Burning 2.3 Billion in a Year, Horizon Seeks Differentiated Breakthrough

Horizon Founder Yu Kai Plans to Shrink Some Hardware

On March 19, he disclosed his 2025 performance, with financial losses exceeding 10 billion yuan, and actual business losses of 2.3 billion yuan. To rapidly promote HSD (Assisted Driving System), its gross margin has declined, while R&D spending has expanded significantly.

“We are not afraid of high R&D investment,” Yu Kai said.

The increasing number of targeted deployments, rising shipment volumes, and additional cash reserves continue to support its money-burning autonomous driving story.

“This year, we will hand over the domain controller hardware to partners,” Yu Kai explained, focusing on chips and software algorithms, with chip gross margins reaching 40-50%, and software licensing approaching 100%.

As of the close on March 23, Horizon’s market value exceeded HKD 100 billion.

Money-Burning Expansion

Yu Kai is a typical scientist-entrepreneur.

He holds a PhD in Computer Science from the University of Munich, and previously served as Vice President of Baidu Research Institute, participating in China’s first autonomous driving project. He owns 12.49% of Horizon, worth about HKD 12.4 billion.

Under his leadership, Horizon’s revenue and losses in 2025 nearly grew proportionally.

Revenue was 3.76 billion yuan, up 57.7% year-over-year; operating loss (adjusted) was 2.37 billion yuan, an increase of 58.7% year-over-year.

Yu Kai explained that the main reason was “increased R&D investment.”

Horizon’s annual R&D expenses reached 5.153 billion yuan, far exceeding revenue; mainly used for personnel salaries, cloud computing power, and technology service procurement.

By the end of 2025, based on equity payments, R&D expenses increased by 76.4% year-over-year to 990 million yuan.

Industry insiders told 21CBR that in the embodied intelligence industry, a group of “smart driving” entrepreneurs have emerged. Between 2024 and 2025, two vice presidents of Horizon have left to start businesses in embodied intelligence.

The high R&D investment’s core achievement is the recently listed HSD.

“I firmly believe that HSD is Horizon’s core product for winning urban autonomous driving, and it is also the technological foundation for future L4 and L5 level autonomous driving,” Yu Kai said.

He mentioned that its AI platform will empower fields like robotics, with increased R&D focus, especially on cloud training.

HSD entered mass production in November 2025, first deployed in mainstream models around 150,000 yuan, with shipments exceeding 22,000 units in just over a month.

By the end of last year, HSD was installed in over 20 vehicle models. Yu Kai expects that in 2026, the targeted deployment will reach a new high, with shipments around 400,000 units.

Hardware and Software Integration

Horizon’s heavily invested HSD has contributed to its performance.

Horizon’s core automotive solutions business has two sub-segments: the “hardware” part, which provides product solutions, contributed 1.62 billion yuan, over 40% of revenue; the “software” part, including licensing and services, earned 1.93 billion yuan, over 50%.

“Supporting NOA (Highway and Urban Navigation Assisted Driving) chips accounts for 45% of shipments, nearly five times that of 2024,” Yu Kai said.

Optimized chip product mix has driven ASP (average selling price) up by over 75% year-over-year.

Notably, HSD relies on high-compute chips like the Zhencheng 6P. For example, the iCAR V27 model, launched with HSD, also uses the Zhencheng 6P chip.

According to Founder Securities, in 2025, Horizon’s chip solution ASP is about $58; in the second half of the year, mid-to-high-end solutions average around $117.

This combination of hardware and software has helped Horizon capture 14.4% of the high-end autonomous driving chip market, just behind Huawei’s 15.2%.

HSD boosts chip sales and generates revenue through IP licensing and services.

“Horizon’s software algorithms have become highly trusted foundational models in the autonomous driving field,” Yu Kai said.

He mentioned that many automakers have licensed these products. For example, Horizon has partnered with a Japanese auto parts giant, becoming one of its top five customers by 2025.

Regarding HSD, Yu Kai’s team is expanding cooperation. In the second half of 2026, they plan to leverage its foundational model to assist Robotaxi (autonomous taxi) clients in conducting pilot operations domestically.

Additionally, as HSD-assisted driving penetration gradually increases, Horizon is expected to develop new business models.

Yu Kai noted that during the Spring Festival, vehicles equipped with HSD accounted for 41% of autonomous driving miles, nearly matching human drivers.

“Once the autonomous driving mileage share surpasses the 50% threshold, user dependence will become irreversible,” he said.

Horizon’s revenue is currently mainly driven by sales of vehicles equipped with its products. In the future, it may generate revenue throughout the entire lifecycle by charging subscription fees for services based on the large installed HSD vehicle fleet.

Subscription models are mainstream in the software industry, often offering higher gross margins than hardware.

Strategic Positioning

After tasting success in mid-to-high-end autonomous driving, Yu Kai plans to accelerate upward.

He believes cockpit integration will be the new trend, and Horizon must fully commit.

Two products are on the way: an integrated cockpit intelligent chip (Agentic CAR SoC) and a matching intelligent operating system (Agentic CAR OS).

There are reports that their new cockpit-integrated chip, called “Starry Sky,” will support localizing cockpit large models, with plans for release in April and mass production within 2026.

Yu Kai aims to unveil this at the Beijing Auto Show.

When asked about the new product, Horizon responded that it has not yet launched and no specific details are available.

Leading automakers are actively developing single-chip cockpit solutions, such as Qualcomm’s SA8775P and NVIDIA’s Thor.

What gives Yu Kai confidence?

“Currently, Qualcomm dominates the Chinese cockpit domain controller chip market with over 70% market share. We have no intention of engaging in direct competition in the mature cockpit market,” he explained.

He added that past attempts by some Chinese companies to directly challenge Qualcomm’s market position have failed.

Horizon aims for a “upgrading” strategy, relying on technological innovation and system-level optimization to avoid homogeneous competition.

“We are fully betting on integrated cockpit intelligent solutions, breaking the underlying chip architecture of autonomous driving and cockpit, connecting the upper-layer software ecosystem, and creating a blue ocean market,” he said.

In Yu Kai’s view, entering the cockpit from autonomous driving offers a more significant “dimensionality reduction” advantage than the other way around. After all, the software ecosystem for autonomous driving is more scarce and valuable than the Android ecosystem in cockpits.

He described a scenario of cockpit-autonomous driving integration: after work, users tell their car they want to watch a movie; the vehicle’s intelligent system will recommend content, book tickets, plan routes, and automatically park upon arrival.

Typically targeting the 100,000 to 200,000 yuan mid-to-low-end vehicle market, the integrated cockpit product could become Horizon’s most effective weapon to expand its business amid fierce competition and ongoing price wars.

Deep waters, abundant fish—just waiting to cast the net.

(Author: Yang Song and He Jipai, 21st Century Business Herald; Editors: Yan Ziwei, Zhu Yimin)