China’s Pony AI Eyes Profitability With Robotaxi Growth
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Pony AI Inc.’s report on its first full quarter as a publicly traded company will have investors and analysts homing in on how a new generation of robotaxis could put the firm on a path to profitability.
The stock of the Guangzhou, China-headquartered company is up more than 30% from the November listing price of $13 per share, although the maker of self-driving software has yet to make a profit. Last year, Pony AI reported revenue of $75 million and a net loss of $274 million. Analysts expect the company to achieve breakeven on each new robotaxi added by 2026 and turn profitable in 2029.
Pony AI is part of a growing cohort of firms in the U.S. and China pushing the boundaries around the still-nascent self-driving technology. To raise more capital and grow its business, the company has also confidentially filed for a Hong Kong listing, Bloomberg reported last week citing people familiar with the situation.
“The market would like to get an update on Pony AI’s progress and targets in terms of scaling up its robotaxi fleet,” according to Joanna Chen, an auto analyst with Bloomberg Intelligence. Investors are also looking for “any additional regulatory scrutiny industrywide after some recent car accidents related to autonomous driving functions dominated news headlines in China.”
The stock surged to a record in February, turning founder and CEO James Peng into a billionaire, before tumbling more than 80% by late April. Some high-profile partnerships have since helped the stock soar more than 300% from last month’s low.
(Bloomberg)
One partner, Tencent Holdings Ltd., would make Pony AI’s robotaxi service available to qualifying users on the tech giant’s social media platform, WeChat. Pony AI also has a partnership with Uber Technologies Inc. to launch robotaxi services in the Middle East this year and recently gained a permit for autonomous vehicle testing in Luxembourg.
The world’s largest maker of lidar sensors used in driver assistance systems, Hesai Group, is another partner.
New technologies come with risks. A safety warning and tightened rules in China after a fatal crash could slow deployment while competition from emerging players like WeRide Inc. and Baidu Inc.’s Apollo Go, as well as industry leaders such as Waymo and Tesla Inc., is intensifying. The company’s robotruck business faces competitive pressures too.
AI adoption could also miss market expectations, according to Purdy Ho, an analyst at Huatai Securities. Still, he rates the stock a buy with a 12-month price target of $21 a share.
China’s warning relates to driver-assistance features rather than autonomous driving systems, a positive for Pony AI’s seventh-generation autonomous driving system and robotaxi lineup with Toyota Motor Corp., BAIC Motor Corp. and GAC Motor Co. that allows the company to achieve a 70% reduction in bill-of-materials costs, he said. Mass production and fleet operations are expected in the second half of this year.
“We project that by 2030, Pony AI’s robotaxi service could achieve a 12% penetration in China’s first-tier city ride-hailing market,” generating around $3.4 billion in revenue, Ho wrote in an April note.
Investors are also focused on new technologies that could allow Pony AI to develop cheaper and safer software. Hesai’s lidar long-range sensor that can detect cars and pedestrians up to 200 meters away will be a critical feature for Pony AI’s autonomous driving, where a vehicle can handle complex urban situations without requiring constant human intervention.
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