On Thursday (November 6), Chinese autonomous driving company Pony.ai saw its stock price drop over 15%, while its competitor WeRide’s stock price also fell by the same margin, as both companies began trading in Hong Kong. Analysts expressed concerns over the profitability of this increasingly competitive industry.
Pony.ai and WeRide have been locked in fierce competition in the Chinese market. Both companies are already listed on the Nasdaq in New York, but due to concerns that the Trump administration may push for the delisting of Chinese companies in the US, Chinese tech groups have been considering listing closer to home.
On Thursday, these two autonomous taxi startups raised HK$6.7 billion (about $8.62 billion) and HK$2.4 billion through secondary listings in Hong Kong, but their stock prices struggled to rise due to worries about profitability and the increasing number of new entrants in the industry.
The Financial Times reported that Dickie Wong, a director at the Hong Kong Securities Association, advised investors to be cautious and avoid holding overly high expectations. He attributed the stock price drops of both companies on Thursday to their poor performance in the US.
Since January, Pony.ai’s US stock has risen by 7%, while WeRide’s stock price has fallen by 36%. In comparison, the Nasdaq Composite Index has risen by 22%.
According to the prospectus, Pony.ai’s net loss expanded to $96.1 million in the first half of the year, compared to $51.3 million in the same period last year. WeRide’s net loss was 791.5 million yuan in the first half of the year, higher than 881.7 million yuan during the same period last year.
An analyst at HSBC pointed out in a recent research report that it may take several years for profitability to materialize. The analyst wrote, *”Remote monitoring, parking, charging, cleaning, infrastructure costs, as well as incremental costs supported by technology and artificial intelligence are often overlooked. Given these costs, we believe that autonomous taxi services will not achieve cash flow balance in the seven to eight years after their launch.”*
In the US, both companies are looking to collaborate with California-based Uber, intending to deploy their self-driving taxis on Uber’s ride-hailing platform once they receive regulatory approval.
However, the US Department of Commerce passed a regulation this year prohibiting “foreign adversaries” (including China and Russia) from operating or maintaining autonomous vehicle software used in the US, setting a deadline of March 2026 for compliance. This poses challenges to the American plans of these Chinese firms.
In Wednesday’s US stock market trading, Pony.ai’s stock fell by about 2%, while WeRide’s stock dropped by 5.3%.
According to CNBC, Rolf Bulk from New Street Research stated that the dual listings in Hong Kong will not facilitate the technical development and regulatory approval of these companies in Western markets. On the contrary, secondary listings in Hong Kong may make it more challenging for them to obtain approval in Western markets.
(This article referenced reports from the Financial Times and CNBC)