By Adam Clark

Chinese internet companies Alibaba and Baidu are backing a domestic smart-driving company. It's a sign of increasing competition in the autonomous driving sector in China for Tesla.

Horizon Robotics plans to raise as much as 5.41 billion Hong Kong dollars ($696.6 million) in an initial public offering on the Hong Kong stock exchange.

Alibaba, Baidu and state-owned Beijing Financial Holdings are among the cornerstone investors who have agreed to take up 30% of the company's shares ahead of the IPO. Intel and Volkswagen have previously backed the company.

Horizon Robotics has set a price range of 3.73 Hong Kong dollars to 3.99 Hong Kong dollars each for its offering of 1.36 billion shares. The final IPO price will be determined on Oct. 22, while trading starts on Oct. 24. Goldman Sachs, Morgan Stanley, and China Securities International are advising on the IPO, among other banks.

In and of itself, Horizon Robotics isn't much of a threat to Tesla's business in China. It isn't a vehicle manufacturer, instead providing software and hardware components for autonomous driving systems. However, it supplies Chinese car maker BYD, which has emerged as Tesla's biggest competitor in electric vehicles, and could help it narrow the gap to the U.S. company's self-driving capabilities.

In June, BYD was included in a list of nine manufacturers of trucks and passenger cars whose automated-driving technology can be tested on certain Chinese roads. It was the first time that Chinese authorities have approved testing for Level 3 and Level 4 automated driving technologies in China. Tesla hasn't yet received permission for use of its Full Self Driving technology, which is a so-called Level 2 system.

While Tesla has only just unveiled its robo-taxi concept at a disappointing launch event, Chinese competitors are rushing ahead.

Baidu and other Chinese companies have been operating robo-taxi services in multiple cities in China. Baidu's Apollo Go said in August that it operated more than 400 driverless taxis in the central Chinese city of Wuhan, which was its biggest fleet in the country. In the April-June quarter, the company provided nearly 900,000 rides in China.

Write to Adam Clark at adam.clark@barrons.com

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October 16, 2024 08:49 ET (12:49 GMT)

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