Operator
Hello, ladies and gentlemen. Thank you for standing by, and welcome to Pony AI Inc.'s fourth quarter and full year 2025 earnings conference call. At this time, all participants are in a 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 I will now turn the call over to your host, George Hsiao, Head of Capital Markets and Investor Relations at Pony AI. Please go ahead, George.
Thank you, Operator, and hello, everyone. We appreciate you joining us today for Pony AS fourth quarter and full year 2025 earnings call. Earlier today, we issued a press release with our financial and operating results, which is available on our investor relation website. An earnings presentation, which we will refer to during the conference call, can also be accessed and downloaded on our IR website. Joining me today on the call are Dr. James Peng, chairman of the board and CEO, Dr. Tiancheng Lo, CTO, and Dr. Liu Wang, CFO of the company. They will provide a prepared remark followed by the QA session. Before we begin, please refer to the Safe Harbor Statement in our earnest 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 the GAAP in our earnings release, available on our Invest Relation website and following with the SEC and Hong Kong Stock Exchange. I will now hand over to our Chairman and CEO, Dr. James Pong. Please go ahead.
Thank you, George. Hello, everyone. thank you for joining our endings call 2025 is an amazing year for us this was actually defined by multiple remarkable milestones first our top line growth significantly accelerated looking at q4 last year our robo taxi revenues searched by 160 percent year over year and fair charging revenues skyrocketed by over 500%. Second, since our Gen 7 robotaxis debuted last April, we'll move straight into mass production and commercial deployment. Our fleet has now surpassed 1,400 units. Third, we are expanding our footprint, launching services in new cities in both China and globally. this has massively broadened our reach in fact we're now crossed the 1 million user mark in china alone fourth we've proven our business model actually works we achieved ue break even in both guangzhou and shenzhen and we will replicate this success into more markets looking ahead at 2026 it will definitely be a year of hyper growth for ponies we're riding a perfect wave of industry momentum built on five pillars fully driverless technology policy support mass production large-scale operation and ecosystem maturity last year we used China's Tier 1 cities as a strategic blueprint to deploy Gen 7 robo-texies. From official debut to mass production, regulatory validation, and rigorous testing, we achieved commercially fully driverless operations within just six months. Last quarter, we set our robo-texies lead target to over 3,000 units for this year. boosted by the financial fire powder from our successful hong kong ipo and also with the toyota bz4x gen 7 model already in sop we now have greater visibility and are confident in actually even exceeding this target our excellent virtual driver is the key to support this confidence proven mastery of highly complex urban scenarios and a superior safety record have earned deep trust from the policy makers and partners driving rapid user adoption this directly translates into positive ue since we hit the ue break even in shenzhen last month growth momentum continues with this march we are seeing peak daily revenues of 394 rmb per vehicle and daily orders at 25 per vehicle we will certainly replicate this success globally by year end we plan to deploy robo taxes in over 20 global cities as the go-to partner we have forged strategic alliance with industry leaders like tencent and uber together we will propel global expansion powering accelerated top-line growth and more than tripling our robotaxi revenues for 2026. let me elaborate how we will drive this hyper growth we are executing dual engine strategy that means we are all in on both china and global markets our proven business model in china gives us a solid foundation to replicate the success internationally and we are already seeing great results that provisions us for our next growth phase in china we have earned a clear leadership across tier one cities scaling further and pushing deeper into busy downtown areas take shenzhen for example our robo taxes satisfy surging demand in traffic hubs such as nanshan and bauan during chinese new year the paid orders in the first two months this year alone have already surpassed that of the whole year 2025 in Shenzhen we also entered university town in Guangzhou the business campus zone in southern China this sets the stage for more launches in multiple cities across the Greater Bay Area. In March, we also entered Hangzhou and Changsha, two driving top tier two cities. This is just a start and we will have more cities to follow soon. Now turn to overseas markets. Our presence in Europe, the Middle East, East Asia and Southeast Asia now covers a population of 100 million. We're aiming for nearly half of our 20-city target to come from overseas by the end of Recently, we teamed up with Uber and Vern, which is a RIMAC group company, to enter croatia working together to launch europe's first commercial fare charging robo taxi service in the middle east we rolled out our first fair charging service with movasale cover in doha and we are getting up for fully driverless operations after the approval later this month in dubai uae in singapore we have launched public debut of autonomous driving services with comfortel grow we're confident overseas revenues will grow rapidly in 2026. ecosystem maturity is a critical pillar in executing our dual engine strategy our successful business model makes us a go-to partner partners are now actually lining up to join our joint deployment model essentially it's a model that they will fund vehicles and we can share success together this will empower us to achieve fleet acceleration reduced cost and capital efficiency we have got a robust pipeline of new partners ready to jump on board Toyota is the first to adopt our joint deployment model their busy 4x gen 7 robotaxis will account for a significant portion of our 3,000 vehicle target in 2026 and we have already secured 1,000 units as a long-standing strategic partner our collaboration with toyota extends far beyond just manufacturing together we will commercially deploy robo taxi to drive market penetration by leveraging our oem partners mature supply chain and extensive after sales service networks our enhanced partnership with both Beijing Auto and Guangzhou Auto further reduce our vehicle cost in addition we will jointly deploy RoboTaxi vehicles into more overseas markets to reach a broader user base we also partnered with Tencent by integrating with WeChat mobility unlocking access to hundreds of millions of users to call our robotaxi services we are also deepening strategic partnerships with on-time mobility in guangzhou and atvb in beijing to accelerate adoption of our joint deployment model overseas our global partnership with uber enables us to access users across multiple continents starting from Europe. Our regional alliance strengthened our market penetration with partnerships established with ride-hailing platform Bolt and also auto manufacturers Stellantis. Now, let me turn to Robotruck. Over the past few years, we've made huge technological leaps by using our proven l4 tech stack it has been translating into commercial breakthroughs we are now covering major logistic routes connecting industrial hubs ports and consumption centers across china to seize the opportunity we introduced our gen 4 robo truck in 2025, reducing the ADK bomb cost by 70%. We target mass production of Gen 4 robot trucks and deploy them this year. In 2025, we have deployed fully driverless robot trucks at Jiangmen Port in Guangdong province and tested the 1 plus N driverless platonium in extreme weather conditions in northern northwest china with this proven pack we will deploy robo trucks in more ports and mine haulage scenarios lastly our licensing and applications business delivered a robust growth last year autonomous domain controllers the adc sales actually reached sixfold to the level of 2024. We have also expanded our application scenarios to low-speed deliveries, robot sweepers, logistics, and humanoid robotics. Strong customer demand and growing market recognition of our technology will continue to drive growth. In summary, we have hit a major inflection point as we are validated business models through 2025 achievements such as lead expansion new city launches and UE break-even 2026 is posed as a year of hyper growth we are super confident to triple our RoboTaxi revenues roll fleet to over 3 000 vehicles and deploy robo texas in more than 20 global cities powered by our dual engine strategy we are speeding towards autonomous mobility everywhere i firmly believe every effort we make today will not only reshape the future of human mobility but also drive a revolution in transportation this will be a revolution where safety efficiency and accessibility redefine how the world connects commutes and thrives with that i'll hand it over to our cto dr tienten lo who will go over our technology strategies canton please go ahead thank you James hello everyone this is Tian Cheng looking back and over joining in 2025
it was a landmark year we proved the commercial viability of autism mobility achieving positive unique in economics in Guangzhou and Shenzhen today our free site has surpassed 1400 a large growth throughout the year robotexy is the first to see commercial application of physical ai validated by real world operations and user adoption overall formative tech architecture build-on years of r&d has earned the trust of policymakers and established first mover advantage to capture multi-year growth as i highlighted in the previous quarter world models are now the widely recognized tech path, a domain where we hold a firm living position with the Pony World model. But technology is only the foundation. The key to success is who can deliver reliable, driverless robotic service at scale. I will work you through how our technology drove commercial results in 2025 across three dimensions, scale, efficiency, and user experience. First, scale. Through strong execution on mass production, we surpassed over 2025 fleet target, and this momentum presents us to reach over 3,000 units by the end of 2026. Since middle 2025, we begin mass production of two Gen 7 models with Guangzhou Auto and Beijing Auto. Both now ramping up to full capacity. In February this year, the BZ4X Gen7 Robotaxi, co-developed with Toyota, rode off the production line. The strong generalization of overall sound-driving stack enables us to efficiently adapt across different vehicle platforms. This multi-OEM network enables rapid scaling while strengthening local partnership and broadening over Robotech's vehicle offerings. This scale is backed by a comprehensive ODD that validates our technology's ability to generalize across diverse urban environment. Today, our fully-draftless fleet operates 24-7 in many cities across the globe, serving the public during peak rush hours and severe weather conditions. Achieving this requires regular engineering validation and breadth of our fleet deployment and ODD reflects the maturity and the robustness of our autonomous driving stack. Overseas extension further validates its generalization capability. In Croatia, we are operating across a large area in the center of Zagreb, the capital's urban core, handling complex urban traffic rather than limiting low-complexed rocks. Such ability to deploy in demanding environments from day one demonstrates both the robustness of our technology and the commercial potential of our global expansion. This gives us strong confidence in reaching out to the target of more than 20 cities worldwide. Second, efficiency. We will establish a clear cost advantage, driving a two-fold improvement. On hardware, over-optimized design in Gen 7 robotics effectively lower BOM costs through adopting more cost-effective components. On operation, over-safety records create significant leverage, dramatically reduce insurance fees, and improving remote assistance efficiency. All of this enables us to scale with positive unit economics. Beyond that, over-tech is building a powerful operation mode. We have developed a highly generalized AI-driving capability to build comprehensive and scalable operational workflows. This deep know-how makes us the go-to partners across the mobility ecosystem. It perfectly positions us to execute our drone development model, allowing us to scale fleet much faster with better capital efficiency. The third, user experience. Our technology enables Robotex to serve consistently in high-value, high-difficult scenarios. Yet, I will continue with the third factor, user experience. So, our technology enables Robotex to serve consistently in high-value, high-difficult scenarios, exactly in high-frequency ride-sharing hotspots where demand peak and users are willing to pay a premium. This differentiates over service, supports overpriced strategy, and directly drives U.E. improvement. For example, in Shenzhen, over 24-7 drivers' road taxi covers high-traffic urban zones, such as Nanshan High Tech area, to fulfill daily commuting needs. During rush-overs, our AI virtual driver navigates not only major main road, but also narrow street where commuters actually need to pick up and drop off. providing convenient pool-to-coverage that truly addresses real-world community needs. In Beijing, during a heavy snowstorm in the early March, getting a ride become a major pain point for users, such as long waiting time and limited availability. Despite the extreme conditions, snow-covered sensors reduced visibility and unpredictable road conditions, all demanding significant high driving capabilities. Our RoboTaxi fleet continued operations throughout the snowstorm, capturing substantial older volume growth during that period. Beyond handling extreme conditions, we have significantly improved ride comfort. Over Gen 7, RoboTaxi delivers smoother acceleration, braking, and coloring, significantly reducing motion thickness, a pinpoint that users care about most. This underscores the fundamental point, technology leadership is not just an engineering milestone. It is the core engine of our commercial success. Outstanding user experience earns user preference and repeats usage organically without relying on discounts. Beyond our robotics business, over-proving LFO technology enables us to capture commercial opportunities across the broader autonomous driving industry. Our platform's generalization enables 80% of the tech stack shared between Robotruck and Robotaxi. We have achieved two full-scenario all-weather 24-step operational capabilities. Our operations now span from complex highway segments to unique scenarios like parts and logistics, with accumulated mileage exceeding 60 million kilometers. We also unlock synergy for the license application segment through leveraging over-advanced autonomous driving domain controller design, capitalizing on the rapid growth trend in low-speed delivery, robust reapers, logistics, and robotics. We effectively fulfill our customer's demand on Robonus. Looking ahead to 2026, we will increase our investment in R&D and AI talent to assess our competitive position. Specifically, we are focused on advancing our Pony World model to further strengthen our autonomous driving capabilities, reducing bomb costs through continued hardware software optimization, and improving operational efficiency to lower per vehicle operating costs. These improvements are designed to fuel faster commercialization, expanding over robotex operations to more than 20 cities globally by year-end, and delivering faster revenue We will over-triple robotex revenue than 2025. As we demonstrated already, technology leadership directly drives commercial performance, and this investment will further widen over advantage. This concludes my prepared remarks. I will now pass the call over to our CFO, Dr. Leo Wang, for a closer look at our financial results. Leo, please go ahead.
Thank you, Tian Chen. And hello, everyone. This is Leo. I will focus on year-over-year comparison for the fourth quarter unless otherwise noted. For full year 2025 and the fourth quarter detailed financials, please refer to our earnings release. 2025 marked an inaugural year of large-scale commercialization for our RoboTaxi operations. RoboTaxi segment continues to act as core growth engine for the group, delivering exceptional top-line growth. In the fourth quarter, RoboTaxi revenue surged 160 percent to 6.7 million US dollars for full year 2025 robo taxi revenues reached 16.6 million u.s dollars growing more than doubled at 129 percent this remarkable acceleration was primarily driven by our fair charging service which we saw q4 fair charging revenue skyrocketed by 501 percent with a full year growth rate of nearly 400 percent more importantly within just four months of gen 7 robot taxi launch we are thrilled to see consecutive ue turned positive in both guangzhou and shenzhen two most valuable cities in china this milestone was built on two unique pillars that are exceptionally difficult to replicate from others first our clear cost advantage advantages in both vehicle and the robotaxi operations second our exceptional ai driving capabilities being capable of navigating highly complex urban environments 24 7. we deliver a consistent reliable, and high-quality service, which helped us to capture the robust user demands. With the foundation of positive UE and as vehicle density improves, we are seeing a clear network effect. Improving fleet density shortens with time, boosts utilization rates, and drives the number of orders per vehicle. This in turn enhances overall passenger experience and further stimulates ride-hitting demands. Specifically, year-to-date of 2026, our users have nearly tripled year-over-year and reached 1 million. In February, we successfully delivered unique economic positive in Shenzhen, with an impressive average daily orders of 23 and 338 RMB average daily net revenue on a per vehicle basis. As a matter of fact, this strong upward trend is continuing right now. In March, we hit a new daily peak of 394 RMB net revenue and 25 orders per vehicle more excitingly our paid orders in the first two months of 2026 in shenzhen have already surpassed the entire order volume for the full year of 2025 looking ahead we remain highly confident in the growth trajectory of our robotaxi business as james mentioned our dual engine strategy will drive rapid expansion into more than 20 cities in China and overseas. We are confident that our RoboTaxi revenues will at least triple this year. Simultaneously, we are enhancing our revenue quality by adding high-margin recurring revenue streams through RoboTaxi joint deployment with our partners, such as on-time mobility. This model will lower the capex requirement on initial fleet deployment from our end, and can also give us leverage to expand faster and more efficiently into new regions. From a technology perspective, as Tianchen mentioned, our advanced AI driver capability directly empowers a premium user experience, providing safe, reliable, smooth, and efficient rides for passengers. This superior experience strengthens our pricing power and deepens user mindshare, which can further boost top-line growth. On the cost side, we have proactively secured procurements for critical vehicle components and hardware, including high-demand memory modules. Therefore, we expect the minimal impact from supply chain pricing fluctuation. Meanwhile, with greater fleet scale, continuous tech reiteration, and the deepening OEMs collaboration, We have high confidence in continuously reducing our vehicle bomb cost and further improving operation efficiency. Together, the high-growth margin profile of the RoboTaxi segment is fundamentally elevating our revenue quality and actively contributing to the group's future profitability. Now let's move on to RoboTaxi. by leveraging our proven robo-taxi stack. Our next-gen robo-truck achieves a 70% cost reduction. Furthermore, our transition to EV trucks also will continue to drive down per-kilometer operating cost. Looking ahead to 2026, our shared expertise in robo-taxi will accelerate our robo-truck mass production, enabling us to begin deployment within 2026. As we aggressively deepen our route coverage across major logistic corridors and expanding into more scenarios such as dedicated lines and port operation, we expect to see accelerated growth in revenues beginning in the second half of this year. with lower structural costs, continuous tech breakthroughs towards driverless operation. We are perfectly positioned to capture the freight market's immerse value. Thirdly, our licensing and application also delivered impressive growth in 2025. We are seeing strong clients' demands from our autonomous domain controller ADC product with the ADC volume grew to six times of the level of 2024. Looking ahead, we are seeing a solid order pipeline from existing customers and are actively expanding into new use cases. On the overall profitability front, we achieved a historical financial milestone in the fourth quarter by achieving a first-ever quarterly gap-level net profit. This historical pivot to profitability was primarily driven by the gains from our strategic equity investments, which strengthened our broader ecosystem positioning and unlocked business synergies. In 2025, our expenses were slightly widened. This was a deliberate front-loaded investment to accelerate Gen 7 mass production, expanding into new cities and strengthening our tech stack. Such investments are already starting to drive strong top-line growth. In the era of AI, we anticipate continuous investments into AI technology and the talents to help us secure a long-term competitive edge. Beyond the technology benefits, our joint deployment model will also be a powerful lever for CapEx efficiency. By collaborating with partners to share the initial investment, we are able to scale our fleet rapidly while maintaining a lean balance sheet. Looking ahead, we expect the revenue growth to outpace the growth of operating expenses as we capitalize our fleet scale and capture the virtual cycle of positive UE. Finally, we closed the year with a highly robust balance sheet with a substantial cash reserve of over US$1.5 billion following our successful Hong Kong IPO. This solid capital position gives us the firepower to invest decisively into R&D, SG&A, and the go-to-market capabilities. We are confident that these stepped-up investments will accelerate our pace on large-scale commercialization and deliver faster revenue growth in 2026. Looking ahead, we are crystal clear on our strategic priorities, tripling our robotaxi revenue, expanding our fleet target to over 3,000 vehicles, and deploying robotaxi to more than 20 cities. globally by 2026. We have ample dry powder to support these initiatives, and we will drive progress through our dual engine growth strategy. Combined with our joint fleet deployment model that optimize capital efficiency, we are well positioned to accelerate these targets and turn our operational momentum into sustained profitable and long-term growth for our shareholders. I will now turn the call over to the operator to begin our Q&A session. Thank you.
Operator
Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. For the benefit of all participants on today's call, please limit yourself to one question. If you have more questions, please re-enter the question queue. If you ask questions in Chinese, please repeat them in English. The first question today comes from Ming Sun Li with Bank of America. Please go ahead.
Hi. This is Ming from Bank of America, and thank you for giving me the opportunity to ask a question. So my only question is that since you already have a target of 3,000 robot taxi fleet by the end of 2026, can you share your production ramp-up and deployment plan?
Now that you have achieved the UE break-even in Shenzhen and Guangzhou, what do you think about a future ue trajectory thank you this is james i'll take this one so in my opinion i think the hitting the ue break even is a huge win for the whole industry not just for us it proves that our technology actually works in the real world it also shows that robo taxi is not just feasible but profitable at scale right after the ue break even in guangzhou we did it again in shenzhen this shows that our model is actually replicable and we achieved this break even by focusing on service value not the discounting what we have seen is that in the regular front regular regulatory front currently we do see there's a policy tailwind to support the whole industry in China there's a coordinated efforts between the central and local governments to bring robot taxi services to many cities and in our existing markets of the tier one cities I also have seen there's more licenses were issued to facilitate a larger fleet Globally, many countries learn from the progress in China and the U.S. to clear the policy hurdles and come up with regulations to support accelerated deployment. So the regulatory momentum gives us confidence to actually replicate our current success in many more markets, both globally and in China. Therefore, to capture the market, two things we are focusing this year. One is ramping up production, and the other is launching RoboTexus in many more markets. On the fleet ramp-up, over the last two months, we've been focusing on producing the Toyota BZ4X. And then we're also continuously producing more vehicles with Beijing Auto and Guangzhou Auto. with all three vehicles we're confident will hit over 3 000 units by the end the year end then on the fleet expansion we're pushing deeper into the downtown hubs and secondly we are also expanding into new cities such as hanzhou changsa and many cities across the greater bay area thirdly uh in terms of ue uh since affairs in china is uh relatively low compared with many of the global markets and in china we already deliver positive ue and we're continuing improving the ue we expect better earnings in our existing markets and definitely a lot better margins overseas we plan to expand this year into 2030s which can give us a very strong first mover advantage our joint deployment model will also lower our capex expenditures which can help us to accelerate the fully growth and at least triple our robotaxi revenues this year with this get back to the operator.
Operator
The next question comes from Tim Sao with Morgan Stanley. Please go ahead.
Hi, this is Tim from Morgan Stanley. Thanks for taking my questions. I just have a follow-up question about PONI's latest operation of footprint based on the do engine strategy management just mentioned. So regarding PONI's expansion strategy to enter over 20 CDs this year could you share details about which CDs you plan to enter and what's the split between China and the overseas market and separately with geopolitical tensions escalating in Middle East are you seeing any challenges or haterings to your operation that's my question thank you this is James again I'll take this one strategically we're definitely using our success in China as a blueprint for our global expansion because our technology and the business model are proven
we can replicate quickly broadly in the global markets in fact we expect nearly half of the 20 cities we're targeting in this year to be overseas spending in asia europe and the middle east Next, in terms of go-to-market strategy, we're teaming up with industry leaders to improve our joint deployment model, which can greatly reduce our capex expenditure. This helps us scale efficiently, while at the same time building strong local networks. We're already launched in Zagreb, Doha, Dubai, and Singapore. partnering with global giants like uber bolt and the stelantis one example is the together with the uber and ver we actually have launched the first commercial robo taxi services in europe looking ahead we're certainly exploring more european cities and also doubling down in asia such as south korea and singapore uh regarding the last point of your question on our efforts in the middle east uh first and foremost the risk region remains to be our high priority so far we haven't seen any material impact to our business from the current geopolitical tensions We are still charging along with our efforts in the GCC region. We expect to roll out fair charging services with Mova Saleh in Doha, Qatar, and we are getting ready for fully driverless operations in Dubai after approval later this month. Get back to the operator.
Operator
The next question comes from Leo Yu with CLSA. Please go ahead.
Hi, good evening, management. Thanks for taking my question. My question is on technology. So the road model and autonomous driving stack are now operating in multiple cities across different countries. So could you please tell us more how does the technology generalize to new environments where the conditions could be very different from China? And what role does the road model play in accelerating our expansion plan?
This is Tian Cheng. I will take this one. First and foremost, the key insight is that thriving is about interaction and negotiation with the dynamic agent around you. There is no difference whether you are in Guangzhou, in Shenzhen, or in Zagreb. Different cities and countries are essentially a different combination of similar scenarios. What varies is the probability distribution, not the fundamental nature of the challenges. Some example corner cases are reckless lane train without checked mirrors, a fallen bicycle in the road. These corner cases occur everywhere. Our technology has already been validated in the most demanding conditions, operating at scale across all peak hours, all weather, in dense urban courts in China major cities. This means that when we enter a city like Zagreb, we are not starting from scratch. We are not deploying a system that has already mastered a superset of the scenario city we encounter. This is why we can operate directly in Zagreb's urban core, which carries significant commercial value. Regarding the second part of the question, our overall model plays an important role in accelerating this process it enables us to model the interaction and the negotiation dynamics between our vehicle and the surrounding agents and to generate large-scale simulated scenarios that reflect the specific traffic patterns of our new market by reinforcement learning within this simulated stimulating environment our system continuously improve is driving policy, allowing us to validate and fine-tune efficiently without needing to collect massive amounts of data in a new city. The enablers for reaching 20 cities are clear. Our multi-OEM network provides locally suitable vehicle platforms. Our operational playbook from remote assistance to fleet management is highly standardized and reputable. Our technologies This broad ODD coverage means we can operate in complex urban environment, not just limited and low difficult routes. Together, this gives us strong confidence in achieving our target of deploying robotic servicing in more than 20 cities worldwide by year-end 2026. With that, back to the operator.
Operator
The next question comes from Xinyu Feng with UBS.
Operator
Please go ahead.
Xinyu, your line is open. you may now ask your question hi um can you hear me hi yes hi um thank you for taking my question and congrats to the solid result my question is about the joint deployment model for vehicles only plan to add this year can you elaborate a bit more on how you will apply the joint deployment model and how should we think about the benefit of this model for the company and our value chain partners. Thank you.
This is Liu. I'll take this question. So as you can see that we have hit a critical milestone of UE break-even in Guangzhou and Shenzhen. After that, we've been seeing a lineup of partners in the whole ecosystem that wants to join the robot taxi market, and we are their go-to choice. So in this joint deployment model, our partner funds the vehicle capex and start to tap into the whole robo-taxi value chain. For example, ground operation, vehicle maintenance, and charging. We consider this as a win-win situation for both of us. Our partner gets growing revenue from deployed vehicle, and we essentially are in the R-satellite model to expand our fleet rapidly. In this year, we expect nearly half of our new vehicles are coming through this model, which is led by Toyota. Not only we improve our capital efficiency in our expansion through this model, but also it will create an additional revenue stream through recurring income from the form of revenue sharing or AI driver license fee. So, this revenue stream combined with our self-owned fleet fair charging revenues will help us to achieve more than triple revenue, robot taxi revenue in 2026. And beyond the current lineup of our partners, such as Toyota, On Time, Mobility, and ATBB, we actually expect even more partners will jump on board this year. And I will get back to the operator.
Operator
The next question comes from Purdy Ho with Hoi Tai Securities. Please go ahead.
I'm taking my questions and congratulations on yourself. Now, regarding the 1,000 robot taxis already contracted with Toyota, how are you going to deploy these vehicles? And do you expect any future scaling up or strategic initiatives with Toyota down the road? Thank you.
This is James. I'll take this one. So, in terms of Toyota, I consider it as not just a partner. They've actually been with us since 2019 as our largest strategic shareholder. uh the relationship between us goes way beyond just a auto supplier it's actually a deep strategic long-term collaboration in terms of the mass production of robo taxi vehicles we have jointly launched several robo taxi models on the toyota platforms since the 2019 and in this year 2026 we're adding 2,000-plus new vehicles, and nearly half will be the new Toyota BZ-4X Gen 7 vehicles. This model is jointly developed with Toyota Motor Company and GAC Toyota. The mass production is already live on Toyota's assembly lines. There certainly is a great synergy between us. their manufacturing capability and top-line platforms blend perfectly with our l4 technology and operational know-how so consider our collaboration uh besides the joint jointly developing vehicles uh toyota is also the first partner to adopt our joint deployment model funding the fleet to help us scale capital efficiently this shows their incredible confidence in Pony and together we are rolling out commercially starting from China's top tier cities with this I'll get back to
Operator
the operator the next question comes from Yuqian Ding with HSBC please go ahead.
Thank you, Tim. This is Yuy Chen from HSBC. I've got two. The first question is about competition dynamics. How do you see the automakers getting into the RoboTaki segment? And second question is about the competitive edges. So market narrative is shifting towards more into scaling.
With more entrants getting in, what's Pony's most unique leading advantage? thank you uh sure i'll take the first one and i'll hand over to tension for the second part certainly we have seen that there especially lately there are many announcements about new players already entered or plan to enter the robotaxi business those new entrants including automakers ride-hating companies tech giants or even startups in general I think this new entrance to the RoboTaxi space validates the long-term potential for our industry and I certainly very much welcome the new players essentially they can make the whole ecosystem to be even larger but in reality L4 especially RoboTaxi is such a complex systems that it requires uh integrated solution as i mentioned in my prepared remark there are five pillars for the robo taxi industry namely technology policy mass production operation and partnerships these five pillars are so intertwined that simply throwing resources at them will not accelerate the development process So, over the years, we actually have developed a unique advantage on all aspects of the RoboTaxi industry. So, regarding some of our competitive mode, I'll head over to Tian Cheng to elaborate.
This is Tian Cheng. Technically, I do not think automakers have an advantage in L4 RoboTaxi just because they strong in manufacturing or in L2 systems. The key point is that L2 and L4 are fundamentally different. They are not just two points on the same path. In L2, as the mouse for intervention increases, the actual rate can increase. Partial automation can create a false sense that the system is almost good enough until it fails in a situation where the human is no longer ready to take over that is why the l2 path does not naturally lead to l4 especially when you're talking about the driver's fleet at scale one unique advantage we have at the pony ai is over long-term investment in your world model and l4 native virtual driver training approach the reason this matters that l4 robotics need to be significantly safer than human drivers and that cannot be achieved by simply imitating human driving behavior. To reach that level of safety, the system has to keep improving through large-scale trials and errors in a virtual environment, which is why a word model is essential. In other words, the key to train a L4 virtual driver is building a virtual environment with strong enough seems to have a capability, capability, especially when it comes to interaction between vehicles. That is also why the L4 approach requires many years of investment in AI, and it does not improve mainly by collecting more real-world data. The second unique advantage is that we have a real robotized fleet in operation. And those fleets continuously help us see where the world model is still different from the real world. The hardest part of L4 is not the first 99%. It is the last 1%, the long tail of rare but safety-critical corner cases. To handle those cases safely, it is not enough to look at one recorded trajectory. What really matters is understanding how other vehicles and pedestrians may behave across many different intentions with the AI driver. This is exactly why the world model is so important. Only a world model can give you enough coverage of the full combination space of different intentions in the corner cases, and that kind of coverage is what L4 safety ultimately requires. At the same time, only fully driverless robotics can keep narrowing the gap between the world model and the real world. Real world robotics operations let us observe and understand actual behavior pattern of vehicles and pedestrians in those scenarios where human driving data cannot observe interaction with robotics this is also aligned with the fact that new players typically can only start with a very small fleet regulators understand this logic as well so they are naturally very cautioned about granting permit at early stage so to summary automated the internet space confirms the size of the opportunity, but L4 Robotex is not something you get by extending L2. Only a unique advantage comes from two things, a world model built for L4 and a real Robotex fleet that continuously helps to improve it. Together, they create a cruise loop that keeps both the model and the product moving forward. So with this, back to operator.
Operator
The next question comes from Joel Ying with Nomura. Please go ahead.
Thanks for taking my question. This is Joel from Nomura.
I would just like to understand how do management view the impact of NVIDIA launching their open source model for smart driving as a level four during this CSD, as this year also GTC?
This is Tian Cheng again. For this question, I think the key is to distinguish between a model and the real product. An open-source or time-driving model can be a good start point, but not the end product. There is still a very big gap between a model and a robotics fleet that is commercially deployed, safety-proven, government-approved, and operated at scale. Closing that gap is exactly where over-call advantage lies. So at Pony, over-strengths come from years of full-stack in-house development and real L4 deployment at scale. That includes not just the software or the model, but also the vehicle architecture, sensor, redundant design, domain controller, operational system, validation, and commercialization capability need to run our actual robotic service. For example, sensor customization and redundant design direct at facility, manufacturability, and bomb cost. All OEM partners are also very different from a plug-play approach. That gives us better system integration, higher reliability, and lower system costs. So we view progress from NVIDIA helps move the ecosystem forward. At the same time, we believe the real barrier to entry remains very high. And of course, NVIDIA is an important partner of ours on domain controller, and we maintain a strong collaborative relationship. So with this, back to the operator.
Operator
The next question comes from Tian Yu Liu with CITIC Security. Please go ahead.
Tian Yu Liu from CITIC Security. Thanks for taking the question, and congratulations on rapid growth in the global target service. I have one question. How do you plan to allocate your Hong Kong appeal process? And given your accelerated development targets, do you expect any unworked regions to the 2026 cost and expenditure?
Yeah, this is Leo. I'll take this question. As I mentioned earlier, we have an ample cash reserve, about $1.5 billion as of December 31st in 2025, which was driven by our Hong Kong IPO proceeds. which we gather proceeds of more than $800 million. So this definitely secures long-term capital to feel multiple-year growth. And for us, the 2025 achievement in terms of Gen 7 production deployment and the UE breakeven made us a clear industry leader. So looking forward, we look for accelerated top-line growth to widen our leading position and also push the whole industry towards the next stage. Hence, we need to strategically increase our investments. We've significantly scaled up the number of robotaxes operating across China's Tier 1 cities, especially in Shenzhen and Guangzhou. We also recently entered into new cities in China, such as Hangzhou, Changsha, and international in Croatia, and plan to deploy in more than 20 cities by this year. So in order to support the multiple market expansion, we will invest in business development, operation, and marketing. And as we scale our robot taxi deployment, we are expanding our robot taxi fleet through joint deploy models as well as investment in self-owned vehicles. and we would also recruit ai talents and invest in ai infrastructure to further improve our virtual driver capability we think this would allow us to consistently meet public high expectations for safety reliability and equality to offer a trusted robot taxi service james already mentioned that this is a critical period to expand market share which we think it requires necessary investment to solidify our technological and operational modes. We believe the strategic increase in the investment is a value-driven trade-off to secure long-term market leadership. And we believe with disciplined capital allocation and also the benefits from joint deployment model it will be paid off with much faster growth city expansion in the fleet size and i also believe this will also lead the whole industry into a much advanced phase thank you and i'll now get back to the operator the next question comes from kai xiao with CICC.
Operator
Please go ahead.
Thank you. This is Kai from CICC. I have one question regarding the raw materials inflation such as memories.
So could you share with you how does the inflation impact your production plan and port items?
Yeah, this is Leo. Again, I'll take this question. Thank you for asking this important question. As I mentioned in the early speech, each, the impact on both vehicle and ADK bomb cost is very limited. So we think this resilience is driven by our proactive supply chain strategy and the inventory synergy with our ADC domain controller business. Through this approach, we actually have secured our memory supply even before the market went into price inflation and the shortages. So we are very confident that we can fully support this year's RoboTaxi production target of over 3,000. And thanks to the supply chain measures and our continuous scaling, we remain on track to achieve a 20% reduction in ADK bomb costs for 2026 compared to 2025 levels. we will carry out a ongoing hardware software optimization and this will further reduce our overall bomb cost down the road thank you and i'll get back to the operator are no further questions at this time i'd like to now turn the call back over to the company for closing remarks thank you once again for joining the earnings release on this call today if you have any
further questions, please feel free to contact our IR team. We look forward to speaking with you in the next quarter.
Operator
This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your line.
