(Bloomberg) -- Autonomous driving startup Pony AI Inc.’s upcoming US initial public offering will be closely watched, as Donald Trump’s second administration considers moves that could ramp up competition in the sector with China.
The Guangzhou-headquartered company, which makes self-driving software and operates a fleet of 250 robotaxis in cities including Beijing and Shanghai, is part of a growing cohort of companies in China and the US pushing the boundaries around the emerging technology. Pony is seeking a market value of as much as $4.5 billion, based on the shares listed in its regulatory filings.
The planned listing comes as the US appears set to increase its activity in a technology that Chinese automakers have been going all-in on. President-elect Donald Trump’s transition team plans to make a federal framework for self-driving vehicles a key priority, Bloomberg News has reported.
China and the US are neck and neck in funding autonomous driving companies. The two countries have the most robotaxi startups globally, and the biggest players in the industry have raised a combined $46.8 billion since inception, Bloomberg Intelligence wrote in May. Chinese robotaxi company WeRide Inc. raised $440.5 million last month in a US IPO and concurrent private placement.
While looser regulation could potentially clear the path for autonomous driving technology in the US, Chinese companies operating there face a different set of obstacles.
The Biden administration has proposed a rule to block the import and sale of Chinese- and Russian-made hardware and software for vehicles that can communicate externally, which may impact Pony’s US operations, according to its filings. The company employs more than 100 people in the Bay Area and Tucson, Arizona, working on research and development and testing, the filings show.
“If the government eases US rules for self-driving cars, that would be great, but I think the Republican administration can be tough on China when it comes to cybersecurity and collecting data,” said Richard Bishop, autonomous vehicles industry analyst at Bishop Consulting.
Pony’s US revenue consistently remained below 1% of the total in 2023 and the first half of 2024, and the company expects its US operations to remain limited in scope, with no plans for further expansion in the foreseeable future, the filings show. That could change, particularly if the regulatory picture thaws.
“Having a research and development center in California could potentially help Pony.ai enter the US market,” said Steve Man, analyst for automobiles and industrials at BI.
And a US listing could be useful for Pony as it looks to expand globally, Bishop said. The company’s international backers include Toyota Motor Corp. and Saudi Arabia’s Neom Co.
US-China Thawing
Bankers will certainly welcome the continued thawing in the US-China IPO pipeline. The once-buoyant US market for IPOs by Chinese companies shrank in 2021 as both countries cracked down on Chinese technology companies.
More recently, China has been accelerating approvals of offshore IPO applications, according to Lu Yeung, an equity strategist at BI.
Led by EV maker Zeekr Intelligent Technology Holding Ltd., companies based in China have raised $977 million via IPOs on US exchanges since the beginning of the year, up 77% from the prior-year period, according to data compiled by Bloomberg. However, that’s still a fraction of the $13.2 billion Chinese firms raised in the US in 2020 and 2021 respectively, the data show.
Pony is marketing the American depositary shares in a range between $11 and $13 each, the filings show. At the top price, the company would raise $195 million. The shares are expected to price Wednesday.
“Momentum is building with Chinese companies exploring waters in US IPOs, but here’s still uncertainty for any large Chinese issuers with the new Trump Administration,” said Matthew Kennedy, senior IPO market strategist at Renaissance Capital. “But for now, Chinese companies see an opportunity to go public and they take it.”
--With assistance from Bailey Lipschultz.
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