Pony.ai's 2024 Results Highlight Autonomous Driving's Commercialization Challenges

Pony.ai, known as the "first publicly-traded Robotaxi company," has released its financial results for Q4 and the full year of 2024. According to the public financial report, Pony.ai's annual revenue reached $75 million in 2024, a 4.3% increase compared to the previous year. However, concerns have emerged as net losses significantly climbed to $275 million, expanding by 120% compared to the previous year.

source: Pony.ai

Pony.ai's Business Portfolio

Pony.ai's business structure primarily encompasses three major segments: Robotaxi (autonomous ride-hailing), Robotruck (autonomous freight transport), and technology licensing and application services. Robotaxi has long been considered Pony.ai's core business, with co-founder and CEO James Peng explicitly outlining a strategic approach prioritizing "Robotaxi business, Chinese market, and first-tier cities." However, this segment generated only $7.3 million in revenue for the full year 2024, accounting for less than 10% of total revenue and showing a 5.3% decline.

Currently, Pony.ai's primary revenue source is its Robotruck business. In 2024, this segment generated $40.4 million in revenue, representing a 61.3% year-over-year increase and accounting for 53.87% of total revenue. This growth stems from the successful expansion of autonomous truck fleets into new regions. Beyond Robotruck, technology licensing and application services constitute another significant revenue segment. In 2024, this business generated $27.3 million, representing 36.4% of total revenue, though it experienced a 30.1% year-over-year decline. The company attributed this decrease primarily to timing factors in project-based revenue recognition. This segment primarily provides intelligent solutions, value-added technical services, and vehicle-to-everything (V2X) products and services to OEMs.

source: Pony.ai

Path to Profitability Requires Time and Scale

Despite Pony.ai's substantial investment and strategic focus on its Robotaxi business, the revenue breakdown indicates a long road ahead to achieve profitability. As revenue has grown, costs have simultaneously increased substantially.

In 2024, Pony.ai's operating expenses surged to $296.9 million, an 85.4% year-over-year increase. Research and development expenses reached $240.2 million, up 95.7% year-over-year, while sales, general, and administrative expenses totaled $56.7 million, increasing by 51.7%. The R&D expense growth was primarily related to share-based compensation expenses associated with performance conditions granted to employees in connection with the company's IPO, along with increased R&D investments in Q4 2024 aimed at supporting the development of seventh-generation autonomous driving systems with OEM partners. These escalating costs have exacerbated Pony.ai's annual losses, making effective cost control a significant future challenge.

How Much Potential Remains in Autonomous Driving?

Frost & Sullivan forecasts that China's autonomous taxi service market will reach $39 billion by 2030 and $179.4 billion by 2035. However, publicly-listed autonomous driving companies currently face widespread profitability challenges, and Pony.ai is no exception. With continuously declining gross margins, Pony.ai's most urgent priority remains accelerating its commercialization process.

Pony.ai co-founder and CEO James Peng stated that the company maintains its strategy prioritizing "Robotaxi business, Chinese market, and first-tier cities." Throughout 2024, Pony.ai has continuously expanded its autonomous driving services in China's first-tier cities including Beijing, Shanghai, Guangzhou, and Shenzhen, building robust operational capabilities while pursuing additional market opportunities globally. Since its IPO in Q4, Pony.ai has expanded its paid Robotaxi services to cover urban areas and major airports and train stations in key cities like Beijing, Guangzhou, and Shenzhen, becoming the first to achieve integrated autonomous operations across urban roads, highways, and beltways. The company is also the first to obtain comprehensive regulatory permits for fully driverless Robotaxi operations across all four of China's first-tier cities.

source: Pony.ai

As one of the frequently compared alternatives, Deeproute.ai (referred to as "Luobo Kuaipao" in Chinese) has gained increased spotlight. On November 29, 2024, Deeproute.ai received Hong Kong's first autonomous vehicle pilot license—the only Robotaxi permit in Hong Kong—and simultaneously began road testing. This marks Deeproute.ai's first autonomous driving test license in a right-hand drive, left-side traffic region. Following breakthroughs in complex Chinese routes, Deeproute.ai has also attracted attention from Dubai's Crown Prince. The Wall Street Journal reported that Deeproute.ai is strengthening its business teams in Middle Eastern cities such as Dubai, Abu Dhabi, and Riyadh, as well as in Southeast Asia.

While China's tech community has predominantly focused on AI developments, the autonomous driving sector has yet to produce a true industry-disrupting leader.