NIO and Chinese tech giant Tencent have announced a partnership for self-driving cars. Xpeng Motors also has a partnership with Alibaba for self-driving tech.
CNEVPOST reported that “Tencent Cloud will work with NIO to build an integrated hybrid cloud infrastructure for the smart car sector to meet the electric vehicle company’s diversified business development requirements and provide efficient, stable, secure and open platform services.”
Tencent also said that the partnership would help lower costs and increase efficiencies. Incidentally, Tencent is the largest investor in NIO. The Chinese tech giant has invested in many startup tech companies.
Other Chinese EV (electric vehicle) companies are also working on self-driving cars. At the annual event held last month at its headquarters in Guangzhou, Xpeng Motors unveiled the company’s next-generation neural network-based perception architecture, data management platform, and closed-loop AI. It also featured the latest developments in its mobility business, including robotaxis and robotics.
In September, Xpeng Motors debuted a semi-autonomous driving system in China and launched the pilot program of its Navigation Guided Pilot (City NGP). The pilot program was available for a select group of Xpeng P5 customers in Guangzhou.
NIO Partners with Tencent for Autonomous Driving
Notably, the US has put export restrictions on sales of some high-end chips to China. NIO previously said that the ban would not have much impact on its operations. Nvidia which sees autonomous driving as a key growth driver also said that it is trying to supply Chinese customers with alternate chips that are not covered under the ban.
Meanwhile, NIO and Tencent have announced a self-driving partnership at a time when many companies are reconsidering their autonomous driving investments amid spiraling losses.
Last month, Argo AI, an autonomous driving startup backed by Ford (NYSE: F) and Volkswagen shut down. Ford wrote off its investment in the company and took a non-cash charge of $2.7 billion in the third quarter of 2o22.
Companies are Reconsidering Their Autonomous Investments
Alphabet, which has an autonomous driving subsidiary Waymo, is also facing shareholder heat over the spiraling losses. TCI Fund Management, which holds around $6 billion worth of Alphabet stock, wrote a letter to the company calling upon the management to cut losses in Waymo
TCI said that Alphabet stock is undervalued. Most Wall Street analysts are also bullish on the stock. We have a guide on how investors can buy Alphabet stock.
NIO also reported a squeeze on its gross margins in the third quarter of 2022 amid high inflation. It posted an adjusted per-share loss of 30 cents in the third quarter of 2022, which was wider than the 6 cents per share loss that it posted in the corresponding quarter last year.
NIO posted a gross profit margin of 13.3% in the quarter, which while 30 basis points higher than the previous quarter, was way below the 20.3% gross margin that it reported in the third quarter of 2021.
Deutsche Bank Is Bullish on NIO Stock
NIO stock has crashed this year amid the sell-off in Chinese EV stocks. However, earlier this month, Deutsche Bank said that the worst looks over for the company and reiterated its bullish call on the company. There is a guide on how beginners can buy NIO stock.
Meanwhile, NIO and other US-listed Chinese stocks are trading higher today amid hopes of looser COVID-19 restrictions in the country. There has been a wave of protests in the country against the stringent lockdowns.
Oil prices also tumbled amid concerns over Chinese demand. However, oil has also recovered from its 2022 lows amid optimism over reopening in China.
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