# Long automotive cycles create a high barrier to entry

Markdown copy of https://realalpha.app/s/long-automotive-cycles-create-a-high-barrier-to-entry/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [Kai Yu](https://realalpha.app/people/kai-yu/) · Kai Yu is founder and CEO of Horizon Robotics.
- Host: [Nicolai Tangen](https://realalpha.app/people/nicolai-tangen/) · CEO, Norges Bank Investment Management
- Show: In Good Company with Nicolai Tangen
- Episode: [Horizon Robotics CEO: Car Chips, Mind-Off Driving and China's Speed | Podcast | In Good Company](https://realalpha.app/v/mRzItLhpXFU/), Sep 30, 2026
- Moment: 11:47 to 14:30 of the episode (3 min), playing on https://realalpha.app/s/long-automotive-cycles-create-a-high-barrier-to-entry/; the episode from there: https://realalpha.app/v/mRzItLhpXFU/?t=707

## Quote

> “But in my view, sometimes **terrible business means great business** because that's an entry barrier for all the other newcomers”
> — [Kai Yu](https://realalpha.app/people/kai-yu/) at [13:52](https://realalpha.app/v/mRzItLhpXFU/?t=832) · In Good Company with Nicolai Tangen

## Takeaways

1. A new chip project can take three to four years to prepare.
2. Car-platform production cycles can add another two to five years.
3. High investment and slow returns deter newcomers.

## About this segment

Kai Yu explains why automotive chips take years to develop, qualify and reach production. The slow, capital-intensive cycle discourages new rivals and can make the market attractive to established suppliers.

From “Horizon Robotics CEO: Car Chips, Mind-Off Driving and China's Speed | Podcast | In Good Company”, Sep 30, 2026. [Watch the full episode](https://realalpha.app/v/mRzItLhpXFU/)

## Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

[11:56](https://realalpha.app/v/mRzItLhpXFU/?t=716) But luckily, if you look at our business, I mean. Fundamentally, compared to like those car makers, we are not so crowded, right? And if you look at China, I think pretty much the three top players for the automotive computing, I think, namely nowadays, I think really consolidated to NVIDIA, Huawei, and Horizon Robotics. Not very crowded, yeah. Partially because we choose the position where this business is having extremely high entry barrier.

[12:33](https://realalpha.app/v/mRzItLhpXFU/?t=753) You know, it's not like, okay, a bunch of guys having VC funding and then easily getting into the business because this is automotive. Automotive means mission critical and it has to have the highest standard for the quality, for the safety. You know, and let's say we are doing this chip design for automotive, right? It's not like a consumer type of silicon. And it has to go through all the very regulars and the tough qualification and testing process.

[13:10](https://realalpha.app/v/mRzItLhpXFU/?t=790) So normally, if we initiate a new project, a new generation of product, so it will take three to four years to get the product, the chip, and the solution ready for car makers. And then, if lucky enough, we won a new nomination from one car maker. And then we need to also go through the cycle of the production for the car platforms. And that's going to be another three to five years. In China, two years, right?

[13:41](https://realalpha.app/v/mRzItLhpXFU/?t=821) For global OEMs, they are slower than typically five years. So then think about, It's going to be at least from five years to eight years for the cycle. So in some sense, this is terrible business, you know, heavy investment, very slow return. But in my view, sometimes terrible business means great business because that's an entry barrier for all the other newcomers is extremely high. And then I think a good business is something, well, you can sleep well all night.

[14:21](https://realalpha.app/v/mRzItLhpXFU/?t=861) And that's my opinion.