A closer look at Pony.ai, the Chinese self-driving startup quietly building an international presence

FREMONT, Calif. — One of the world's highest-profile automakers, located in this East Bay suburb, has launched a feature called "Full Self-Driving." Despite its name, the technology requires the constant vigilance of human drivers, who remain responsible for all vehicle operations.

In the shadow of Tesla, another company only 2 miles down the road, Pony.ai, has developed actual Level 4 autonomous driving technology, meaning the vehicle can operate without any human oversight. Pony.ai holds growing ambitions of deploying robotaxis across the globe.

The company took another step closer to that goal in October, receiving authorization to conduct driverless testing on public roads in Beijing. The permit allows Pony to test without human safety drivers in a 7.7-square-mile area that includes major subway stations. It follows permits granted by Chinese authorities this year for testing of both autonomous cars and trucks on highways near the city.

Pony, which counts Toyota, Hyundai, FAW and GAC as automotive partners, is now approved for driverless testing in five cities on two continents. With $1.1 billion raised to date, including $400 million from Toyota, the company has, somewhat quietly, established itself as a global contender.

"It really is a blue chip company with a strong leadership team that has deep knowledge and experience," said Michael Dunne, founder and CEO of ZoZo Go, a consulting firm that specializes in helping U.S. automotive companies better understand Asian markets.

Beyond Beijing, Pony conducts driverless testing in Guangzhou and has a human safety backup aboard in Shanghai trials. In California, daily driverless testing is conducted in Fremont and Milpitas. The company runs further testing in Irvine, Calif.

An ever-expanding scope of geographies and operations is key to the company's strategy.

"Obtaining driverless test permits is solid proof of Pony.ai's leading position in the autonomous driving industry," said Ning Zhang, vice president and head of the company's Beijing R&D center.

Eight companies, including Pony, hold driverless testing permits in California. Those include key competitors Baidu, AutoX and WeRide, which all conduct extensive testing in both the U.S. and China.

Dunne ranked Baidu as the front-runner of that group. But he placed Pony, founded by Baidu and Google alums James Peng and Tiancheng Lou in 2016, in a "strong" second position, in part because of its efforts to establish groundwork in both countries.

"Pony has done the best job so far of being present in both the U.S. and China," he said. "It's still the early days. The Chinese companies are watching and waiting to see which way the wind blows. They know they can always go home. In the case of Pony, they're saying, 'Let's keep the seat warm here in case there's an opening.' "

Pony was valued at $5.3 billion following its latest funding round in February.

Among all self-driving companies, including the likes of Cruise and Waymo, Pony.ai was the first in California to establish self-driving service. It started a taxi venture in November 2019 in Irvine, with human backup drivers on board. Amid the pandemic, that pilot project pivoted to food delivery. The company hopes to again ferry human passengers, starting next year with driverless service.

Irvine is just the start. In Fremont, there are discussions with city officials about reviving a robotaxi service for public employees that connected riders between city hall and public transit stops, among other select areas, before the pandemic.

A ride along those routes last month proved uneventful. With the caveat that demonstration rides are, at best, a snapshot glance of a company's self-driving competence and not a comprehensive assessment, Pony's self-driving system comported itself well in a handful of notable scenarios.

With a safety driver behind the wheel, the vehicle gingerly navigated around a construction zone that had been erected minutes earlier and partially occluded the view of an intersection. It handled double left turns near busy shopping centers. It even took pains to make subtle steering corrections to avoid a pigeon already reduced to roadkill.

One forthcoming question may involve funding. Beyond the $1.1 billion already in its coffers, the company seemed on course for a further influx of funds in August via a merger with a special-purpose acquisition company. But it hit the brakes on those plans.

Reuters reported at the time that Pony had feared it would be subject to the same regulatory crackdown from government officials that beset ride-hailing company Didi shortly after its own initial public offering. (Two days after Didi listed on the New York Stock Exchange in June, the Chinese government ordered its app erased from online stores.) A Pony spokeswoman declined comment on the company's IPO plans.

A more practical challenge ahead may involve Pony's fleet, which currently numbers more than 40 cars in California and 220 overall. The majority of the vehicles are Hyundai Kona Electrics, while the rest are Toyota hybrids, according to the company.

California lawmakers are proposing a bill that would mandate a zero-emission future for robotaxis, requiring all new light-duty vehicles in the state to emit no emissions by the 2031 model year. Eventually, Pony wants to evolve its entire fleet to meet those potential regulations in California and for green-minded reasons overall.

Whenever Pony chooses to start that refresh, those deep automotive ties will be easy to rely upon — among many strengths for a company that holds a firm global foothold.

"The relationships with Toyota and other automotive companies and the money coming in, that puts them in a strong position," Dunne said. "That's all a big deal."