Pony AI (2026 HK, HK$74.20, HK$32bn): Strong Robotaxi Demand Validates Sustainable Commercialization

Pony.AI posted solid 1Q26 growth, with Robotaxi posting strong end-market demand, driving positive UE in several core cities, substantiating commercialization of autonomous mobility. Furthermore, Bill of Materials (BOM) reduction will amplify per-vehicle profitability, and we remain positive on the company's long-term outlook.

Driven by Robotaxi and Intelligent Solutions: 1Q26 total revenue came in RMB236m (+145% YoY) with,  

1). Robotaxi revenue stood at RMB59.1m (+395% YoY / +27% QoQ, 25% of total). Passenger fares surged 4.6x YoY, confirming strong demand of real user payments.  Currently, its global fleet size has reached 1,700+ units, deployed in 9 countries including China, Qatar, Singapore, Croatia and South Korea.  It is a leading player in major cities such as Beijing, Shanghai, Guangzhou and Shenzhen.  It has also established partnership with OnTime and Verne under co-fleet models to penetrate more cities in China.

Looking ahead, the Mgt has raised its full-year 2026 targets of robotaxi fleet size from 3k to 3,5k units with revenue growth from 3x to 3.5x+YoY, and target to operate in over 20 cities globally.  In addition, the 2027 model Robotaxi is expected to achieve a total vehicle BOM of no more than RMB 230k, providing a strong reason for rapid fleet expansion.

2). Robotruck revenue reached RMB70.3m (+31% YoY / -23% QoQ, 30% of total). The expanding fleet and higher traffic volume used by Sinotrans are the key reasons behind the growth. The QoQ drop would be affected by logistics off‑season.  The company’s Gen4 truck is scheduled for mass production in 2H26.  The L4 autonomous light-duty truck was launched in April, focusing on urban logistics scenarios. Leveraging the same software stack and operational infrastructure with Robotaxi, the light-duty truck is expected to reduce operating costs by approximately 50% compared to manned fleets.

3). Intelligent Solutions revenue came in at RMB107m (+246.5% YoY / +63% QoQ, 45% of total). Driven by strong demand on Atom ADC, which shipment grew more than 5x YoY, commonly used for low-speed delivery, street sweepers, logistics and humanoid robots. This marks Pony.Ai’s ability to leverage its L4 technology and software‑hardware integration, packaging autonomous driving capabilities into standardized ADCs for external sale, thus becoming a supplier of autonomous hardware and solutions.

Stable GPM, Narrowing Core Loss: Overall GPM remained stable at 16.2%. OPEX ratio improved further to 187% (from 266% in 4Q25), benefiting from strong topline expansion, despite absolute OPEX remaining above RMB400mn. R&D spending moderated to RMB330mn, while SG&A stayed relatively flat at RMB111mn, due to higher costs associated with overseas operations. Core operating loss narrowed to RMB402mn from RMB517mn in Q4 2025, though largely unchanged YoY. Core operating margin continued its QoQ and YoY improvement to -170%. And the net loss stood at RMB369mn. By the end of 1Q26, the company had total cash and investments totaling RMB9.9bn, providing ample liquidity to underpin strategic execution.

Our views: We remain positive on Pony.AI. The company is a global leader in Robotaxi and L4 autonomous driving. Its rapidly growing Robotaxi revenue and ADC shipments further validates its technological edge and commercialization capability.

Pony.AI has achieved positive unit economics (UE) in several core cities (such as Guangzhou and Shenzhen) and it would be a critical milestone in commercialization. The successful business case is likely to attract more new partners (e.g., mobility platforms, fleet operators) and existing users to increase their commitment.

We believe Pony.Ai’s L4 technology is its core competitive capability and the foundation of its industry leadership. However, it is important to keep its costs down as the fleet size expands.  Therefore, the company plans to lower total vehicle BOM cost for its 2027 domestic Robotaxi model by 25%, from the current RMB310k (7th generation) to below RMB 230k, which will further boost per‑vehicle profitability. Although insurance mitigates part of the operational risk, potential safety incidents still warrant close monitoring given their possible regulatory, reputational and financial implications. The company has been admitted in to Stock Connect on June 4. The company is trading at 18x FY26E EV/Revenue. (Research Department)