combined with the visibility of scale economies, accelerates the penetration of intelligent driving functionsThe market for intelligent driving solutions is poised for substantial growth