Executive Summary / Key Takeaways

• Digitalization Leader in China's Auto Market: SunCar Technology Group ($SDA) is a pivotal force in digitalizing China's vast auto insurance and services markets, leveraging its cloud-based platform and AI to offer efficient, integrated solutions to a market with over 330 million drivers.
• Robust Growth and Strategic Partnerships: The company demonstrated strong financial performance in 2024, with total revenue reaching $441.9 million (up 21.5%) and adjusted EBITDA surging 492% to $9.8 million. This growth is fueled by deepening partnerships with major EV manufacturers like Tesla and Xiaomi , and significant penetration into the larger gas vehicle market.
• Differentiated Technology and AI Integration: SunCar's proprietary technology, including its 2-minute license plate scan for insurance quotes and the recent full integration of DeepSeek AI, provides a significant competitive advantage, enhancing efficiency, personalization, and operational cost reduction across its segments.
• Positive Outlook with New Ventures: SunCar projects full-year 2025 revenue guidance of $521 million to $539 million, reflecting an 18% to 22% growth. The company is also strategically exploring new revenue streams, including a planned $10 million investment in Real-World Asset (RWA) cryptocurrencies, aiming for blockchain integration.
• Competitive Strengths and Market Opportunity: Despite facing competition from large conglomerates, SunCar's specialized focus, nationwide coverage, and advanced technology position it as a leader in its niche, poised to capitalize on China's rapidly digitalizing automotive and insurance sectors, an addressable market estimated at $120 billion for insurance services and $20 billion for B2B auto services.

A Digital Revolution on China's Roads

SunCar Technology Group Inc. ($SDA), established in 2007 in Shanghai, China, has emerged as a critical enabler in the ongoing digitalization of China's immense automotive after-sales services and insurance markets. With over 330 million drivers, China represents the world's largest and fastest-growing passenger vehicle market, undergoing a profound shift from traditional offline processes to digital solutions. SunCar's core mission is to enhance the customer experience and operational efficiency within this evolving landscape through its cloud-based, software-focused B2B platform. The company's journey, culminating in its NASDAQ listing in May 2023, underscores a strategic vision to become the preeminent technology platform in this space.

The broader market trends in China are highly favorable for SunCar's business model. Electric Vehicles (EVs) and hybrids are rapidly gaining traction, accounting for 59% of all vehicle sales in China by August 2024, and are projected to reach around 60% of total car sales in 2025. This surge in new energy vehicles (NEVs) has significantly stimulated demand for insurance coverage, with NEV premiums soaring to $13.8 billion in 2023, a six-fold jump from five years prior, and representing 11.5% of China's motor insurance business. Concurrently, the much larger traditional internal combustion engine (ICE) vehicle market, with over 300 million existing vehicles, is also undergoing rapid digitalization to remain competitive. This dual tailwind provides SunCar with a substantial addressable market, estimated at $120 billion for insurance services and $20 billion for B2B auto services.

Technological Leadership and AI-Powered Differentiation

At the heart of SunCar's investment thesis lies its robust and continuously evolving technology platform, backed by an approximate $100 million investment in its industry-specific cloud, AI, mobile apps, and data infrastructure. This investment has yielded significant differentiators that underpin its competitive moat.

SunCar's core technology enables a seamless and efficient digital experience. For insurance buyers, its platform can generate an accurate quote within two minutes simply by scanning a license plate. This speed and convenience are critical in a market transitioning from manual processes. The company holds 160 registered copyrights of computer software, reflecting its proprietary advancements in B2B auto services.

A significant recent development is the full integration of DeepSeek artificial intelligence technology into SunCar's proprietary cloud-based service platform and car insurance SaaS solutions, announced in February 2025. This integration is designed to revolutionize automotive service intelligence by providing:

• Enhanced insurance recommendation precision through advanced risk profiling and customer need analysis.
• Improved scheduling efficiency of automotive services with real-time monitoring and maintenance alerts.
• Sophisticated user behavior analysis enabling highly personalized service delivery.
• Cost-effective AI implementation through its proprietary cloud-based service platform.
• Robust data security measures ensuring enterprise-grade protection.

Chairman and CEO Zaichang Ye emphasized that leveraging DeepSeek's powerful general intelligence and reasoning capabilities is "reimagining the entire automotive service experience while significantly reducing operational costs" for SunCar, its enterprise clients, and end customers. This technological edge directly translates into operational efficiencies, improved customer satisfaction, and enhanced cross-selling opportunities for both insurance and non-insurance products. The ANGI AI Technology Service Center further extends this leadership, co-developing custom insurance solutions with auto partners to boost new policy sales, renewals, and extended warranties.

Strategic Expansion and Partnership Momentum

SunCar operates across three synergistic segments: Auto Insurance, Technology Services, and Auto Services. Each segment has demonstrated strong performance and strategic expansion, contributing to the company's overall growth.

The Auto Insurance segment is experiencing rapid growth, driven by the auto industry's increasing focus on monetizing the post-sale customer experience. In 2024, auto insurance revenue surged by 44.4% to $170.5 million, compared to $118.1 million in 2023. This growth was propelled by strong partnerships with automakers and a substantial increase in insurance policies sold. In the first half of 2024, the number of EV insurance policies sold increased by 250%. SunCar has expanded its collaboration with Tesla (TSLA) to 48 cities from an initial six, launched customized insurance products with Xiaomi (XIACY) for its first vehicle deliveries and the YU7 model, and integrated its SaaS platform into Zeekr's app ecosystem. Partnerships also extend to other leading EV manufacturers including Nio (NIO), Li Auto (LI), XPeng (XPEV), Seres (SFEMF), Leapmotor (LIAPF), SAIC, and Changan Avatr. Beyond EVs, SunCar is making significant inroads into the gas vehicle market, securing a two-year agreement with SAIC Maxus to enhance insurance sales management across its dealership network. This penetration into the much larger ICE market represents a considerable growth opportunity, as gas vehicle dealers increasingly seek digital solutions to capture downstream revenue.

The Technology Services segment provides modular software management tools and technical consulting, experiencing a 46.4% revenue increase to $44.9 million in 2024, up from $30.7 million in 2023. This growth is fueled by strong demand from insurance companies and sales partners for SunCar's software, which streamlines workflows, manages customer relationships, and automates order processing. The company's ongoing upgrades to its technology stack and a shift towards a SaaS model are enhancing service capacity and driving this rapid expansion.

The Auto Services segment offers a comprehensive network of customized services to enterprise customers, including major banks, insurance companies, and internet platforms. Revenue in this segment increased by 5.3% to $226.5 million in 2024, driven by the addition of 39 new bank sector customers and an increased number of completed service orders. SunCar has secured an exclusive $6.8 million contract with Sam's Club (WMT) for car wash services across 17 cities and provides high-end limousine services for luxury brands like Chanel, Dior (LVMUY), and Omega (SWGAY). Renewed agreements with internet giants like Didi (DIDIY), Meituan (MPNGY), and Alipay, alongside a new partnership with GoYin, further solidify its market presence. The company also launched a strategic partnership with AntFortune for exclusive airport limousine services targeting high-net-worth clients.

Financial Performance and Outlook

SunCar's financial performance in 2024 demonstrated significant progress and a clear trajectory of growth. The company reported total revenue of $441.9 million for the full year 2024, a 21.5% increase from $363.7 million in 2023. This revenue growth was accompanied by a remarkable 492% increase in adjusted EBITDA, reaching $9.8 million in 2024 compared to $1.6 million in the prior year. This substantial improvement in adjusted EBITDA highlights the scalability of SunCar's business model as it expands its operations.

While the company reported a net loss of $68.66 million in 2024, this was primarily attributable to a one-time, non-cash share-based compensation expense of approximately $62.8 million related to the 2024 equity incentive plan. This expense, split between general and administrative and research and development, was a strategic move to retain and reward long-term employees critical to the company's growth and is not expected to recur in the near future. Excluding this one-time item, the underlying operational profitability shows a positive trend.

Looking ahead, SunCar has initiated full-year 2025 revenue guidance of $521 million to $539 million, reflecting a forecasted growth of 18% to 22%. This guidance is underpinned by continued strong momentum, with first-quarter 2025 revenue increasing 20% to $102.6 million compared to $85.6 million in the first quarter of 2024. Auto e-insurance revenue in Q1 2025 grew 37% to $45.9 million, driven by a higher volume of policies sold, while Technology Services revenue rose 41% to $10.7 million. The company anticipates continued strong growth in its insurance business as a key contributor to profitability, further leveraging AI and other technologies to optimize operations.

Competitive Positioning and Strategic Advantages

SunCar operates in a competitive landscape, but its specialized focus and technological prowess provide distinct advantages. While large conglomerates like Ping An Insurance Group (PNGAY), Alibaba Group (BABA), and Tencent Holdings (TCEHY) offer broader digital ecosystems and financial services, SunCar differentiates itself through its deep specialization in automotive-specific technology and nationwide coverage.

Ping An, a major financial services player, offers comprehensive insurance and tech-enabled services. However, SunCar's offerings in digital insurance intermediation and automotive after-sales are more specialized and tech-focused, particularly with its SaaS products for auto insurance. This allows SunCar greater agility in niche areas like new energy vehicle services. While Ping An's scale provides a broader customer base and stronger profitability, SunCar's targeted innovation can lead to faster integration for partners and potentially higher efficiency in specific automotive segments.

Against Alibaba and Tencent, which leverage massive user bases and diversified platforms, SunCar's unique value proposition lies in its dedicated focus on automotive SaaS. This specialization enables more precise tech execution and customized solutions for auto partners, potentially leading to faster processing for insurance renewals and enhanced customer loyalty. While these tech giants possess superior market reach and cash flow, SunCar's emphasis on niche market positioning and technology business growth allows it to carve out a significant presence, particularly in the rapidly evolving EV market.

SunCar's competitive advantages, or moats, include its proprietary cloud-based technology platform, which facilitates rapid insurance quoting and comprehensive auto services, and its extensive network of over 47,000 service providers across China. Unlike many regional competitors who rely on manual processes, SunCar's digital infrastructure enables superior efficiency and scalability. The company's EV-specific products are also highly differentiated, catering to the unique needs of this fast-growing market segment.

Risks and Future Initiatives

Despite its strong growth trajectory, SunCar faces inherent risks. Regulatory changes in China's dynamic financial and automotive sectors could impact its operations and profitability. Intense market competition from both established players and new entrants necessitates continuous innovation and strategic execution. While the company's business is 100% focused on China's domestic auto market, it monitors indirect effects such as potential supply chain disruptions for its partners due to international political factors. The economic pressures on the gas vehicle market, while creating demand for SunCar's solutions, could also strain its support and development resources.

Strategically, SunCar is not resting on its laurels. Beyond its core business, the company announced plans in September 2025 to invest up to $10 million in select Real-World Asset (RWA) cryptocurrencies. This move signals a new strategic direction, with SunCar researching its own strategy to integrate blockchain and RWA tokenization into its existing cloud-based digital insurance business model. The goal is to offer customers and partners more transparent and efficient transactions within an RWA tokenized blockchain. The RWA tokenization market is projected to reach $18.9 trillion by 2033, growing at a CAGR of 53% between 2025 and 2033, indicating a potentially transformative long-term opportunity.

Furthermore, SunCar plans for future international growth, primarily through strategic M&A opportunities, with the U.S. market identified as a top priority for initial expansion. The company believes its existing advanced automotive service cloud platform can be localized for the U.S. market, positioning it for broader global reach.

Conclusion

SunCar Technology Group stands at the forefront of China's automotive digital transformation, leveraging its deep technological investments and strategic partnerships to capture significant opportunities in the auto insurance and services markets. The company's impressive revenue growth and surging adjusted EBITDA in 2024, coupled with a positive outlook for 2025, underscore the effectiveness of its cloud-based, AI-powered platform and its ability to meet the evolving needs of both EV and ICE vehicle ecosystems.

SunCar's specialized technological differentiators, including its rapid quoting system and DeepSeek AI integration, provide a robust competitive advantage against larger, more diversified players. While the company remains vigilant regarding regulatory shifts and market competition, its strategic initiatives, including the exploration of RWA tokenization and international expansion, position it for sustained long-term growth. For discerning investors, SunCar represents a compelling opportunity to participate in the digitalization of the world's largest auto market, driven by a clear vision and a proven ability to execute.