The Pony AI $PONY IPO got a lukewarm reception. They priced at the top of the range at $13, where the stock remains. It's not shocking since it's an unprofitable Chinese technology stock focused on delivering self-driving.
Investors have cooled on self-driving partly due to the failures of major players like General Motors $GM and multiple disappointments from Tesla $TSLA. That doesn't mean it's not coming. In ten years, the number of people driving cars and trucks as a job will be much smaller. Even today, there are plenty of examples of the technology working when the domain is bounded and more controlled.
There have also been some disasters in the space, like the TuSimple IPO $TSPH, which now trades at 50c despite having close to $2 in cash per share. Their self-driving truck technology didn't work out well for investors.
While TuSimple will join our AI Fraud Parade, I don't think Pony is a name that should be tossed aside. We've done quite well sifting through the new AI names and picking up Nebius $NBIS, Penguin Solutions $PENG, and SoundHound $SOUN.
Start with the easier stuff.
I've always found it puzzling why much of the investment and narrative around autonomous driving focuses on the most general and complex use cases. Over the past several years, those promising it have had to continually announce delays and their feeling that AGI and FSD were "just around the corner."
It's not. But that doesn't mean there are not many promising applications that are more narrowly defined and can be addressed with the technology available today. For example, there are facilities where robotic valets park cars tightly in warehouses where they are retrieved on demand.
Railyards deploy AI-based autonomous solutions to move trains and containers faster with fewer errors and accidents than human operators.
Most of these applications are orders of magnitude lower in complexity. There's no need to account for pedestrians, strollers, bikes, road construction. Even weather and road conditions can be handled more efficiently, and speed is less important than throughput.
The US has an acute shortage of commercial truck drivers, particularly on long-haul routes. Operators have told me that in some cases, no matter how much money they offer, they can't attract drivers. The reason isn't money; it's mandatory drug testing.
Long-haul trucking is particularly attractive for autonomous driving. Spending multiple 10-hour days behind the wheel of a truck is not a great use of a human being. It's miserable, expensive, and prone to driver fatigue and general unhappiness. These routes are primarily in desolate stretches of the country, which can be very well mapped and coded.
Pony AI Positioning
Pony has two distinct parts of the business - autonomous driving passenger vehicles and self-driving trucks. Pony is positioned mainly as a pure technology provider and seeks to build licensing and fee-based businesses around the integration and use of their platform in these application areas.
