Jefferies initiates Pony AI at Buy as China’s robotaxi market scales

Investing.com -- Jefferies initiated coverage of Pony Ai Inc (NASDAQ:PONY) with a Buy rating and $32.8 price target, citing the company’s leadership in China’s robotaxi transition from pilot to scale.

The brokerage said Pony is positioned to capture up to 30% of the domestic market long term, as the industry expands from a RMB52 billion total addressable market in 2030 to RMB1 trillion by 2040.

Pony AI stands out for regulatory approvals, cost-reduction plans, and full-stack capabilities across OEMs, transportation network companies, and system innovation.

The company is currently the only operator licensed for fully driverless, fare-charging robotaxis in four Tier 1 cities. Joint ventures with Toyota, BAIC, and GAC-Toyota aim to bring Gen-7 vehicles to market at sub-RMB300k costs, integrated with platforms including WeChat and Uber to expand user access.

Jefferies said recent checks in Shenzhen show 24/7 operations with fares at RMB3.5-4.3 per kilometer and wait times of 5-25 minutes. Positive customer experiences under complex conditions suggest demand will rise as the fleet scales.

The brokerage expects Pony AI to achieve unit economics breakeven in 4Q25, with gross margin of 4%, supported by daily gross transaction value of RMB303 per robotaxi, optimized fleet ratios, and lower insurance costs.

With Gen-8 vehicles projected at RMB200k, gross margin could reach 52% by 2030 and 66% by 2035. Fleet expansion is planned to 400-500 Gen-7 vehicles by year-end, with a long-term target of 100000 units.

Jefferies valued Pony AI at $11.6 billion, applying a 9.4x 2030 revenue multiple discounted to 2026, noting the company will shift to a more asset-light, software-driven model, with its “Pony Inside” platform contributing 28% of revenue by 2030.

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