Chinese autonomous driving unicorn enters the US stock market! Pony.ai applies for IPO, aiming to raise as much as $300 million

The concept of autonomous driving, which is hot in the capital market, is about to hit the headlines again. Pony.ai, a unicorn in autonomous driving deeply rooted in first-tier cities in China, is officially making its way to the U.S. stock market.

On Thursday, October 17th, Pony.ai (Pony AI Inc.) submitted its prospectus to the U.S. Securities and Exchange Commission (SEC) to apply for its American Depositary Shares to be listed on the NASDAQ under the stock code PONY. Goldman Sachs, Bank of America, Deutsche Bank, and Huatai Securities will serve as the lead underwriters for Pony.ai's initial public offering (IPO).

Pony.ai plans to use the funds raised from this IPO mainly for executing market strategies, scaling up the commercialization of its autonomous driving technology in key target markets, continuing to invest in the research and development of its autonomous driving technology, general corporate purposes, and possible strategic investments and acquisitions to enhance the company's technological capabilities and overall ecosystem.

In April this year, the China Securities Regulatory Commission issued a notice for Pony.ai's overseas issuance and listing, which indicated that Pony.ai plans to issue no more than 98.1495 million common shares and list in the United States. Since its establishment, Pony.ai has received a total of nine rounds of financing, with investors including Sequoia China, IDG Capital, 5Y Capital, Toyota, Kunlun Wanwei, and others. Following the completion of its latest Series D financing round in October last year, the company's valuation has reached $8.5 billion.

This Thursday, Pony.ai did not disclose the planned fundraising amount in its prospectus. However, earlier this week, Bloomberg reported, citing sources familiar with the matter, that Pony.ai hopes to raise up to $300 million through the IPO. Investors who have previously invested in another autonomous driving technology company, WeRide, are considering participating in this IPO.

Coincidentally, last week, GAC Group announced that, in order to deepen business synergy and promote the company's development in the field of autonomous driving, it agreed that its wholly-owned subsidiary, GAC Capital Co., Ltd., would invest $27 million (approximately RMB 191 million) in Pony.ai.

First to Obtain Regulatory Approval for Public Robotaxi Services in Four First-Tier Cities in China

Founded in 2016, Pony.ai was co-founded by Peng Jun, former Chief Architect of Baidu's Autonomous Driving Division, and Lou Tiancheng. It has established research and development centers in Silicon Valley, Beijing, Shanghai, Guangzhou, and other locations. According to its official website, after years of research and development accumulation, the company has built three core businesses around its "virtual driver" technology: autonomous driving ride-hailing services, autonomous trucking, and intelligent driving for passenger vehicles.

In its prospectus, Pony.ai describes itself as the "global leader in achieving large-scale commercialization of autonomous driving. On public roads in major Chinese cities, Pony.ai has achieved what was once only depicted in science fiction novels - creating cars that can drive autonomously."

Pony.ai also mentions its main business of autonomous taxi ride-hailing services (Robotaxi), stating, "Today, commuting in a Pony.ai Robotaxi without a driver is not only a showcase of breakthrough technology, but has also become a part of daily life for many residents in these (Chinese major cities) communities. Just as intuitive as taking a traditional taxi, riding in a Pony.ai Robotaxi provides a revolutionary travel option for everyone, making our streets safer, more environmentally friendly, and changing the way the world travels."

Three months before applying for listing on the US stock market, in early July this year, Pony.ai obtained the Shanghai Autonomous Vehicle Demonstration Application License, with an approved operating scope covering a 205-kilometer route in the central area of Pudong, Shanghai. With this, Pony.ai's autonomous driving unmanned passenger service officially covers the four first-tier cities of Beijing, Shanghai, Guangzhou, and Shenzhen in China.

Pony.ai also mentioned this achievement in its prospectus. The prospectus cited information from the business consulting firm Frost & Sullivan, stating that Pony.ai is one of the first companies in China to obtain Robotaxi operation service permits in all four first-tier cities, and the only autonomous driving technology company that has obtained all regulatory permits required to provide Robotaxi services to the public in these first-tier cities.

The prospectus stated that Pony.ai currently operates more than 250 Robotaxi vehicles, with a cumulative autonomous driving mileage of over 33.5 million kilometers, including over 3.9 million kilometers of unmanned driving mileage.

Revenue Doubled in the First Half of This Year, Net Loss Narrowed by 25.6%

The prospectus shows that Pony.ai's operating income accelerated growth this year, operating expenses decreased slightly, and losses continued to narrow in double digits.

In 2023, Pony.ai's operating income was $71.899 million, a year-on-year increase of 5.1% compared to 2022. As of the first half of this year ending on June 30, revenue doubled year-on-year to reach $24.72 million. Operating expenses in 2023 were about $160 million, a 21% decrease from about $200 million in 2022. Operating expenses in the first half of this year were $74.304 million, a 4.4% decrease year-on-year.

In 2023, Pony.ai's net loss was approximately $125 million, a 15.5% decrease year-on-year. In the first half of this year, the net loss was $51.775 million, a 25.6% decrease year-on-year.

Chinese Autonomous Driving Companies Going Global Mainly for "Education Market" Rather Than Market Competition

In August this year, when responding to the IPO for the first time, Pony.ai's CEO James Peng told Southern Finance that research and development-oriented companies actually need capital support. Financing is a win-win situation with the capital market. With the support of funds, companies can do better, create more excellent products, and with better products, they can attract more investor support. This is a positive cycle. Pony.ai's IPO has obtained some approvals and processes, and the entire process is also related to the capital environment Peng Jun believes that for Chinese autonomous driving companies to explore overseas markets, it is more of an "educational market" process rather than just competing for market share. During the process of Chinese technology going global, overseas customers will also come to China for research. "When they ride in our cars, experience our technology, they will have a deeper understanding of our maturity, scalability, and safety."

At that time, Peng Jun mentioned that Pony.ai's Robotaxi has covered the entire 803 square kilometers of Nansha, Guangzhou. The key next step is how to replicate the "Nansha experience" nationwide