Potential Strategic Move

Pony.ai, a prominent player in the robotaxi sector, is evaluating the possibility of a secondary listing. This consideration arises less than six months after its initial public offering (IPO) in the U.S. and is influenced by growing apprehensions regarding the potential delisting of Chinese companies under Donald Trump’s administration.

James Peng, co-founder and CEO of Pony.ai, commented, “It’s nothing concrete yet, but definitely it’s something we’re contemplating,” during a recent interview at the Shanghai Auto Show. He acknowledged that multiple factors need to be weighed before making such a decision.

Current Market Context

In November, the Toyota-supported company achieved a valuation of $5.25 billion after raising $260 million on the Nasdaq. However, the CEO’s remarks reflect the growing uncertainty faced by numerous U.S.-listed Chinese firms given the escalating trade tensions.

U.S. Treasury Secretary Scott Bessent recently did not dismiss the possibility of delistings, sparking concerns reminiscent of Trump’s first term when several state-affiliated Chinese firms faced removal from the New York Stock Exchange.

Peng noted, “We cannot operate based on some speculation, so for the potential delisting we have to deal with it. At least nothing concrete really has happened yet.”

Impact on American Depositary Receipts

The pressure on American depositary receipts (ADRs) for Chinese companies is escalating, primarily due to deteriorating U.S.-China relations. In 2020, a new legislative measure was introduced under Trump that could lead to the ejection of Chinese firms from U.S. exchanges if they fail to comply with substantial audit requirements for a period of three years.

Amid these challenges, Hong Kong’s finance secretary Paul Chan suggested that the city should be the primary destination for Chinese companies considering a relisting.

Future Listing Considerations

Although Peng did not pinpoint a specific market for the potential secondary listing, he indicated that locating a viable alternative is necessary. When asked about Hong Kong as an option, he remarked that it was “always possible.”

The stock of Pony.ai saw an uptick, soaring by 30% in New York after the introduction of its latest autonomous driving system at the Shanghai Auto Show. Peng expressed optimism regarding international growth, stating, “We have very strong welcoming signals from some of the markets.”

International Expansion Plans

Pony.ai’s ambitions extend beyond China, with discussions underway in Germany, Switzerland, and Sweden. This month, the company also announced that it received a testing permit in Luxembourg, marking a significant milestone in its robotaxi initiatives in Europe.

Domestically, the company’s fleet of 300 vehicles is restricted to specific areas within China’s largest cities, yet expansion into larger operational zones is anticipated in the near future.

Valuation Trends

Despite its promising prospects, Pony.ai’s valuation has seen a decline from over $8 billion prior to its IPO in 2022, dropping to $1.9 billion as of the latest Nasdaq closing amid waning optimism about the self-driving sector and similar trends affecting its industry peers.