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On March 25, Pony.ai, heralded as the "first Robotaxi company," unveiled its financial report for the fourth quarter and full year 2024, offering a glimpse into both its business performance and the challenges facing the autonomous driving industry.

According to the publicly released financial report, Pony.ai's revenue for 2024 totaled US$75 million, marking a 4.3% year-over-year increase. However, its net loss also surged significantly, reaching US$275 million, a 120% jump from the previous year.

From 2022 to 2023, Pony.ai's net losses amounted to US$148 million and US$125 million, respectively, summing up to US$548 million over three years. Concurrently, the company's gross margin has been on a decline, plummeting from 46.9% in 2022 to 15.2% in 2024. With major automakers intensifying their efforts in intelligent driving, the window of opportunity for Pony.ai to showcase its narrative is rapidly narrowing.

01

Pony.ai's Business Overview

Pony.ai's business structure primarily comprises three segments: Robotaxi (autonomous taxi services), Robotruck (autonomous freight services), and technology licensing and application services. For a considerable time, Robotaxi was regarded as Pony.ai's core business, with co-founder and CEO Peng Jun explicitly stating the strategic approach of "Robotaxi business first, Chinese market first, tier-one cities first." However, in 2024, Robotaxi revenue was only US$7.3 million, accounting for less than 10% of total revenue and declining by 5.3% year-over-year.

Currently, Pony.ai's primary revenue driver is its Robotruck business. In 2024, this segment generated US$40.4 million in revenue, a year-over-year increase of 61.3%, representing 53.87% of total revenue. This growth is attributed to the successful expansion of the autonomous truck fleet into new regions.

According to the prospectus, the company operates an autonomous truck fleet of over 190 vehicles, including both independently operated trucks and those operated in partnership with Sinotrans. The fleet provides hub-to-hub long-haul freight services across China, with cumulative freight mileage exceeding 767 million ton-kilometers. Additionally, Pony.ai has collaborated with Sany Group to jointly develop Level 4 autonomous trucks.

Apart from the Robotruck business, technology licensing and application services also contribute significantly to revenue. In 2024, this segment generated US$27.3 million in revenue, accounting for 36.4% of total revenue but declining by 30.1% year-over-year. The company attributes this primarily to the timing of project-based revenue recognition. This business primarily involves providing OEMs with intelligent solutions, technology value-added services, and V2X products and services.

02

Profitability Requires Time and Incremental Progress

Despite Pony.ai's significant investment and strategic emphasis on the Robotaxi business, achieving profitability still has a long way to go based on revenue share. On the one hand, as the company's revenue grows, costs are also escalating substantially.

In 2024, Pony.ai's operating expenses soared to US$296.9 million, a year-over-year increase of 85.4%; research and development expenses reached US$240.2 million, a year-over-year increase of 95.7%; and selling, general, and administrative expenses were US$56.7 million, a year-over-year increase of 51.7%. The growth in R&D expenses is primarily linked to share-based compensation expenses associated with performance-based stock awards granted to employees in connection with the initial public offering, as well as increased R&D investment in the fourth quarter of 2024 to support OEM partners in the development of the seventh-generation autonomous driving system model.

High costs have exacerbated Pony.ai's losses year after year. However, as of December 31, 2024, the company still had substantial financial reserves, with cash and cash equivalents of US$536 million, short-term investments of US$209 million, and long-term investments of US$131 million, providing financial support for its continued investment in R&D.

But for Pony.ai, which considers Robotaxi as its core business, effectively controlling costs in the future is a major challenge.

According to Frost & Sullivan's analysis, Robotaxi costs primarily encompass single-vehicle product costs, maintenance costs, safety redundancy costs, and platform operating costs. Currently, the investment in single-vehicle products has dropped to around US$300,000, and costs have been significantly reduced over the past five years. However, to achieve mass production, it is still necessary to further reduce the costs of high-precision sensors and artificial intelligence algorithms. Based on current industry data, the annual revenue of a Robotaxi is approximately US$6,000, which is insufficient to cover annual maintenance, redundancy, and operating costs, let alone compensate for the single-vehicle product cost gap. Therefore, expanding service coverage and increasing revenue have become crucial for achieving profitability.

In 2024, Pony.ai's cost of revenue was US$63.6 million, a year-over-year increase of 15.6%. The prospectus indicates that the cost of revenue includes fleet operating expenses, employee compensation, and direct operating and material costs. In the first half of 2024, fleet operating expenses amounted to US$15.746 million, accounting for 71.1% of the cost of revenue, primarily involving toll fees, fuel costs, third-party transportation fees, and other expenses related to the operation and maintenance of the company's own robot taxi and robot truck fleets.

03

Unveiling the Hidden Potential of Autonomous Driving

Frost & Sullivan predicts that the market size of autonomous taxi services in China will reach US$39 billion by 2030 and US$179.4 billion by 2035. However, listed autonomous driving companies generally face losses, and Pony.ai is no exception. With gross margins continuing to decline, Pony.ai's top priority remains accelerating its commercialization process.

Pony.ai's co-founder and CEO Peng Jun stated that the company adheres to the business strategy of "Robotaxi business first, Chinese market first, tier-one cities first." In 2024, Pony.ai continuously expanded the deployment of autonomous driving services in China's tier-one cities of Beijing, Shanghai, Guangzhou, and Shenzhen, establishing robust operational capabilities and striving for more market opportunities in the global arena.

Since its listing in the fourth quarter, Pony.ai has extended its Robotaxi paid services to urban areas and key airports and railway stations in major cities such as Beijing, Guangzhou, and Shenzhen, pioneering integrated autonomous driving operations across urban roads, highways, and ring roads. The company is also the first to obtain full-category regulatory approval for fully driverless Robotaxi services in all four tier-one cities.

In the commercial vehicle Robotruck segment, Pony.ai launched the country's first unmanned truck platoon follow-g test and freight service across provinces on the Beijing-Tianjin-Tanggu Expressway in January this year, which has proven effective thus far. Let's allow Robotaxi to run for a while longer.

It is noteworthy that on the same day Pony.ai released its financial report, Singapore's Deputy Prime Minister Heng Swee Keat visited Baidu. In the afternoon, he met with Robin Li at Apollo Park in Yizhuang and immediately remarked, "Very good, this is the future! Welcome RoboTaxi to Singapore." As one of the solutions that has always been compared, RoboTaxi's future is garnering increased attention.

On November 29, 2024, Baidu's RoboTaxi service obtained Hong Kong's first pilot license for autonomous vehicles, the only Robotaxi license in Hong Kong, and simultaneously commenced road testing. This is the first autonomous driving test license obtained by RoboTaxi in a right-hand drive, left-side driving region. After making breakthroughs in complex routes in China, RoboTaxi has also attracted the attention of the Crown Prince of Dubai. According to a Wall Street Journal report, RoboTaxi is strengthening its business team in Middle Eastern cities such as Dubai, Abu Dhabi, and Riyadh, as well as in Southeast Asia.

While domestic tech circles are paying greater attention to AI, the autonomous driving field has yet to produce a leader capable of disrupting the industry.

Reference materials:

The Paper: Pony.ai's revenue increased by 4% last year, and three seventh-generation Robotaxi cooperative models will be launched

Data source: Prospectus/Financial report

Image source: Network and official website