Toyota-backed autonomous automobile firm Pony AI has joined the checklist of Chinese language companies going public on the U.S. inventory market after a multi-year ban from Beijing on offshore capital elevating.
Zeekr, a luxurious Chinese language electrical automobile startup, debuted on the New York Inventory Change in Could, and WeRide, one other AV startup, additionally hopes to file an IPO within the U.S. this yr at a $5 billion valuation, however its plans have been delayed as of August.
Pony was valued at $8.5 billion when it raised capital in 2022. Toyota participated in that spherical as a follow-on investor after injecting the startup with $400 million in 2020, per PitchBook information. The Japanese automaker’s stake in Pony is at 13.4%. The Chinese language AV startup has since secured $100 million from Saudi Arabia’s NEOM in 2023, and $27 million from Chinese language VC GAC Capital in October.
However the submitting to go public reveals that Pony’s board of administrators not too long ago slashed the minimal valuation for its IPO all the way down to $4 billion. Pony additionally dropped its minimal goal for what it desires to boost within the transaction from $425 million to only $200 million.
That’s not all that stood out in Pony’s IPO submitting, although, so listed below are our prime 4 takeaways.
Modest fleet and operations
IPO filings are chock stuffed with numbers that had been both beforehand obscure or missing context, and Pony’s isn’t any exception.
The corporate says it operates a fleet of 190 “robotrucks” in Beijing and Guangzhou, and over 250 robotaxis in Beijing, Guangzhou, Shenzhen, and Shanghai. It might cost for robotaxi fares within the first three cities, and is absolutely driverless in Guangzhou and Shenzhen.
On the robotaxi aspect, Pony says it receives a mean of 15 every day orders per robotaxi from the 220,000 registered customers on the PonyPilot app. Total it says it has accrued greater than 20 million “autonomous driving miles,” although simply 2.4 million of these had no human driver behind the wheel.
Pony enhances its robotaxi service with a rising robotruck enterprise. It says it has already acquired 57 company clients – accounting for 73% of whole income within the first half of this yr. However the majority of that cash is coming from Pony’s prime three clients, who generated 62.8% of whole revenues throughout the identical interval.
Income up and to the fitting?
It’s no secret autonomous automobiles are a dear enterprise. And whereas Pony says it generated gross earnings of $32 million and $17 million in 2022 and 2023, respectively, the corporate misplaced greater than $270 million over these years.
An enormous driver of these losses has been Pony’s R&D spend. Comprehensible, provided that Pony is an organization growing pioneer know-how, involving an especially sensor-heavy autonomous stack. However we surprise when Pony goes to actually prioritize operations over R&D. As of June 30, the startup’s workforce of round 1,300 workers is 44% R&D, 16% know-how deployment and manufacturing, and solely 28.5% operations. It spent $73 million on R&D worker salaries alone in 2023 and completed the primary half of this yr with $335 million in money.
Pony initiatives it would usher in much more cash within the coming years, particularly as robotaxi fares enhance. However it sounds much less optimistic about bringing the prices down, as a result of within the submitting it doesn’t say it expects the price of that income to lower over time – solely that these prices will “proceed to evolve within the close to future.”
Now, Pony’s income did almost double to $24.7 million within the first half of 2024 when in comparison with the identical interval final yr. It has additionally pared its losses year-over-year within the first half. However whereas it appears to be like like Pony’s income goes up and to the fitting if we glance solely on the first half of the yr, the corporate nonetheless has a protracted method to go if it hopes to beat 2023’s whole income of $71.9 million.
SIXTY. PAGES. OF. RISK.
Each firm wants to put out the dangers related to the enterprise once they go public. However rattling all of it if Pony wasn’t extremely thorough with 60 pages value of disclaimers.
One in all its primary dangers? It’s coming off a scarcity of sufficiently expert workers with information of U.S. GAAP (Typically Accepted Accounting Rules) to make sure correct compliance with SEC necessities.
Whereas Pony says it has fastened this weak spot as of the tip of 2023, there may be very current proof that reveals how actual a threat this may be to a younger enterprise in Fisker. That EV startup’s nosedive into chapter 11 was, largely, triggered by it lacking the deadline to file its third-quarter monetary outcomes final yr.
There’s additionally the previous Individuals’s Republic of China conundrum – one thing Zeekr is conversant in. We’ll let Pony say it: “The PRC regulatory authorities have important oversight over our enterprise and should affect our operations as they deem applicable to additional financial, regulatory, political and societal objectives.”
Transferring on, Pony included a slight threat of not with the ability to proceed its extraordinarily restricted robotaxi testing within the U.S. attributable to impending rules towards Chinese language linked automobiles. The startup has a allow to check AVs with a driver behind the wheel in California, but it surely says its operations within the U.S. generated “lower than 1% of our whole revenues in 2023 and the six months ended June 30, 2024.”
Pony paints a fairly image
We are actually a number of years faraway from the particular objective acquisition merger craze that allowed startups to make outrageous projections about their companies. Keep in mind when Faraday Future projected it could promote greater than 100,000 EVs in 2024? It’s bought roughly 13 thus far.
It is a conventional IPO, so Pony doesn’t have almost as a lot license to be so unhinged with its projections. Nonetheless, Pony indulges in some self-flattering imagery of what its know-how is able to that we’d be remiss to not share with you.
“On the general public roads of China’s metropolises, Pony has achieved what was as soon as solely depicted in science fiction — constructing a automotive that drives itself,” the corporate writes. “Passengers, wide-eyed with surprise, unlock the door utilizing the app and climb into the again seat.”
“Stepping out of the automotive, the passengers pay the fare by means of the app and conclude this awe-inspiring trip. In the meantime, the robotaxi drives itself away to select up the following passenger, leaving one to ponder what different marvels the longer term holds.”
Large-eyed, certainly.
