BofA starts coverage on Pony AI with ‘buy’ rating on growth drivers

Investing.com — Bank of America initiated coverage on autonomous mobility company Pony Ai Inc (NASDAQ:PONY) with a “Buy” rating and a price target of $18, reflecting a 37% upside potential.

Pony AI is expected to ramp up its fleet size fast in next few years and BofA forecasts that Pony will become profitable by 2029, driven by economies of scale and improving unit economics.

The company currently operates 250 robotaxis and 190 robotrucks, with plans to scale up to 68,000 robotaxis and 6,300 robotrucks by 2029 and 2030, respectively.

Pony’s Virtual Driver technology, which integrates software, hardware, and services, is a key competitive advantage, positioning it ahead of its peers in China.

“We like Pony’s proprietary Virtual Driver technology, which integrates in-house software, hardware, and services, to deliver reliable and cost-effective autonomous mobility in diverse circumstances,” analyst said.

The company has already secured licenses to operate fully driverless robotaxis in all four tier-1 cities in China, setting it apart in the rapidly evolving market.

Risks include regulatory challenges, user acceptance, competition. Though, BofA believes that Pony’s technological leadership, strategic collaborations, and favorable policy support from the Chinese government will enable it to dominate the autonomous mobility space.