Source: ByteSource

On June 27, foreign media reported that Uber is in preliminary talks with its founder, Travis Kalanick, about investing in and acquiring Pony.ai's US subsidiary. Currently, these discussions are at an early stage, and specific financial details, as well as Uber's role in Pony.ai's US operations, remain unclear.

This move marks Uber's latest push in its aggressive expansion into autonomous driving, following global strategic partnerships with companies like Pony.ai and WeRide to swiftly establish a Robotaxi service network encompassing the Middle East and international markets.

Meanwhile, Tesla is grappling with declining sales and profits in the new energy vehicle market. Deliveries in the first quarter of 2025 plunged 13% year-on-year, with vehicle sales gross profit margins at just 11.3%, and carbon emission credit income accounting for 141.7% of net profit. The highly anticipated internal testing of its Robotaxi service has sparked safety concerns due to technical failures, hampering the commercialization process. Xiaomi's YU7, with its "high configuration at a low price" strategy, directly targets Tesla's Model Y, further intensifying industry competition.

By adopting an open strategy that does not restrict itself to a single technology route, Uber has already collaborated with Chinese companies like Pony.ai to deploy a fleet of 500 vehicles, using the Middle East as a launching pad, while Tesla's Robotaxi is still in internal testing. Uber plans to expand to 15 international cities within five years.

This strategic layout, which avoids direct competition with Tesla, is seen as a precise targeting of Tesla's autonomous driving commercialization process, raising further doubts about the autonomous driving bubble in the latter's trillion-dollar valuation.

01

The 'Distant Water' of Autonomous Driving

Musk has high hopes for Tesla's investment and layout in autonomous driving, viewing it as the key to unlocking the 'trillion-dollar mobility market.' However, based on current market performance and financial report data, this 'distant water' does not seem to immediately address Tesla's current sales decline and profitability issues.

According to financial reports, Tesla's core business, particularly vehicle sales, is facing significant challenges. In 2024, Tesla's deliveries declined by 1.1% year-on-year, and in the first quarter of 2025, they fell by 13% year-on-year. In major markets such as China, Germany, and the UK, Tesla's sales have plummeted, with drops of 6% in China, 46% in Germany, and 62% in the UK in April 2025. The root cause of this sales slowdown lies in waning innovation capabilities, with delayed iterations of popular models like the Model 3/Y leading to consumer fatigue. Additionally, Tesla's promised more affordable model, the Model 2/Q, has been delayed.

Amidst this backdrop, Tesla's profitability has also suffered. In the first quarter of 2025, Tesla's gross profit margin on vehicle sales was only 11.3%, and excluding FSD (Full Self-Driving) subscription revenue, the actual gross profit margin drops to as low as 9.5%.

In stark contrast, BYD's gross profit margin on automobile sales reached 22.3% in 2024, surpassing Tesla by 9.1 percentage points. In the first quarter of 2025, Tesla once again became reliant on carbon emission credit income, which accounted for 141.7% of net profit, highlighting the weakness of its core business profitability.

Musk's launch of the Robotaxi internal testing on June 22 was seen as Tesla's "last card" under sales and profit pressures. However, the internal testing process has been plagued by issues, including entering the wrong lane and sudden braking. Although the safety driver intervened in time to prevent accidents, it has raised doubts about the near-term commercialization of Robotaxi.

As the core of Tesla's autonomous driving business, the growth of FSD subscription revenue has fallen far short of expectations. In 2024, Tesla recognized less than $1.2 billion in FSD revenue, failing to cover its $4.54 billion in R&D expenses (assuming 30% is allocated to intelligent driving).

Despite Tesla's ownership of nearly 4 million vehicles, the slow conversion rate and revenue growth of FSD have raised significant concerns about the bubble in the part of its trillion-dollar valuation supported by FSD. With Tesla's core business weakening and innovation capabilities declining, the slow commercialization of the autonomous driving business makes it unable to effectively boost performance in the short term.

02

Aggressive Xiaomi

For Tesla's narrative on new energy vehicles, Xiaomi's recent strong performance in the automotive sector has become a new variable disrupting the established narrative logic, particularly with the launch of its first SUV model, the YU7, which has made it more difficult for Tesla to increase sales recently, giving Uber an opportunity to target Tesla's autonomous driving business.

Screenshot from Xiaomi Auto website

On June 26, Xiaomi's YU7 was officially launched with a starting price of RMB 253,500, RMB 10,000 cheaper than the Model Y. Leveraging a strategy of "high configuration at a low price" and a marketing approach emphasizing detailed experience and emotional value, YU7 surpassed 200,000 bookings within just 3 minutes of opening for reservations, surging to 289,000 within an hour and locking in 240,000 orders within 18 hours. This order volume is equivalent to the cumulative sales of Xiaomi's SU7 in 13 months since its launch and half of Tesla Model Y's sales in China last year. The popularity of YU7 has not only sparked a gray market for order resales but has also quickly impacted sales terminals, leading to a decrease in customer traffic at some new energy vehicle brand stores.

The success of Xiaomi's YU7 directly challenges Tesla's Model Y, especially in the Chinese market, where Model Y's "good days" may already be over. As Tesla's sales pillar, Model Y's appeal is weakening, with an average delivery volume of only 25,000 units in the first five months of 2025, a year-on-year plunge of 73.6%. The emergence of Xiaomi's YU7 means that in the mid-to-high-end pure electric SUV market priced between RMB 250,000 and RMB 350,000, Model Y has encountered a highly threatening competitor.

The impact of Xiaomi's YU7 has also affected other new energy vehicle brands, with stock prices of Xpeng, NIO, Li Auto, and Zero Running falling by 3-7% respectively. This indicates that the popularity of YU7 is not an isolated incident but has profoundly impacted the entire pure electric SUV market segment priced between RMB 250,000 and RMB 350,000. Competitors such as Zeekr R7 have also quickly responded by offering limited-time subsidies to counter Xiaomi's offensive.

For Xiaomi, the biggest challenge currently lies in production capacity. Despite the astonishing number of YU7 orders, the delivery cycle is relatively long, with the standard version requiring a minimum of 53-56 weeks for delivery after order confirmation, and the Max version requiring 33-36 weeks. This could potentially repeat the mistake of SU7's initial phase, where excessively long delivery cycles led to some users canceling their orders.

However, Xiaomi Auto continues to increase its capacity construction, with each phase of the Beijing Yizhuang factory having an annual capacity of 150,000 units. The second-phase factory is expected to commence production as early as July, and plans for a third-phase project are underway, demonstrating its determination to accelerate expansion.

The success of Xiaomi's automotive business has not only enhanced Xiaomi's brand image but also boosted mobile phone sales. Although Xiaomi Auto is still incurring losses, Lei Jun expects it to achieve profitability in the second half of this year. The popularity of Xiaomi's YU7 is not only due to the product itself but also because it has won the favor of users through a combination of "technology + emotional resonance + ecological value," posing a new challenge to the premiumization strategies of traditional automakers.

03

Precise Targeting

Uber's capital operation with Pony.ai is not an isolated incident. A systematic review of Uber's series of layouts in the autonomous driving field undoubtedly reveals a precise targeting strategy.

Screenshot from Pony.ai website

Long before this disclosed transaction, Pony.ai and Uber had close interactions. On May 6, Pony.ai and Uber announced a global strategic partnership. According to the cooperation agreement, Pony.ai's Robotaxi services and fleet will be integrated into the Uber platform in the second half of 2025, starting in the Middle East market and gradually expanding to more international markets. This means that Uber riders will be able to book autonomous driving services provided by Pony.ai's Robotaxi through the Uber app.

Almost simultaneously, Uber invested an additional $100 million in equity in WeRide, enabling WeRide to commence trial operations of fully driverless Robotaxis in Abu Dhabi, creating the first fleet of fully driverless Robotaxis in the Middle East. Subsequently, in June, WeRide announced a strategic partnership with the global mobility platform Uber and the Dubai Roads and Transport Authority (RTA), with plans to launch Dubai's first commercial Robotaxi services through the Uber platform within 2025.

Since Uber does not tie itself to a single technology route, it achieves synergistic operation of different solutions through order management, pricing mechanisms, and consistent user experience, thereby associating with any mainstream autonomous driving technology as much as possible.

Regarding its layout in autonomous driving, Uber has been active in the past two to three months. In addition to Pony.ai and WeRide, it has also announced cooperation agreements with autonomous driving technology companies May Mobility and Momenta.

Under these circumstances, Tesla's pilot launch of Robotaxi in Austin will pit it against Uber in direct competition. Both parties are vying for users in the same city: Tesla's initial pricing is $4.2 per ride, slightly higher than Uber's human driver services but lower than Waymo's premium positioning. Uber CEO Dara Khosrowshahi has clearly stated that Tesla is a "rival to be wary of," especially as its low-cost model could disrupt the existing market structure.

Tesla plans to expand Robotaxi to California by the end of 2025 and enter Europe in 2026, with the Cybercab model reducing the cost per vehicle to below $30,000. In contrast, Uber has collaborated with Chinese companies such as WeRide and Pony.ai, using the Middle East as a springboard (e.g., Dubai, Abu Dhabi) to rapidly deploy services. With a Robotaxi fleet of 500 vehicles in 2025, Uber plans to add 15 international cities in the next five years. This "rural surrounding cities" strategy aims to circumvent Tesla's first-mover advantage in the European and American markets.

In other words, while Tesla's Robotaxi is still in the internal testing phase and faces numerous technical and commercialization challenges, Uber has already paved a broader path for the commercialization of autonomous driving services globally through a series of collaborations and capital operations.

This precise targeting is bound to reduce the market's imagination for Tesla's autonomous driving business and amplify the negative impact of declining vehicle sales.