Pony AI stock price: Chinese Waymo rival is up a staggering 55% today. Here are 3 possible reasons why

Chinese robotaxi technology company Pony AI Inc. (Nasdaq: PONY) was up a whopping 55% on Monday—yes, you read that right—after Chief Technology Officer Lou Tiancheng told the Wall Street Journal it can now build its autonomous driving system for 70% less and is on the road to profitability.

Pony AI makes the technology that allows cars to become autonomous, or self-driving, not the cars itself, but it partners with companies to make the cars. It also operates a fleet of robotaxis in China.

Last week, Pony AI also received positive feedback after it unveiled three new driverless vehicles at the Shanghai Auto Show, which were co-developed with Chinese state-owned automakers BAIC Motor and Guangzhou Automobile Group, as well as Toyota.

And that’s not all. Also last week, Pony AI announced a partnership with Chinese tech firm Tencent, which would see Pony AI’s autonomous ride-hailing services integrated into Tencent Maps as well as the popular social platform, WeChat.

Analysts estimate the company has slashed its bill-of-materials, or BOM (all the materials, components, sub-assemblies, and instructions needed to manufacture a product) costs for its robotaxis from $137,217 to just $41,165.

Cheaper production could enable Pony AI to achieve single-unit breakeven, or the point at which it makes a profit each time a new robotaxi is added to its fleet, according to the WSJ. Some analysts think it could reach that coveted goal by the end of 2025, but that the company likely wouldn’t turn a profit until at least 2030, when it hits 50,000 robotaxis.

“The key is software optimization,” Lou told the WSJ. “For example, our software performance has tripled under the same computing power.”

It’s worth noting that Pony AI, which focuses on developing and deploying autonomous driving technology, including robotaxi services, has yet to turn a profit, and in fact posted a loss last quarter, which was its first reporting since going public last year.

If all goes well, Pony plans to to start production of its robotaxis mid-year, with the goal to expand from 300 vehicles to 1,000 at the end of 2025, per the WSJ.