Pony AI Q2 2025 Earnings Report

Pony AI EPS Results

• Actual EPS: -$0.14
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Pony AI Revenue Results

• Actual Revenue: $21.45 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Pony AI Announcement Details

• Quarter: Q2 2025
• Date: 8/12/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, August 12, 2025
• Conference Call Time: 8:00AM ET

Pony AI (NASDAQ:PONY) Inc., through its subsidiaries, engages in the autonomous mobility principally in the People's Republic of China and the United States. The company provides robotruck services, such as transportation services to the logistics platforms. Pony AI Inc. is based in Guangzhou, the People's Republic of China.

Pony AI Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: In Q2 PonyAI began mass production of its Gen7 robotaxi vehicles, rolling out over 200 units in two months and targeting a fleet of 1,000+ by year-end.
• Positive Sentiment: Total revenues surged 76% year-over-year to $21.5 million, with robotaxi service revenue up 158% and fare charging revenue growing over 300%.
• Positive Sentiment: The company achieved a 70% reduction in autonomous kit BOM cost and improved operational expenses, including an 18% drop in vehicle insurance and enhanced remote assistance efficiency.
• Negative Sentiment: Net loss widened to $53.3 million from $30.9 million in the prior year period, driven by increased investments in mass production and R&D for Gen7 vehicles.
• Positive Sentiment: PonyAI expanded its global footprint, securing fully driverless permits across all four Tier-1 Chinese cities and launching trials or partnerships in Dubai, Seoul and Luxembourg.

Presentation

[Operator]

Hello, ladies and gentlemen. Thank you for standing by, and welcome to PonyAI Inc. Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the management's prepared remarks, there will be a question and answer session.

[Operator]

As a reminder, today's conference call is being recorded, and a webcast replay will be available on the company's Investor Relations website at irponyai under the News and Events section. I will now turn the conference over to your host, George Shao, Head of Capital Markets and Investor Relations at Pony dot ai. Please go ahead, sir.

[George Shao, Head of Capital Markets & IR at Pony AI]

Thank you, operator, and hello, everyone. We appreciate you joining us today for PonyAI's second quarter twenty twenty five earnings call. Earlier today, we issued a press release with our financial and operating results, which is available on our Investor Relations website. An earnings presentation, which we'll refer to during this conference call, can also be accessed and downloaded on our Investor Relations website. Joining me today on today's call are Doctor.

[George Shao, Head of Capital Markets & IR at Pony AI]

James Peng, Chairman of the Board and Chief Executive Officer Doctor. Tianqin Luo, Chief Technology Officer and Doctor. Liu Wang, Chief Financial Officer of the company. They will provide prepared remarks followed by a Q and A session. Before we begin, please refer to the Safe Harbor statement in our earnings release, which applies to this call as we will be making forward looking statements.

[George Shao, Head of Capital Markets & IR at Pony AI]

Please also note that we will discuss non GAAP measures today, which are more thoroughly explained and reconciled to the most comparable measures reported under GAAP in our earnings release available on our IR website and filings with the SEC. I will now hand it over to our Chairman and CEO, Doctor. James Peng. Please go ahead.

[Jun Peng, Chairman, Co-Founder & CEO at Pony AI]

Thank you, George. Hello, everyone. Thank you for joining our earnings call. We have actually had a very exciting quarter. Let me walk you through three achievements that define our success this quarter.

[Jun Peng, Chairman, Co-Founder & CEO at Pony AI]

First, in June, we finished building assembly lines for our seventh generation global taxi vehicles. In the last two months, we ramped up production capacity with more than 200 Gen seven vehicles rolled off the assembly line. This puts us firmly on track to hit our target of 1,000 plus vehicles by year 2025. We have operated Gen seven robotaxis in all our four Tier one cities in China with over 2,000,000 kilometers of open road autonomous driving. The path towards positive unit economics is also very clear as we made substantial reduction in key cost items such as remote assistance and vehicle insurance.

[Jun Peng, Chairman, Co-Founder & CEO at Pony AI]

Second, we continue to expand our robotaxi service areas and our user reach. The registered users surged by 136% year over year in Q2. In addition, we secured Shanghai's first fully driverless commercial license and expanded presence globally in cities such as Dubai, Seoul and Luxembourg. Third, our strong operational momentum has translated into outstanding financial results. On a year over year basis, our total revenues surged by a remarkable 76%.

[Jun Peng, Chairman, Co-Founder & CEO at Pony AI]

Robotaxi revenues have more than doubled, with fare charging revenues growing more than 300%. Now let me share more details in these areas. As I mentioned previously, we positioned 2025 as the pivotal year of mass production. So first, let me talk about the mass production of Gen seven robotaxi vehicles. The first two models of Gen seven, namely the Guangdong Automobile Group, the GAC, and Beijing Automotive Industry Corporation, the BAIC models, have entered mass production in June and July, respectively.

[Jun Peng, Chairman, Co-Founder & CEO at Pony AI]

As of today, over 200 vehicles have been produced, which puts us well positioned to reach the 1,000 plus vehicle milestone by year end. We have made significant improvements to our Gen seven vehicles in terms of safety, cost, reliability and even appearance. The platform features a 100% automotive grade autonomous driving kit, designed for a 600,000 kilometer life cycle. All the sensors are highly integrated with the vehicles and can be preassembled. The total bond cost has also reduced 70% compared to our previous generation.

[Jun Peng, Chairman, Co-Founder & CEO at Pony AI]

That is the cost dropped to even less than one third. Building on this foundation, we launched the operation of multiple Gen seven robotaxi models in all four Tier one cities. This highlights how our autonomous driving systems can reliably adapt to different vehicle platforms and road environments. Since launching, our Gen seven vehicles have exceeded over 2,000,000 kilometers of on road autonomous driving mileage. The operational environments include extreme weather conditions, such as tropical storms, high temperature and cold weather conditions, further validating our vehicle's safety and reliability.

[Jun Peng, Chairman, Co-Founder & CEO at Pony AI]

So far, we have an impeccable safety track record. The overall performance of Gen seven Robotaxis also exceeded our previous generation. The newly designed in cabin interface provide a much better user experience. We have also made Robotaxis fleet operation much more efficient. Notably, we achieved reductions across key cost items such as energy, vehicle insurance, maintenance, remote assistance and ground support.

[Jun Peng, Chairman, Co-Founder & CEO at Pony AI]

There are two developments standing out in Q2. The first one is that we have sequentially improved the remote assistance to vehicle ratio, making us confident in achieving one:thirty ratio by year end. This means that one remote assistant will be capable of monitoring 30 vehicles. The second highlight is that we have secured 18% reduction in vehicle insurance costs compared with our prior renewal cycle. As I actually mentioned in the last quarter, our insurance premium was already at just half of the typical cost for traditional human operated taxes.

[Jun Peng, Chairman, Co-Founder & CEO at Pony AI]

This further decrease in cost reflects the growing recognition by insurers of our safety track record. With mass production underway, license secured and service optimized, we are now well positioned to meet the rising demand from users. We continue to accelerate commercial deployment and expand our ecosystem at scale. Our commercial growth continued to gain momentum with robotaxi service revenue up by 150108% year over year. Particularly, we delivered more than 300% year over year growth in fare charging revenues.

[Jun Peng, Chairman, Co-Founder & CEO at Pony AI]

The impressive growth momentum was fueled by our accelerated deployment of robotaxis across all four Tier one cities, enabling us to expand into a broader range of use cases and boost higher user adoption. Additionally, our efforts to optimize the user experience significantly enhanced user engagement, reinforcing customers' recognition and trust in our robotaxi services. To further accelerate this momentum, we continued our effort in building a mobility ecosystem. In June, we formed a strategic partnership with Hehu Group, which is the largest taxi operator and fleet manager in Shenzhen. We plan to jointly deploy over 1,000 robotaxis in Shenzhen in the coming years.

[Jun Peng, Chairman, Co-Founder & CEO at Pony AI]

This collaboration pairs our AI powered technology and service expertise with Xiehua's operational scale and deep local experience. Now let me switch gears towards expanding services to a broader user reach. We have seen strong user adoption in the second quarter with registered users surging by 136% year over year. Even with a larger user base, our user satisfaction rate remains well above 4.8 out of five. Currently, we have secured permits in all four Tier one cities for our Gen seven vehicles.

[Jun Peng, Chairman, Co-Founder & CEO at Pony AI]

As we continue to add more vehicles to our fleet, we expect to enter even larger scale operations for many more users to enjoy. Particularly, we are one of the first companies to receive a permit for fully driverless commercial robotaxi service in Shanghai's Pudong District. Following the acquisition of this permit, we become the only company to have commercial fully driverless operations in all four Tier one cities. This showcase both our technological maturity and solid operational capabilities. Recently, we also extended the fare charging global taxi service from fifteen hours per day to a full 20 fourseven coverage in Guangzhou and Shenzhen to better meet the rising user demand.

[Jun Peng, Chairman, Co-Founder & CEO at Pony AI]

This expanded operating window now captures late night and early morning trips. So now let me share the updates on our global expansion. Our international playbook focuses on entering strategic markets with hyper growth potential. To date, we have established presence in seven countries across China, East Asia, Europe and The Middle East. During Q2 this year, we made significant strides in Dubai, Seoul and Luxembourg.

[Jun Peng, Chairman, Co-Founder & CEO at Pony AI]

In The Middle East, we established our presence in Dubai, the largest and most populous city in UAE. We formed a strategic collaboration with the Dubai Roads and Transport Authority to integrate our autonomous driving technology into the city's transportation ecosystem. Initial trials will begin in late twenty twenty five, followed by fully driverless operations shortly after. We have also advanced our presence in South Korea by securing nationwide permits. We are conducting extensive on road operations in Gangnam District, which is the heart of Seoul.

[Jun Peng, Chairman, Co-Founder & CEO at Pony AI]

We have navigated complex urban environments and which showed reliability under challenging conditions such as winter snowfalls. In the second quarter, we began nighttime and early morning operations, which is a significant step towards 20 fourseven operations. Shifting to Europe. We have obtained a testing permit early this year in Luxembourg. By partnering with Emmy Weber, Luxembourg's leading mobility and free service provider, we launched our road test in the city of Leningen.

[Jun Peng, Chairman, Co-Founder & CEO at Pony AI]

Our goal is to use Luxembourg as a launch pad to serve future European expansions. In summary, we have laid a solid foundation for large scale commercial robotaxi operation. 2025 is the pivotal year of mass production for Polin AI, and we have already made it happen. With Gen seven global taxi rolling off the production line and deployment across major cities globally, we are driving strongly towards positive unit economics and entering a new phase of multiyear accelerating growth. In the coming quarters, our main focus will be scaling up.

[Jun Peng, Chairman, Co-Founder & CEO at Pony AI]

With a solid plan and great execution in place, I'm extremely excited about the future of TONY dot AI in revolutionizing the mobility industry. This concludes my remarks. Now I will hand it over to our CTO, Doctor. Luo. Tianqin, please go ahead.

[Tiancheng Lou, Director, Co-founder & CTO at Pony AI]

Thanks, James. So hello, everyone. This is Tianqin. I'm very proud of what we have achieved in the second quarter. We have started mass production of Gen seven robotaxis.

[Tiancheng Lou, Director, Co-founder & CTO at Pony AI]

This shows that we are scaling up autonomous mobility technology. It also proves that we have constructed two important pillars for the robotaxi industry, fully driverless and scale. These two pillars are the foundation of the success of the robotaxi business. Let me elaborate a little more. So fully driverless means no safety operator inside the car at all.

[Tiancheng Lou, Director, Co-founder & CTO at Pony AI]

This is a strong indicator that technology already meets safety standards. It also means the developer software and hardware systems provide sufficient redundancy to handle extreme cases. So if something breaks, the car can still work well. After we get to fully driverless, the next pillar is scale. This refers to the number of fully driverless robotaxis should be at least the order of hundreds running the road every day with a large enough of ODD.

[Tiancheng Lou, Director, Co-founder & CTO at Pony AI]

People can just open their ride sharing apps and call robotaxis at their convenience. Based on these two standards, the development of L4 robotaxi technology universally follows three consecutive stages. The first stage, cars still need a safety operator, either in the driver's seat or passenger seat. The safety operator inside the vehicle have to step in to take over to mitigate any potential incidents. This incident may be caused by AI model errors, hardware failures or simply traffic scenarios that the vehicle cannot handle.

[Tiancheng Lou, Director, Co-founder & CTO at Pony AI]

Second stage, cars can run without any safety operation in the car, although it's still limited in a relatively small scale, such as roughly a dozen of cars. At this stage, vehicles are equipped with redundant system, which can handle hardware filters. It also means the safety capability of the whole system reached roughly a similar level as a typical human driver. Moving to the third stage. Rule taxis can go fully driverless with hundreds of cars open to the public.

[Tiancheng Lou, Director, Co-founder & CTO at Pony AI]

They can also run 20 fourseven in all weather conditions, especially during rushovers. Once Rope Taxis can operate without any safety operator in the car, it must reach a significant high level of safety to enable large scale operations. With the reason that, statistically speaking, as the fleet size gets bigger and the cars drive more mileage every day, there are higher possibility for potential error to occur. As such, to scale up safely, the whole system has to meet much higher safety standards. As a result, the size of the fully developed fleet is directly proportionate to the high standard of safety and reliability.

[Tiancheng Lou, Director, Co-founder & CTO at Pony AI]

Only teams that truly trust their technology will run fully driverless service on a large scale. At this stage, the system can handle complex driving situations, And this is at least 10x safer than a human driver. That means user can easily access fully drive robotaxis service whenever they want, even through tough conditions like heavy rains or snowstorms. They will get a ride that is reliable and safe at all times. So we are proud that Pony AI have already achieved the third day in 2024 last year.

[Tiancheng Lou, Director, Co-founder & CTO at Pony AI]

With our current extended operation in Shanghai is a good example, let me elaborate. In July, we secured the newly issued fully driverless commercial license in Pudong District of Shanghai, And we offered the robotaxis service in the public to the public during World AI Conference, dubbed ASC. We stood out in two ways. Number one, we were the only company with fully driverless and on demand ride sharing service to the public. Number two, Shanghai was reigning during the conference.

[Tiancheng Lou, Director, Co-founder & CTO at Pony AI]

We were the only company to remain operational in heavy rains. The fast speed at which we are scaling up fully drives robotaxi in Shanghai shows we are over strong generalization capability. This is powered by our high fidelity training environment and the evaluation system. Today, people in all four Tier one cities can call our fully driverless robotaxi and get to anywhere they are going. Our latest Gen seven robotaxis platform powers our fully driverless and scalable services.

[Tiancheng Lou, Director, Co-founder & CTO at Pony AI]

We also enforce regular engineering practice to enforce our safety first principle. We have already mass produced over 200 Gen seven robotaxis and proven they are ready for large scale deployment. Our multiple Gen seven models are equipped with multi sensor suite and a new computing platform with four Orang chips. This vehicle has achieved over 2,000,000 kilometers on public road across all four Tier one cities. The testing in diverse conditions shows the reliability of our entire autonomous driving stack, With much better integrated sensor setup and upgraded sensor cleaning system, the vehicle are much more reliable in extreme weather and heavy traffic conditions.

[Tiancheng Lou, Director, Co-founder & CTO at Pony AI]

More importantly, the target of 1,000 robotaxi vehicles is just a start. As the service area expanded and the fleet gets denser, the network effect will kick in. This means that the user can reach more destinations and with less time for a ride. Overall, a much better user experience. We have also enhanced the in cabin experience for room tour Gen seven robotaxis, such as voice interactive features.

[Tiancheng Lou, Director, Co-founder & CTO at Pony AI]

All this will lead to accelerating multi year growth trajectory. To ramp up, our achievement makes the second quarter reinforce our confidence in the path forward. Mass production is firmly on track with Guangzhou Auto and Beijing Auto Gen seven vehicle production ramping up fast. We are continuously improving our operational efficiency and reducing the relevant cost. All this effort puts us in a strong position to scale up autonomous mobility rapidly.

[Tiancheng Lou, Director, Co-founder & CTO at Pony AI]

This concludes my prepared remarks. I will now pass the call to our CFO, Doctor. Liu Wang, to review our financial results. Liu, please go ahead.

[Haojun Wang, CFO at Pony AI]

Thank you, Tianqin. Hello, everyone. This is Liu. I will be focusing on year over year comparisons for the second quarter, unless otherwise specified. Q2 was another strong quarter, marked by robust revenues growth and the significant progress in the mass production of our Gen seven robotaxi fleet, while also maintaining disciplined investment.

[Haojun Wang, CFO at Pony AI]

In the second quarter, total revenues finished at US21.5 million dollars growing by 76% year over year, mainly driven by robust growth in both Robotaxis services and the licensing and applications, a clear demonstration of our effective commercialization execution. Robotaxis service revenues reached US1.5 million dollars representing another quarter of rapid year over year growth of 158%. Both fair charging services and the project based engineering solutions continued to expand strongly. In particular, fair charging revenues expanded by more than 300% year over year. The strong growth was driven by expanding user adoption and the demand in Tier one cities in China as well as an increased fleet of robotaxis vehicles.

[Haojun Wang, CFO at Pony AI]

In addition, through ongoing optimization of our pricing and operational strategies across diverse user segments, we continued to enhance user engagement and service efficiency. Such growth momentum underscores our commitment to establishing a scalable and a recurring monetization model, enhancing our long term business visibility. Moving to Robotruck Services. Revenues were US9.5 million dollars as we proactively optimized our operation to focus on high margin revenues. Global truck services revenue were down by 10% year over year for second quarter.

[Haojun Wang, CFO at Pony AI]

Licensing and application revenues were US10.4 million dollars growing significantly by 902% year over year. We saw increasing orders and deliveries for autonomous domain controller sales, driven by both new and existing robot delivery clients. Turning to gross margin. It improved year over year to 16.1%, with gross profit of US3.5 million dollars in the second quarter. As mentioned in the last quarter, we continue to advance initiative aimed at reducing gross margin variability with a focused strategy on prioritizing high margin revenues within Robotaxi and Robotruck services.

[Haojun Wang, CFO at Pony AI]

I also want to highlight that we made solid progress in optimizing Robotaxi unit economics, such as remote assistance and vehicle insurance. Total operating expenses were US64.7 million dollars up by 75% year over year. The increase in share based compensation expenses reflected the normalization of expense recognition following our IPO in November 2024, as vesting is no longer contingent of IPO completion. Excluding share based compensation expenses, non GAAP operating expenses were US57.5 million dollars up 59% year over year. The increase was primarily driven by increased investments in mass production alongside employee expenses aimed at strengthening our R and D capacity for Gen seven robotaxi vehicles.

[Haojun Wang, CFO at Pony AI]

Net loss for the second quarter was US53.3 million dollars an increase from US30.9 million dollars in the same period last year. Non GAAP net loss was US46.1 million dollars compared with US30.3 million dollars in the same period of last year, primarily reflecting increased investments in mass production and R and D employee expenses for concurrent development of Gen seven vehicle models. As we drive towards larger scale robotaxi mass production and deployment, our disciplined investment remain a top priority as we enter this critical scaling phase. Turning to the balance sheet and cash flow. Our combined cash and cash equivalents, restricted cash, short term investments and the long term debt instrument for wealth management was US747.7 million dollars as of 06/30/2025.

[Haojun Wang, CFO at Pony AI]

The quarterly financing cash inflow increased by US33.1 million dollars mainly due to employee share sales following the expiration of the lockup period, resulting in funds collected on behalf of employees for future distribution. With the imminent scaling up and the commercial deployment, we believe our current cash reserves are well positioned to support our operational needs. In the same time, we remain proactive in exploring additional opportunities to ensure long term financial resilience. Looking ahead, with disciplined investment in place and the mass production underway, we are very on track to reach 1,000 robotaxi fleet size target, already with over 200 contributed by the Gen seven robotaxi fleet, With a competitive cost structure for the latest Gen seven vehicles and a well executed go to market strategy, we have laid a solid foundation for large scale commercialization moving forward. I will now turn the call over to the operator and begin our Q and A session. Thank you.

[Operator]

Thank you. We will now begin the question and answer For the benefit of all participants on today's call, please limit yourself to two questions. If you have more questions, please reenter the question queue. If you ask question in Chinese, please repeat them in English. First question is from Ming Hoon Lee, Bank of America.

[Ming Hsun Lee, Managing Director - Head of Greater China Auto research at Bank of America]

Thank you, management, taking my question, and congratulation on the solid progress of your mass production. So I only have one question. Could you share more thoughts on your production plan throughout the 2025?

[Jun Peng, Chairman, Co-Founder & CEO at Pony AI]

This is James. I'll take this call. As I mentioned in my prepared remarks today, we are firmly on track to reach our 2025 production target. In less than two months, we have already ramped up production with over 200 Gen seven robotaxi vehicles. It showed a clear accelerating momentum.

[Jun Peng, Chairman, Co-Founder & CEO at Pony AI]

As of now, we are very confident in surpassing a fleet size of 1,000 plus by year end. The key actually to achieve the robotaxi mass production lies in the ramping up its efficiency, which involves comprehensive process such as equipment calibration and also the staff training. These staff ensure a steady increase in production volume, while upholding the highest safety standards. As of now, we have already reached a scalable production cycle. In addition, the key components are already secured through our agile and holistic sourcing strategy.

[Jun Peng, Chairman, Co-Founder & CEO at Pony AI]

This not only ensures sufficient inventory to support production pace, but also helps to maintain the bond cost stability. Currently, we have completed the retooling of assembly lines for both the BAIC and GAC Gen seven Robotaxi models. Both of these models have entered the SOP phase, that is the start of production phase, with steady production rate, reflecting our strong execution. These vehicles have begun on road testing. And so far, we have impeccable safety track record with more than 2,000,000 kilometers of operation.

[Jun Peng, Chairman, Co-Founder & CEO at Pony AI]

And the results confirm they met all our stringent safety requirements. Now let's also look at the unit economics. The bond cost of our Gen seven robotaxi has been reduced by 70% compared with the previous generation. During Q2, we have also made major improvements in robotaxi fleet operations, such as enhanced remote assistance efficiency and decrease in the vehicle insurance. This is further reinforced by our proven go to market strategy as we have seen a strong growth in fare charging revenues.

[Jun Peng, Chairman, Co-Founder & CEO at Pony AI]

So with all these improvements, I'm actually now very confident in reaching positive unit economics for our Gen seven vehicles. With this, back to the operator.

[Operator]

Next question is from Bin Wang, Deutsche Bank.

[Bin Wang, VP - Investment Banking at Deutsche Bank]

Thank you. Your Lobo taxi revenue growth was very strong once again this quarter. You elaborate the key drivers behind the solid growth? For example, what's the free size at the beginning of the quarter and the end of the second quarter? Thank you.

[Haojun Wang, CFO at Pony AI]

Yes, this is Liu. I'll take this question. As I mentioned earlier, our robotaxis service revenue rose by 13058% year over year, powered by a more than 300% expansion in fair charging revenues. This growth actually stems from expanding user adoption and the demand in Tier one cities in China, coupled with an increased deployed fleet of robotaxis. Through ongoing optimization to our pricing and also operation strategies across diverse user segment, we have greatly improved the user engagement and the service efficiency.

[Haojun Wang, CFO at Pony AI]

Our current user satisfaction rate is well above 4.8 out of five. Additionally, we are currently operating across 2,000 square kilometers in Tier one cities in China. That's more than 20 times the size of city of San Francisco. This provides us ample market space to deploy a larger scale of robotaxis fleet. So looking ahead, increasing vehicle density in these regions remains our top priority.

[Haojun Wang, CFO at Pony AI]

We expect the notable improvements in vehicle accessibility and the user experience, which in turn will incentivize higher demand. By continuously scaling up production and deployment, we are well positioned to improve vehicle utilization and the user experience. We believe these factors will be the key drivers of a scalable and a recurring monetization model that strengthening our business visibility over the long term. Now I'll get back to the operator.

[Operator]

Next question is from Ting Song, Goldman Sachs.

[Ting Song, Global Investment Research Associate at Goldman Sachs]

Thanks for taking my question. Have one question. Currently, China's Ministry of Public Security commented on the intelligent driving systems and autonomous driving. What does this mean for the L4 robotaxi industry? And are there any changes in the government's attitude on the industry? Thank you.

[Tiancheng Lou, Director, Co-founder & CTO at Pony AI]

This is Tian Cheng. I will take this question. The recent comment you mentioned actually reinforce the distinguishing between L2 driving assistance and L4 autonomous driving. The government's core message is that L2 and L4 are two completely different products. Current L2 driver assistance intelligent driving system have not yet achieved fully autonomy that L4 can achieve.

[Tiancheng Lou, Director, Co-founder & CTO at Pony AI]

And under L2, the driver remains ultimately responsible for vehicle operation. This is aligned with the MRIT comments early in April. They all set a clear boundary that L2 is driving assistance system and L4 is autonomous driving. So this is actually beneficial for us. It helps the public clearly understand the distinguishing between L2 and L4 systems, and then reduces the risk of user mistakenly treating L2 as for L4 autonomous driving.

[Tiancheng Lou, Director, Co-founder & CTO at Pony AI]

In addition, the difference in responsibility will result in different safety standards. The L2 system's liability lies with the drivers. In contrast, the L4 system has full responsibility, resulting in a safety first principle and the regular engineering practice. Given above, PonyAI is a company dedicated to L4 solutions. Achieving L4 autonomous driving requires very high safety standards.

[Tiancheng Lou, Director, Co-founder & CTO at Pony AI]

It was also needed a multilayer software and hardware architecture that provide redundancy in the even up system component figures. It must include critical components as sensors, computing, controls and power systems. In China, to obtain fully dropped permit, redundant system must be tested in many complicated situations, such as handling factories coming out of blind spots. That's why most mass produced vehicles out there need to add actual redundancy to meet this basic requirement. With that, back to the operator.

[Operator]

Next question is from Yi, Huatai Securities.

[Analyst]

Yes. Thank you for taking my questions. This is Chuyang from Huatai. So first of all, congrats on your recent business development expansion. So my question is, as we look at new market expansion, what are the key technical requirements to enter new geographies?

[Analyst]

And how confident are you in your system's ability to adapt quickly and safely to different environments? Thank you.

[Tiancheng Lou, Director, Co-founder & CTO at Pony AI]

This is Tianqi again. I will take this question. The core of L4, total driving, is all about the ability to handle corner cases and extreme cases. In different geographies, this type of scenario is actually similar. For example, a pedestrian step into the road, a vehicle suddenly changing lanes, or there is unexpected road construction.

[Tiancheng Lou, Director, Co-founder & CTO at Pony AI]

These situations are fundamentally the same, even if their frequency can be varied by location. So our software system have achieved fully drive this scalable and 20 operation across different environment. This key enabler is our point of work model, which we deploy consistently across cities and countries. It enables us to generate numerous challenges scenarios and replicate existing scenarios in many variations. This significantly enhanced AI driving model's ability to handle a wide range of challenging situations.

[Tiancheng Lou, Director, Co-founder & CTO at Pony AI]

While entering a new area, we can quickly launch road testing and validation, additionally turning off the AI model is not needed. So for example, our current operation at WAIC in Shanghai have already proved that our system is robust, adaptable and built for rapid replication. This resilience is also enhanced by dealing with complex urban environments. This gives us a solid foundation for efficient and reliable expansion into large ODD and scalable operation. So with this, back to the operator.

[Operator]

Next question is from Xinyu Fang, UBS.

[Analyst]

Hi. Thank you for your hi, can you hear me?

[Haojun Wang, CFO at Pony AI]

Yes.

[Analyst]

Hi. Thank you and congrats on rapid growth in robotaxi services this quarter. My question is that we've seen news reports about potential Hong Kong IPO plans of the company. Do you have any timetable that you can share for now for such IPO, please? Thank you.

[Haojun Wang, CFO at Pony AI]

Yes. This is Liu. I'll take this question. First of all, I would say we do not comment on market speculation. Additionally, we actually have been closely monitoring the market conditions.

[Haojun Wang, CFO at Pony AI]

In line with our strategic priorities of scaling up, we remain focused on executing our go to market strategy. Meanwhile, we will actively explore more capital market opportunities to maximize shareholders' value. I'll get back to the operator.

[Operator]

Next question is from Evelyn Zhang from Daiwa.

[Evelyn Zhang, Associate Director at Daiwa Capital Markets]

Yeah. Thanks management for taking my questions. So my question is about your overseas market expansion. Could you please elaborate more on your future plan to expand your robotaxi business in the overseas market? And as you mentioned earlier, you have deployed robotaxi in Middle East and in South Korea and Europe.

[Evelyn Zhang, Associate Director at Daiwa Capital Markets]

And could you please share your insights on how overseas regulation framework looks like? For example, are your robotaxis in these three areas are still in the road testing stage or in a commercial service stage right now? Thanks.

[Jun Peng, Chairman, Co-Founder & CEO at Pony AI]

This is Jeff. Let me begin with overview of our global expansion strategy. As you can see that our current global expansion actually focus on markets with hyper growth potential. That is, we are focused on markets with strong mobility demand, well developed infrastructure and supportive regulatory environments. So we have built our process through deep collaboration with local partners and policymakers.

[Jun Peng, Chairman, Co-Founder & CEO at Pony AI]

So given our proven ecosystem, technology expertise and large scale operation experience in China, I think we are very much well positioned to rapidly replicate of our success to the international markets. As I mentioned in my prepared remarks, during Q2, we entered Dubai as a new market, advanced our operations in South Korea. We also strengthened local partnership in Luxembourg, where road tests have now started. Every step forward reflects our core belief, autonomous mobility everywhere. In terms of our operational and some details of our global expansion, I'll hand it over to Bill, who will give you further perspective.

[Haojun Wang, CFO at Pony AI]

Thank you, James, and this is Leo. So from an operation perspective, scaling to hundreds of commercial fully driverless robotaxis requires strong local policy support, technology, cost competitiveness and user adoption. As of now, few countries have achieved this level of readiness and deployment, except for The U. S. And China.

[Haojun Wang, CFO at Pony AI]

Other than these two countries, most countries only have the regulation allowing the testing with a safety driver. And most of these commercialization remain limited to project based or one off pilot program, such as vehicle sales as of now. We believe it still take time for a sustainable fair charging business model to mature in terms of both monetization and the unit cost fronts in this region. I would also emphasize that scaling full driverless robotaxis fleet demand a fundamentally higher level of safety and operation rigor, and it becomes increasingly critical as the operation expanding. This leap from dozens to hundreds is a big jump in complexity.

[Haojun Wang, CFO at Pony AI]

So building this operational capability is very essential. Only then can we validate the model and begin replicating it in other cities or countries. With that, I'll get back to the operator.

[Operator]

Thank you. As there are no further questions, I'd like to turn the conference back over to the company for closing remarks.

[George Shao, Head of Capital Markets & IR at Pony AI]

Yes. Thank you once again for joining us today. If you have any questions, please feel free to contact our IR team. We look forward to speaking with you in the next quarter.

[Operator]

This concludes today's conference call. You may now disconnect your line.

Participants

Executives

• George Shao, Head of Capital Markets & IR
• Jun Peng, Chairman, Co-Founder & CEO
• Tiancheng Lou, Director, Co-founder & CTO
• Haojun Wang, CFO

Analysts

• Ming Hsun Lee, Managing Director - Head of Greater China Auto research at Bank of America
• Bin Wang, VP - Investment Banking at Deutsche Bank
• Ting Song, Global Investment Research Associate at Goldman Sachs
• Analyst
• Evelyn Zhang, Associate Director at Daiwa Capital Markets