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China's robotaxi firms should expect falling costs and major cities opening as much as their fleets next yr, based on the chief executive of the most recent startup in search of more funding for its autonomous driving ambitions.
James Peng, CEO and founding father of Guangzhou-based Pony.ai, said the corporate plans to expand its robotaxi fleet from about 250 to a minimum of 1,000 vehicles by 2025, with lower production costs and bigger service areas within the so-called first-tier cities of Beijing, Guangzhou, Shanghai and Shenzhen.
“Technological advances will allow us to cut back production costs again and again over,” Peng said in an interview with the Financial Times, adding that front-tier cities will “soon” be significantly, if not completely, opened to driverless taxis would.
The founder said this might mean Pony.ai reports positive margin for its robotaxi business as early as next yr.
However, investors are unconvinced concerning the sector's prospects as the corporate and its peers are all loss-making. In late November, Pony.ai joined a lot of self-driving startups that went public this yr. The company raised $452 million in a Nasdaq offering and personal placements, but its shares fell nearly 8 percent of their New York debut.
The lackluster performance highlights market skepticism about whether the industry can grow to be commercially viable given fierce competition, an uncertain political outlook, high research and development spending and low short-term revenues. In the US, General Motors this month abandoned development of its cruise robotaxi business.
The Nasdaq IPO valued Pony.ai at $5.25 billion, nearly 40 percent lower than its $8.5 billion valuation two years ago. Local rivals WeRide and Horizon Robotics saw their valuations fall by 22 and 23 percent, respectively, from previous funding rounds after they sold shares in October.
Pony.ai's driverless taxi services in China's top cities have been slow to take off as a consequence of the small fleet and limited operational areas, covering only a handful of districts. “We don’t have enough users because we don’t have enough robotaxis on the road,” Peng said.
The company derives greater than two-thirds of its revenue – or $27.4 million from $39.5 million in the primary nine months of this yr – from providing driverless truck services, but Peng said that That could soon change, because the startup is partnering with two Chinese state-owned automakers to mass-produce “hundreds of” robotaxis yearly.
The initiative will allow Pony.ai to cut back production costs to lower than 300,000 RMB (US$41,000) per automobile through economies of scale, Peng said. According to people near the corporate, the corporate is currently spending greater than 500,000 RMB to provide a driverless taxi.
Meanwhile, Peng expects that Beijing will allow driverless taxis in all suburban districts in the subsequent two years and that Guangzhou, a industrial hub, will develop many of the city in the identical period.
Its chief technology officer, Lou Tiancheng, said Pony.ai doesn't plan to focus on the lower end of the market, where margins are tighter and demand is stronger, but slightly the goal is to draw customers “who’re ready for one.” higher experience at the next price”. “.
“Your first two orders (with us) could also be low-cost,” he said. “This is not going to be the case along with your future orders.”
Lou added that the corporate could “make a whole lot of money” if its robotaxi fleet grows to 10,000, an “achievable” goal that represents only “a really small percentage” of Chinese taxi fleets of all kinds.
However, analysts are usually not convinced. Tu Le, founding father of Sino Auto Insights, a Detroit-based consulting firm, said he was “impressed” with Pony.ai's robotaxi after driving it this yr, but wasn't sure how it could perform in a market with ” “immense competition” can stand out from the group. The company lagged behind more established competitors in every part from capital to fleet size and price control.
“We still don’t know what the key is that makes Pony higher than everyone else,” Le said.
Regulatory uncertainty could pose one other hurdle to Pony.ai's expansion. While major cities embrace the technology, smaller cities are more cautious. Lou said his company wouldn't consider entering certain cities even after it unveiled policies promoting self-driving.
“We would really like to enter a market with very strong government support,” he said.
Chief Executive Peng insisted the corporate operates in a field where there are “not many” competitors. He said he wasn't concerned about Tesla's plan to expand into the robotaxis space because the electrical vehicle giant hasn't “invested within the sector long enough.”
He added that Tesla may face “challenges” in getting regulatory approval to launch its unique semi-autonomous driving service in China.
“It could be thing if we let (the ride service) in,” he said. “It’s higher to have competition.”
