Autonomous Vehicle Startup Raises $267 Million

By Bruce Harpham Tuesday, November 10, 2020

Pony.ai, a startup focused on autonomous vehicle technology, has raised $267 million from investors in its Series C funding round. Investors in the company include the Ontario Teachers' Pension Plan, one of Canada's largest public-sector pension funds. Other investors in the company include Fidelity China Special Situations PLC, 5Y Capital, Clearvue Capital, and Eight Roads. As a result, the company is now valued at more than $5 billion.

Pony's Technology Is on Display

Pony is already advancing beyond the pure research and development phase. The company has displayed its vehicles at the China International Import Expo in November 2020. Unlike Tesla, Pony does not directly manufacture vehicles. Instead, the company focuses on producing software and partnerships with other firms.

Toyota's Self-Driving Car Strategy

Toyota invested over $400 million in Pony to date as part of its strategy to enter the self-driving car market. As a result, Toyota vehicles are likely to use Pony vehicles in the future. In the short term, Pony technology will be installed in Lexus RX 450h cars in China on a pilot basis. The partnership also gives Pony access to large scale sales and production. Last year, Toyota sold over 2.3 million vehicles in the United States.

Toyota's focus on self-driving car technology goes beyond Pony. The automaker is also investing in a high-end mapping system. In essence, Toyota is now able to create HD maps from commercial satellite images. Thanks to technology from TRI-AD, Toyota will no longer have to depend on map data from third parties like Google Maps.

Pony Offers Robo-Taxi Service in Irvine, CA

Rather than selling directly to consumers, Pony is planning to enter the robo-taxi market. This approach to the autonomous car market will put it in direct competition with other firms like Cruise and GM (find out more in our story: GM and Cruise's Innovative Leap in Self-Driving Cars — No Steering Wheel or Pedals).

Pony had already completed a robo-taxi test in Irvine, California, in November 2019. By installing its technology in Hyundai cars, several hundred people rode in the vehicles. Unfortunately, the pilot program was suspended in March due to the COVID-19 pandemic.

Robo-Taxi Service in China

Pony's trans-Pacific model gives it an advantage that other self-driving car companies like. The company can access talent in California along with the state's pro-autonomous driving market. However, the company also has staff based in China, where it can access China's rising technology market.

In 2018, Pony launched a robo-taxi service in China called PonyPilot. Initially, the company limited its technology to employees. Later, the company expanded the service to the general public. The company has not released figures on revenue earned through this service.

Baidu Launches a Robo-Taxi

Pony is far from alone in the Chinese robo-taxi industry. Baidu, one of China's largest technology companies, launched a robo taxi service last month. With its deep pockets, Baidu is taking a loss on its robo-taxi service. In Beijing, app users can hail self-driving cars free of charge using Baidu Maps or Apollo Go.

Baidu's self-driving car model is different from traditional taxis. The company has close to one hundred pick-up and drop-off points in Beijing. That means that users have to make their way to one of these points to use the service. As a result, Baidu passengers are likely to continue using other taxi services, traditional and app-based, for other trips. The company serves an area of approximately 700 square kilometers (435 square miles) in Beijing. Baidu also offers Changsha's service, Hunan province covering 130 square kilometers (80 square miles).

China Encourages Self-Driving Cars

Government support or hostility can make a big difference in innovation. The Chinese government has made it clear that they are open to supporting self-driving cars. At the end of 2019, Beijing has set aside 322 km (200 miles) of road space in a suburban area for self-driving car testing. The area includes schools and office buildings, so it is reasonably close to real-world driving conditions.

Thirteen companies have received road test licenses to explore technology. Beyond the capital, self-driving car tests are underway in Shanghai and Guangzhou. By permitting multiple companies to test their technology in different cities, Chinese companies may gain experience faster as a result.

Market Demand for Robo-Taxis

While robo-taxis are not yet commercially viable, experts expect that it will become a large market. Allied Market Research estimates that the robo-taxi market will be worth $1 billion by 2023. By 2030, the report estimates that passenger transport by robo-taxi may be worth $16 billion.

About the Author


Headshot for author Bruce Harpham

Bruce Harpham is an author and marketing consultant based in Canada. His first book "Project Managers At Work" shared real-world success lessons from NASA, Google, and other organizations. His articles have been published in CIO.com, InfoWorld, Canadian Business, and other organizations. Visit BruceHarpham.com for articles, interviews with tech leaders, and updates on future books.

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