8/12/2025

speaker
Operator

Hello ladies and gentlemen, thank you for standing by and welcome to Pony AI Inc's second quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. After the management's prepared remarks, there will be a question and answer session. 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 IR Pony AI under the news and events section. I will now turn the conference over to your host, George Hsiao, head of capital markets and investor relations at Pony AI. Please go ahead, sir.

speaker
George Hsiao
Head of Capital Markets and Investor Relations, Pony AI Inc.

Thank you, operator. And hello, everyone. We appreciate you joining us today for PonyEd's second quarter 2025 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 will 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 Dr. James Peng, Chairman of the Board and Chief Executive Officer, Dr. Tiancheng Luo, Chief Technology Officer, and Dr. Liu Wang, Chief Financial Officer of the company. They will provide prepared remarks followed by a Q&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. 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 website and filings with the SEC. I will now hand it over to our Chairman and CEO, Dr. James Peng. Please go ahead.

speaker
Dr. James Peng
Chairman of the Board and Chief Executive Officer, Pony AI Inc.

Thank you, George. Hello, everyone. Thank you for joining our innings call. We have actually had a very exciting quarter. Let me walk you through three achievements that define our success this quarter. 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 7 vehicles rolled off the assembly line. This puts us firmly on track to hit our target of 1,000 plus vehicles by year end of 2025. We have operated Gen 7 robotaxis in all our four tier one cities in China with over 2 million kilometers of open road autonomous driving. The path towards positive unit economics is also very clear. as we made substantial reductions in key cost items, such as remote assistance and vehicle insurance. Second, we continued 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%. Robotaxi revenues have more than doubled, with their charging revenues growing more than 300%.

speaker
Operator

Now let me share more details in these areas.

speaker
Dr. James Peng
Chairman of the Board and Chief Executive Officer, Pony AI Inc.

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 7 robotaxi vehicles. The first two models of Gen 7, namely the Guangzhou Automobile Group, the GAC, and the Beijing Automotive Industry Corporation, the BAIC models, have entered mass production in June and July, respectively. 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 7 vehicles in terms of safety, cost, reliability, and even appearance. The platform features 100% automotive grade autonomous driving kit, designed for a 600,000-kilometer lifecycle. All the sensors are highly integrated with the vehicles and can be pre-assembled. The total bond cost has also reduced 70% compared to our previous generation. That is, the cost dropped to even less than 1 third. Building on this foundation, we launched the operation of multiple Gen 7 Robotaxi models in all four Tier 1 cities. This highlights how our autonomous driving systems can reliably adapt to different vehicle platforms and road environments. Since launching, our Gen 7 vehicles have exceeded over 2 million 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. So far, we have an impeccable safety track record. The overall performance of Gen 7 robo taxis also exceeded our previous generation. The newly designed in-cabin interface provide a much better user experience. We have also made Robotaxi fleet operation much more efficient. Notably, we achieved reductions across key cost items, such as energy, vehicle insurance, maintenance, remote assistance, and ground support. 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 1 to 30 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 an 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 taxis. 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 robo taxi service revenue up by 158% year-over-year. Particularly, we delivered more than 300% year-over-year growth in fare charging revenues. The impressive growth momentum was fueled by our accelerated deployment of mobile taxis across all four Tier 1 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 robotics services. To further accelerate this momentum, we continued our effort in building a mobility ecosystem. In June, we formed a strategic partnership with Xihu Group, which is the largest taxi operator and fleet manager in Shenzhen. We plan to jointly deploy over 1,000 robot taxis in Shenzhen in the coming years. This collaboration pairs our AI-powered technology and service expertise with Xihu'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 5. Currently, we have secured permits in all four Tier 1 cities for our Gen 7 vehicles. 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 robot taxi 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 showcases both our technological maturity and solid operational capabilities. Recently, we also extended the fare charging global taxi service from 15 hours per day to a full 24-7 coverage in Guangzhou and Shenzhen to better meet the rising user demand. 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. 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 2025, 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. We have navigated complex urban environments, which shows 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 24-7 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 fleet service provider, we launched our road test in the city of Leningen. Our goal is to use Luxembourg as a launch pad to serve future European expansion. In summary, we have laid a solid foundation for large-scale commercial robo-taxi operation. 2025 is the pivotal year of mass production for PolyAI, and we have already made it happen. With Gen7 robo-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 multiple year accelerating growth. In the coming quarters, our main focus will be scaling up. With a solid plan and great execution in place, I'm extremely excited about the future of Tony AI in revolutionizing the mobility industry. This concludes my remarks. Now, I will hand it over to our CTO, Dr. Tiancheng Lou. Tiancheng, please go ahead.

speaker
Dr. Tiancheng Luo
Chief Technology Officer, Pony AI Inc.

Thanks, James. Hello, everyone. This is Tiancheng. I'm very proud of what we have achieved in the second quarter. We have started mass production of Gen7 robot taxis This shows that we have scaling up autonomous mobility technology. It also proves that we have constructed two important pillars for the robotics industry, fully driverless and scale. These two pillars are the foundation of the success of the robotics business. Let me elaborate a little more. Fully driverless means no safety operator inside the car at all. 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 robot taxis should be at least an order of hundreds, run on the road every day with a large enough of ODD. People can just open their ride-sharing apps and call Robotaxi at their convenience. Based on these two standards, the development of L4 Robotaxi technology universally follows three conceptual stages. The first stage, cars still need a safety operator, either in the driver's seat or passenger's seat. The safety operator inside the vehicle have to step in to take over to mitigate any potential incidents. These incidents may be caused by AI model errors hardware failures, or simply traffic scenarios that the vehicle cannot handle. 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 systems, which can handle hardware failures. 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, robot taxis can go fully driverless with hundreds of cars open to the public. They can also run 24-7 in all weather conditions, especially during rush hours. Once robot taxis can operate without any safety operation 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 possibilities for potential errors 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 driven fleet is directly proportioned to the high standard of safety and reliability. Only teams that truly trust their technology will run fully-drived 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 users can easily access fully-drived robotic service whenever they want, even through tough conditions like heavy rains or snowstorms. we will get a ride that is reliable and safe at all times. So we are proud that Pony AI has already achieved the third stage in 2024, last year. 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 Robotics service to the public during World AI Conference . 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 raining during the conference. We were the only company to remain operational in heavy rains. The fast speed at which we are scaling up fully-drived Robotics in Shanghai shows we over strong generalization capability. This is powered by our high fidelity training environment and the evaluation system. Today, people in all 41 cities can call our fully driverless robot taxi and get to anywhere they are going. Our latest Gen7 robot taxi platform powers our fully driverless and scalable services. We also enforce regular engineering practice to enforce over safety first principle. We have already mass-produced over 200 Gen 7 robot taxis and have proven they are ready for large-scale deployment. Our multiple Gen 7 models are equipped with multi-sensor switch and a new computing platform with four ORIX chips. This vehicle has achieved over 2 million kilometers on public road across all 41 cities. The testing in diverse conditions shows the reliability of our entire autonomous driving stack. With much better integrated sensor setup and upgraded sensor carrying system, the vehicles are much more reliable even in extreme weather and heavy traffic conditions. More importantly, the target of 1,000 robot taxi vehicles is just a start. As the service area expanded and the fleet gets denser, the network effects will kick in. This means that the user can reach more destinations and wait less time for a ride. Overall, a much better user experience. We have also enhanced the in-cabin experience for JoyJet 7 Robotaxis, such as voice interactive features. All this will lead to accelerating multi-year growth trajectory. To wrap up, Overachievement makes the second quarter reinforced overconfidence in the path forward. Mass production is firmly on track, with Guangzhou Auto and Beijing Auto Gen 7 vehicle production ramping up fast. We are continuously improving our operational efficiency and reducing the relevant costs. All this effort puts us in a strong position to scale up autonomous mobility rapidly. This concludes my prepared remarks. I will now pass the call to our CFO, Dr. Leo Wang, to review our financial results. Leo, please go ahead.

speaker
Dr. Liu (Leo) Wang
Chief Financial Officer, Pony AI Inc.

Thank you, Tiancheng. Hello, everyone. This is Leo. 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 7 Robotaxi fleet, while also maintaining disciplined investment. In the second quarter, total revenues finished at $21.5 million, growing by 76% year-over-year, mainly driven by robust growth in both Robotaxi services and the licensing and applications, a clear demonstration of our effective commercialization execution. Robotaxi service revenues reached 1.5 million US dollars, representing another quarter of rapid year-over-year growth of 158%. Both fare 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 demand in Tier 1 cities in China, as well as an increased fleet of robo-taxi vehicles. In addition, through ongoing optimization of our pricing and operational strategies across diverse user segments, we continued to enhance user engagement and the 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 robot truck services, revenues were 9.5 million US 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 the second quarter. Licensing and application revenues were $10.4 million, growing significantly by 902% year-over-year. We saw increasing orders and deliveries for autonomous domain controller sales, driven by both new and existing robo-delivery clients. Turning to gross margin, it improved year over year to 16.1%, with gross profit of $3.5 million in the second quarter. As mentioned in the last quarter, we continue to advance initiatives aimed at reducing gross margin variability with a focused strategy on prioritizing high-margin revenues within robotaxi and robotruck services. 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 $64.7 million, 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 $57.5 million, up 59% year-over-year. The increase was primarily driven by increased investments in mass production alongside employee expenses aimed at strengthening our R&D capacity for Gen 7 robot taxi vehicles. Net loss for the second quarter was $53.3 million and increased from $30.9 million in the same period last year. Non-GAAP net loss was 46.1 million U.S. dollars compared with 30.3 million U.S. dollars in the same period of last year. Primarily reflecting increased investments in mass production and R&D employee expenses for concurrent development of Gen 7 vehicle models, as we drive towards large-scale Robotaxi mass production and deployment, our disciplined investments 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 747.7 million US dollars as of June 30th, 2025. The quarterly financing cash inflow increased by $33.1 million, 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 mass production underway, we are very on track to reach 1,000 robot taxi fleet size target, already with over 200 contributed by the Gen 7 robot taxi fleet. With a competitive cost structure for the latest Gen 7 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&A session. Thank you.

speaker
Operator

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1. on your telephone keypad. If you are using a speakerphone, please pick up the handset before pressing the keys. To withdraw your question, please press star then two. For the benefit of all participants on today's call, please limit yourself to two questions. If you have more questions, please re-enter the question queue. If you have questions in Chinese, please repeat them in English. First question is from Ming Hun Li, Bank of America.

speaker
Ming Hun Li
Analyst, Bank of America

Thank you, Benjamin, for taking my question. And congratulations 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 second half of 2025?

speaker
Dr. James Peng
Chairman of the Board and Chief Executive Officer, Pony AI Inc.

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 7 RoboTaxi vehicles. It showed a clear accelerating momentum. 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. 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 a agile and holistic sourcing strategy. This not only ensures sufficient inventory to support production pace, but also helps to maintain the bomb cost stability. Currently, we have completed the returing of assembly lines for both the BAIC and GAC Gen 7 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 an impeccable safety track record with more than 2 million kilometers of operation. 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 7 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 the decrease in the vehicle insurance. reinforced by our proven go-to-market strategy, as we have seen a strong growth in fare charging revenues. So with all these improvements, I'm actually now very confident in reaching positive unit economics for our Gen 7 vehicles.

speaker
Operator

With this, back to the operator.

speaker
Operator

Next question is from Bin Wang, Deutsche Bank.

speaker
Bin Wang
Analyst, Deutsche Bank

Thank you. Your robo-taxi revenue growth is very strong once again this quarter. Can you elaborate the key drivers behind the solid growth? For example, what's the free size at the beginning of the quarter to the end of the second quarter? Thank you.

speaker
Dr. Liu (Leo) Wang
Chief Financial Officer, Pony AI Inc.

This is Leo. I'll take this question. As I mentioned earlier, our robo-taxi service revenue rose by 158% year-over-year, powered by a more than 300% expansion in fare 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 robo taxis. Through ongoing optimization to our pricing and also operation strategies across diverse user segments. We have greatly improved the user engagement and the service efficiency. Our current user satisfaction rate is well above 4.8 out of 5. Additionally, we are currently operating across 2,000 square kilometers in Tier 1 cities in China. That's more than 20 times the size of the city of San Francisco. This provides us ample market space to deploy a larger scale of Robotaxi fleet. So looking ahead, increasing vehicle density in these regions remains our top priority. We expect the notable improvements in vehicle accessibility and the user experience, which in turn will incentivize higher demands. 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's strengthening our business visibility over the long term. Now I'll get back to the operator.

speaker
Operator

Next question is from Ting Song, Goldman Sachs.

speaker
Ting Song
Analyst, Goldman Sachs

Thanks for taking my question. I 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 robot taxi industry, and are there any changes in the government's attitude on the industry?

speaker
Dr. Tiancheng Luo
Chief Technology Officer, Pony AI Inc.

Thank you. This is Tiancheng. I will take this question. The recent comment you mentioned actually reinforced the distinction between L2 driving assistance and L4 autonomous driving. The government qualifies that L2 and L4 are two completely different products. Current L2 driving assistance intelligent driving systems have not yet achieved fully autonomy that L4 can achieve. And under L2, the driver remains ultimately responsible for vehicle operation. This is aligned with the MIT comments early in April this year. 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 a user mistakenly treating L2 as full L4 automobiling. In addition, the difference in responsibility will result in different safety standards. The L2 system's liability lies with the driver's. In contrast, the L4 system has full responsibility, resulting in a safety first principle and a regular engineering practice. Given above, Pony AI is a company dedicated to L4 solutions. Achieving L4 autonomous driving requires very high safety standards. It would also need a multi-layer software and hardware architecture that provides redundancy in the event of system component failures. It must include critical components as sensors, computing, controls, and power systems. In China, to obtain fully-drived permit, redundancies must be tested in many complicated situations, such as handling cyclists coming out of blind spots. That's why most mass-produced vehicles out there need to add actual redundancy to meet these basic requirements. With that, back to the operator.

speaker
Operator

Next question is from Chu Yang Yi, Huatai Securities.

speaker
Chu Yang Yi
Analyst, Huatai Securities

Yes, thank you for taking my questions. This is Chuyen from Huatai. So first of all, congrats on your recent business development expansion. So my question is, as you look at new market expansion, what are the key technical requirements to enter new geographies? And how confident are you in your system's ability to adapt quickly and safely to different environments? Thank you.

speaker
Dr. Tiancheng Luo
Chief Technology Officer, Pony AI Inc.

This is I will take this question. The core of L4 auto driving is all about ability to handle corner cases and extreme cases. In different geographics, this type of scenario is actually similar. For example, a pedestrian step into the road, a vehicle suddenly changing lanes, or there's unexpected road construction. These situations are fundamentally the same, even if their frequency can be varied by location. All the software systems have achieved fully driverless, scalable, and 24x7 operations across different environments. This key enabler is our Pony World model, which we deploy consistently across cities and countries. It enables us to generate numerous challenging scenarios and replicate existing scenarios with many variations. This significantly enhanced the AI driving model's ability to handle a wide range of challenging situations. While entering a new area, we can quickly launch load testing and validation. Additionally, tuning of the AI model is not needed. So, for example, our current operation at WAIC in Shanghai has 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 extension into large ODD and scalable operations. So with this, back to the operator.

speaker
Operator

Next question is from Xinyu Fang, UBS.

speaker
Xinyu Fang
Analyst, UBS

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

speaker
Operator

Yes.

speaker
Xinyu Fang
Analyst, UBS

Hi, thank you and congrats on rapid growth in rural taxi 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 timetables that you can share for now for such IPO, please? Thank you.

speaker
Dr. Liu (Leo) Wang
Chief Financial Officer, Pony AI Inc.

Yeah, 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. 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.

speaker
Operator

Next question is from Evelyn Zhang from Daiwa.

speaker
Evelyn Zhang
Analyst, Daiwa Securities

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

speaker
Operator

This is Jeff.

speaker
Dr. James Peng
Chairman of the Board and Chief Executive Officer, Pony AI Inc.

Let me begin with an overview of our global expansion strategy. As you can see, our current global expansion actually focuses 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 the local partners and the policy makers. 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 partnerships in Luxembourg, where road tests have now started. Every step forward reflects our core beliefs, autonomous mobility everywhere. In terms of the Our operational and some details of our global expansion, I'll hand it over to Leo, who will give you further perspective.

speaker
Dr. Liu (Leo) Wang
Chief Financial Officer, Pony AI Inc.

Thank you, James, and this is Leo. So from an operation perspective, scaling to hundreds of commercial fully driverless robot taxis 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 US and China. 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 takes time for a sustainable fare 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. 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.

speaker
Operator

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

speaker
Operator

Yes.

speaker
George Hsiao
Head of Capital Markets and Investor Relations, Pony AI Inc.

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.

speaker
Operator

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

Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

-

-