Pony.ai’s Nasdaq debut raises the stakes in China’s robotaxi race

This year, China’s autonomous driving industry has been abuzz with IPOs, with companies from various segments of the supply chain making their public market debuts. Among these, robotaxis—powered by Level 4 autonomous driving technology—are often considered the pinnacle of innovation, earning the moniker “crown jewel” of the industry.

Pony.ai, often compared to Waymo for its pioneering role in the robotaxi sector, recently went public, marking a significant moment in this IPO spree. The listing has ignited speculation that the robotaxi competition is entering a critical phase.

On November 27, Pony.ai made its Nasdaq debut, notching the largest IPO in the autonomous driving space on the U.S. stock market this year. The IPO drew intense investor attention, with subscription demand so high that the company delayed pricing to accommodate interest.

This milestone capped an eight-year journey for Pony.ai, reflecting the twists and turns of the autonomous driving industry—an ecosystem shaped by technological breakthroughs, fluctuating market dynamics, and shifting investor priorities. Once enamored by futuristic technology concepts, capital markets now zero in on commercial viability.

From the outset, Pony.ai emulated Waymo, adopting similar strategies and technological approaches. Notably, it bypassed Level 3 autonomous driving to focus exclusively on Level 4 technology and selected light detection and ranging (LiDAR) as the foundation of its approach.

Pony.ai’s business spans three core areas:

Currently, robotrucks stand as Pony.ai’s largest revenue driver. In the first three quarters of 2024, the segment brought in USD 27.4 million, accounting for 69% of total revenue.

The robotaxi segment—widely seen as Pony.ai’s most ambitious pursuit—has yet to dominate its earnings. Its revenue contributions for 2022, 2023, and the first three quarters of 2024 were 13.1%, 10.7%, and 11.9%, respectively. Yet, Pony.ai continues to lead in pilot operations, underscoring its long-term commitment to commercializing autonomous ride-hailing services.

Well before Baidu’s Apollo Go grabbed headlines in Wuhan this year, Pony.ai had already completed pilot runs in Beijing, Guangzhou, and other cities. Since launching China’s first autonomous ride-hailing service in 2018, the company has expanded operations from its home base in Guangzhou to other major hubs. It now holds permits to offer driverless ride-hailing services in Beijing, Shanghai, Guangzhou, and Shenzhen. According to Pony.ai’s IPO filing, its robotaxi business recorded USD 4.7 million in revenue during the first three quarters of 2024—a 422.2% year-over-year increase.

Looking ahead, Pony.ai has partnered with Toyota and BAIC to mass produce robotaxi vehicles, with plans to roll out thousands of units over the next two years. The company anticipates achieving per-vehicle profitability by 2025, marking a key shift toward self-sustained growth.

Meanwhile, Waymo One, Waymo’s autonomous ride-hailing service, has set a benchmark. In August 2024, its daily average ride volume in San Francisco reached approximately 8,823 rides, surpassing the 5,784 rides completed by traditional taxis—a clear indication that autonomous taxis are beginning to outperform conventional services.

Waymo’s achievements fuel growing confidence in the commercial viability of autonomous mobility. Its journey began with Google’s autonomous vehicle project in 2009. By 2016, Waymo conducted its first fully autonomous driving test in Phoenix, Arizona, becoming a standalone Alphabet subsidiary later that year. Two years on, Waymo launched the world’s first commercial autonomous ride-hailing service, taking another leap in 2020 when it began offering fully driverless rides to the public. Today, Waymo operates across San Francisco, Phoenix, and Los Angeles, with expansion plans targeting Miami by 2026.

Pony.ai’s IPO carries notable symbolic weight in this context. However, the Chinese market presents distinct challenges: complex road conditions, dense urban landscapes, and an earlier wave of competition compared to global markets.

The commercialization of autonomous driving began in 2018 with Waymo leading the charge. Six years later, while Level 4 autonomous driving has yet to see widespread adoption, the competition in China’s robotaxi market is heating up.

Currently, three key players dominate the landscape: Baidu’s Apollo Go, Pony.ai, and WeRide. Beyond these frontrunners, AutoX, Xpeng, Geely, and OnTime are also advancing their robotaxi initiatives, but at varying levels of scale and maturity.

While Apollo Go, Pony.ai, and WeRide share overlapping business strategies, each has carved out a distinct focus:

In terms of scale and commercialization, only Apollo Go and Pony.ai have achieved significant operational footprints. According to its IPO filing, Pony.ai operates over 250 robotaxi vehicles, with each vehicle completing an average of 15 orders per day. Meanwhile, a report from Huajin Securities indicates that Apollo Go has launched nearly 1,000 robotaxi vehicles across China, with its daily order volume in Wuhan now on par with local traditional taxis.

However, the two companies differ significantly in their market expansion and resource allocation strategies:

On the international front, Pony.ai has extended its autonomous driving business to regions such as South Korea, Luxembourg, Saudi Arabia, and the UAE. Apollo Go, meanwhile, took its first step abroad last month by securing an autonomous driving license in Hong Kong.

China’s robotaxi landscape remains fluid, with competition only starting to intensify. Autonomous driving companies are now adapting to new market paradigms in secondary markets.

A seasoned investor told 36Kr that the stock performance of companies like Pony.ai, which are listed in the US, will hinge on the trajectories of Tesla and Waymo. Since Donald Trump’s reelection, Tesla’s valuation logic has shifted, indirectly benefiting autonomous driving stocks.

Tesla’s market valuation is increasingly tethered to its advancements in autonomous driving technology. Following Trump’s victory, Tesla’s stock price surged nearly 70%, fueled by investor bets that the administration will loosen regulations on autonomous vehicles. Tesla’s recent rollout of its “Full Self-Driving” (FSD V13.2) software further bolstered confidence, with initial deliveries already underway.

Dan Ives, an analyst at Wedbush Securities, predicts that Tesla’s artificial intelligence and autonomous driving segments could add USD 1 trillion to the company’s market value.

The intensifying competition has also led to industry casualties. Since the collapse of Argo AI, companies such as Ghost Autonomy and Embark have shuttered operations. Most recently, General Motors’ Cruise division announced its withdrawal from the robotaxi market.

“Given the considerable time and expense required to scale a robotaxi business in an increasingly competitive market, combining forces would be more efficient and therefore consistent with our capital allocation priorities,” said Mary Barra, CEO of General Motors, during a call announcing Cruise’s withdrawal.

KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Geng Chenfei for 36Kr.