Pony AI Inc. American Depositary Shares Price & Performance (PONY)

Thank you. This is George speaking. Hello, everyone. We appreciate you joining us today for Pony AS fourth quarter full year twenty twenty four earnings call. Earlier today, we issued a press release with our financial and operating results. Which is available on our IR website. Joining with me today on the call are Doctor. James Pony, Chairman of the Board Co Founder and Chief Executive Officer. [indiscernible] Director Co Founder and Chief Technology Officer and Doctor. Liu Wang, founding member and Chief Financial Officer. Will provide prepared remarks followed by a Q and A session. Please note that today's discussion will contain forward looking statements made under the Safe Harbor provisions of The U. S. Private Securities Litigation Reform Act of 1995. Forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Further information regarding these and other risks and uncertainties is included in the relevant public filings of the company as filed with the U. S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward looking statements except as required under applicable law. Please also note that Pony AI's earnings press release this conference call include discussions of both unaudited GAAP information and unaudited non GAAP financial results.

For a reconciliation of these non GAAP measures to the most directly comparable GAAP measures, please refer to Pony's disclosure document available on our IR website. I will now turn the call over to our Chairman, Co Founder, and CEO, Doctor. James Peng. Please go ahead. Thanks, George. This is James Peng, Founder and CEO We consider this is an exciting time for Pony.ai as we report our first earnings results as a public company. Our NASDAQ listing marks a significant milestone and is timed perfectly with the imminent mass commercialization of our robotaxi services. With ample financial resources, now available, we are well positioned to lead and capitalize [indiscernible] upcoming large scale rollout of robotaxis. Making this year an inflection point for the [indiscernible] spread adoption of autonomous transportation solutions. We are taking Robotaxi first China first, [indiscernible] First. Approach. This is our current focus is on scaling robotaxi operations in China. Which not only generates sizable recurring revenue, but also offers a solid foundation for further expansion into various global markets. China's online ride hailing market is exceptional. The countries Tier one cities [indiscernible] Beijing, Guangzhou, Shanghai and Shenzhen, [indiscernible] [indiscernible] combination of demand consumer readiness and regulatory clarity.

Making them ideal for large scale robotaxi deployment. We estimate each city can easily support a fleet of over tens of thousands of robotaxis. With technology that meets regulatory standards, and the best by the fully drugless fare charging licenses we have already secured We are all ready for quick scale up. Launching large fleet in Tier one cities will enable us to validate our business model optimize our operations and establish these markets as a benchmark and a scalable framework for future growth either into other Chinese cities or extends to international markets. Next, I'll explain why we anticipate our global taxi service will soon achieve mass commercialization. First and foremost, we have achieved technological readiness for mass commercialization. Our operational records proved that our robotaxi has achieved level four driverless operation 20 fourseven in all weather conditions [indiscernible] commercial ready. Our technology is empowered by virtual driver [indiscernible] The virtual driver is a comprehensive full stack system with proprietary software and hardware. This enables us to collaborate effectively with automakers and the transportation network companies we call them TNCs. To create a scalable robotaxi business model. Additionally, our generative Pony World model [indiscernible] our virtual driver to be much safer and better than expert human driver.

Through advanced reinforcement learning.

Our Pony work simulates a wide range of scenarios. Including extreme cases and the long tail events. By employing a training method called Learn by Practicing Our virtual driver does not just know what to do. It actually understands the reasons behind its actions. This is quite different from imitation learning. That is widely used for the typical L2 systems. Because the L2 systems imitate the driving patterns of human drivers, They can only reach human level safety In contrast, Pony World has improved our virtual driver safety by 16 times while at the same time significantly improving its comfort and driving efficiency. Our safety record enabled our commercial insurance costs per robotaxi to be reduced to almost half that of the traditional taxes. Second, we have established strong relationship with local governments and secured the required policy approvals for large scale commercialization. We have obtained all the most advanced licenses in China's Tier one cities. For instance, in recent weeks, Pony AI launched paid robotaxi service that connects key transportation hubs [indiscernible] South Railway Station Beijing Daxing Airport, and Yiduang District. With plans to gradually expand to Beijing City Center Moreover, in February, we launched paid robotaxi services in Guangzhou City Center Guangzhou Baiyun International Airport and Guangzhou South Railway Station.

We are the first and only company approved to provide robotaxi services on this high demand routes. Moving forward, we'll gradually expand our operations in these cities paving the way way for our future growth. Third, we have built extensive mass production partnerships to support large scale commercialization. For example, in the first half of twenty twenty four, we established a joint venture with Toyota As part of the deal, we will roll out mass production of the robotaxis. Based on BZ4X, as well as build the value chain of autonomous driving operations including maintenance, charging, and other aspects. In addition, the second half, of twenty twenty four, we respectively reached mass production partnerships with BAIC, New Energy, that is Beijing Auto, and the GAC Group, that is Guangzhou Auto. Based on the BAC, ARCFOX, Alpha T5 models, and the GAC ION models. We carried out cooperation in the mass production of auto grade autonomous driving kit vehicle model production redundant safety design of the chassis, and some other areas. These partnerships have been reinforced [indiscernible] strategic equity investments from all these three OEMs. All three upcoming robotaxi vehicles are based on our seventh generation autonomous driving systems. This latest generation has achieved a major breakthrough in cost efficiency.

Reducing unit bomb cost by over 70% compared to the previous generation. With further cost reduction anticipated and will scale up Fourth, we have fortified our operational capabilities to support the ramp up of fleet size and accommodate fast growing user demands. We have developed our own ride hailing platform which is called Pony Pilot. [indiscernible] strategic partnership with leading DNCs such as on time mobility and Alipay. To offer driverless robotaxi services. In the fourth quarter of last year, we also established a partnership with Alibaba's online mapping and ride hailing platform [indiscernible] and integrated our robotaxi service. Into its mobile app and the media programs. Making our services more accessible to the public. In 2024, the average daily orders per vehicle reached 15. And in Q1 twenty twenty, twenty five we continue to see the growth of daily orders per vehicle.

With significant progress have been made in all the four pillars of autonomous driving, That is technology, regulations mass production and large scale operation. We do see that critical inflection point for mass commercialization is right in front of us. Now let's look at our Robotruck business. Which we have also seen significant growth in 2024. We deepened our joint venture with Finochance. Transforming it into a comprehensive autonomous driving transportation as a service platform. Together, we'll continue building a smart efficient safe and environmental friendly logistics road transport network. While further expanding our Robotruck fleet. Major milestone that highlights our leadership in global truck business is our approval as the first company in China to conduct Robotruck Driver Out Platoni on cross provincial highways. Linking Beijing Tianjin and Hebei products. With owning the leading truck requiring a safety operator, and the following trucks. To be fully driverless. Testing has already begun on the Beijing, Tianjin, Hangzhou Expressway. Making a significant step towards full autonomy For all trust, in the platform which will further reduce logistics costs and accelerate commercialization.

In summary, our transition to a public company marks the beginning of an exciting new chapter We stand at a defining moment as we move towards the large scale commercialization of autonomous mobility and continue to gain momentum. Building on a solid foundation of technological advancements regulatory support and industry partnerships. Looking ahead, our priority for this year is clear. Accelerating the mass production and the deployment of our seventh generation robotaxi fleet further reducing the unit bond costs and expanding operation areas and density in China's Tier one cities. With that, I will now pass it over to our CTO, [indiscernible] to review our technological progress Hinton please go ahead. Thanks, James.

Hello, everyone. This is Tianqiao.

So I'm delighted to have this opportunity to share with you the latest progress of our technologies. Pony's technology co development centered around enabling the mass commercialization of robotaxi To achieve successful robotaxi commercialization, autonomous driving technology must meet three key criteria. First, it must attain a sufficiently high standard of safety [indiscernible] a magnitude safer than a typical human driver is attainable, and should be needed. Secondly, cost control is essential.

Cost should be managed across various aspects including sensors, company hardware, daily operation and insurance.

Low cost ensure that your tech service remain economically sustainable. Finally, [indiscernible] should cover large enough geographical area to enable large scale operation. According to our operational and safety record, Pony's technology have matured to a level that can support mass commercialization [indiscernible] cost effectiveness, and intensive service coverage. Through years of effort, we have been commercially operating fully gravis robotaxi for over two years. During this time, safety has already surpassed typical human driver by an order of magnitude. As we progress, cost are expected to decrease by 70% in back generation which will be mass produced in the second half of this year. Moreover, over service coverage has received regulatory approval and licenses, in all tier one cities in China, which are capable of operating tens of thousands of the lower taxis. Moving forward, our technical goal will remain focused on enhancing cost efficiency operational capability without compromising safety In the competitive landscape of the global taxis services, only companies that can run wireless commercial operation with a significant fleet called Appetition at the forefront. Years of innovation and diligence have given us a strong competitive edge. It took us four years to progress from initial garbage dump station to fully launching commercial global taxi service in China, Taiwan city.

So you may wonder why it took companies like Weibo and Pony almost five years to get there. From demo. To commercial operation. The reason that we have to move from simply matching human driving capability to significantly exceeding them. This means we have to rebuild our core algorithm as all the ones were designed in a way subject to human limitations. Now let me further explain why [indiscernible] technology evolution that allows us to bridge the gap and the launch over a fully driverless services. The key is moving from imitation learning to reinforcement learning. A trend that is the key driver brought us a seat at the forefront. With imitation learning, which is still widely used by most of the L2 system, So AI drivers learn by copying human behavior using data from the real world driving. By mimicking human driving patterns, imitation learning cannot understand the reasoning behind the driving behavior. As a result, this solution is not generally enough to handle ever changing traffic scenarios. Reinforcement learning, on the other hand, uses a generative virtual environment called a word model [indiscernible] Where our virtual driver teach itself through billing of even trillions of generative acts of trial.

This allows our virtual driver to understand why by analyzing the outcome of every action, equipping them to make smarter decisions in complicated scenario. So, repeated reinforcement learning our virtual driver gradually learn to adapt to new situation. Unprotected challenges, [indiscernible] preparing to preparing them to operate in the real world. Over time, our virtual driver trained on the Pony world [indiscernible] advanced skills needed for complex tasks such as multi navigating business street, handling traffic scenarios, while safely operating for tens of thousand hours without any incident. There are three key components making our Pony World approach possible. The ability to generate realistic scenarios and sensor data, a high fidelity simulation system and a comprehensive set of evaluation metrics Together, these elements allow our Pony work to effectively coach [indiscernible] to handle real world challenges. I would like to highlight our high fidelity simulation engine here. Which leverages the latest technology to create our environment [indiscernible] in both subtle details and the dynamic responses Unlike traditional systems that rely on human driving data, our simulation engine generated for on driving scenarios, [indiscernible] to understand adapt to [indiscernible] The traffic participant in our simulation engine are designed to behave like real human.

Interacting with autonomous vehicles, in a natural and human like way. This makes our Pony World a powerful tool for coaching over virtual driver. Finally, let me share the latest progress we were made in advancing our technology for mass production and the commercialization. Large scale compensation requires handling lower probability extreme cases with hardware that has lower performance. To address this challenge, we continue to innovate our PonyWorth here's how it works, We have trained an Oracle AI driver in our Pony world. A virtual environment that that time can be reworked [indiscernible] and then acts as a coach to train other AI drivers. Helping them anticipate and respond to future [indiscernible] Using similar methods, we will be able to maintain safety standard for mass produced and auto grid LiDAR. Main controllers. [indiscernible] Tony Ward, has improved over version drivers safety record by 16 times while significantly improving its comfort and driving efficiency. This advancement has reduced the commercial insurance cost per robo taxi to almost half of that [indiscernible] traditional taxis. As this is a clear objective measure, by the insurers, of safety of our technology. Before I conclude, I would like to highlight the creation of Pony World took years to dedicate research and development.

Driven by IT, of exceptional talented engineers, who evolved and thrived together with us over time. [indiscernible] was filled by the belief of that our Pony world offer a greater potential and is critical achieving driverless robotic commercialization. Those years we spend were the toughest for our company and for me personally. I deeply grateful for the trust and the support of our investors and colleagues along the way. This concludes my prepared remarks. I will now pass the call over to our CFO, Doctor. Liu Wang, for a closer look at our financial results. Liu, please go ahead.

Thank you, Tien Tsin.

And, hello, everyone.

I'm pleased to present Pony AI's financial results.

On our inaugural earnings call. Looking back on 2024, we kicked off our seventh generation autonomous driving system [indiscernible] [indiscernible] three OEM partners which is critical critical to execute our robotaxis first China First and Tier one City First strategy.

We also deepened the partnership with industry leaders creating a robust ecosystem that accelerates the adoption of these technologies.

During our IPO late last year, we raised over US400 million dollars which provided us with [indiscernible] to drive our strategy. Looking forward, we'll concentrate and accelerate our seventh generation autonomous driving [indiscernible] Development and the deployment in China's Tier one cities. Hence to solidify Pony AI's position for sustainable growth. Moving to our financial performance Please note as we navigate the early stages of commercialization, We are experiencing in our quarterly revenue and margins which is expected to continue in the near term.

But we are focused on executing our go to market strategy and achieving key milestones laid out by James in his remarks.

Which we expect to reduce variability in our financial performance in the future.

Now let's take a closer look at our financial results for '24. For additional quarterly results, please refer to our earnings release which is posted online.

Our full year revenue totaled US75 million dollars an increase of 4.3% year over year. Global Taxi Services revenue was US7.3 million dollars down 5.3% year over year.

The decrease was primarily driven by reduced service fee from providing autonomous vehicle engineering solutions.

Based on our project progression schedule. Our Robotactic Services revenue also include passenger fares, which saw significant year over year increase driven by the expansion. Of our public facing fare charging growth operations in Tier one cities. We expect this part of growth will continue and even accelerate as we deploy the seventh generation of truck driving vehicles [indiscernible] grew strongly delivering US40.4 million dollars in revenue up 61.3% year over year.

This robust growth was driven by the expansion of our fleet into new regions where new demand can be fulfilled by our Robotruck fleet. Licensing and application revenue was US27.4 million dollars down 30.1% year over year. Influenced by recognition schedule of project based revenue.

Total cost of revenue was $663,600,000.0 up 15.6% year over year. In line with revenue trend and revenue mix. We achieved gross profit of US11.4 million dollars resulting a gross margin of 15.2%. A decrease from 23% in 2023.

The year over year decrease was mainly due to services with relatively low gross margin contributed increasingly to our revenues. Moving forward, we expect gross margins to improve as we further scale and optimize operation over time.

Total operating expenses were $296,900,000 an increase of 85.4% year over year.

Excluding share based compensation, non GAAP operating expenses were US169.9 million dollars up 8.7% year over year.

The increase was mostly driven by accelerated R and D investment to support the launch of our seventh generation robotaxis vehicles. In collaboration with our OEM partners. Loss from operations was US285.5 million dollars compared to US143.2 million dollars in 2023.

Non GAAP loss from operations was RMB158.5 million dollars compared to US139.5 million dollars in 2023.

Net loss was $275,000,000 compared to US125.3 million dollars in 2023.

Non GAAP net loss was US153.6 million dollars compared to US118.5 million dollars in 2023. Turning to our balance sheet.

Our combined cash and cash equivalents restricted cash short term investments and long term debt instruments for wealth management was US825.1 million dollars at the end of twenty twenty four.

And lastly, for our business outlook, As mentioned earlier, we expect continuous fluctuation in our quarterly revenue as well as margin since we are at the nascent stage of commercialization.

While we're not giving formal guidance at this time, we are confident in our ability to scale up commercialization drive sustainable growth, and deliver value to our shareholders. I will now turn the call over to the operator to begin our Q and session.

Thank you.

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. For the benefit of all participants on today's call, please limit your If you ask your question in Chinese, please repeat them in English. The first question today comes from Virena Jang with Goldman Sachs.

Please go ahead. Thank you, management team. I have two questions.

My first question is about the business strategy. So what's the strategic rationale behind your RobotaxiFirst China first and also the Tier one cities first approach? If you could share more color behind yes, this will be appreciated. Thank you. [indiscernible] I'll take the first question regarding our three strategy. Actually, from day one that Pony was founded, Autonomous Mobility Everywhere [indiscernible] always been our company model. This model actually reflects our vision to bring autonomous transportation to all global markets. And across all types of vehicles. We certainly have the ambition for other markets down the road The fundamental reason behind our China first, Robotaxi first and Tier one cities first strategy. Rising our confidence in an imminent opportunity from mass commercialization. China has the largest ride hailing market with around 40% of the global market measured by the number of orders. This is roughly twice the size of The U. S. Market. [indiscernible] Tier one cities represents the largest share. Backed by supportive regulatory environment, and growing users' demand. In 2024 and 2025, we expanded our operations of paid robotaxi to more railway stations international airports, and the city centers in Beijing, Guangzhou and Shenzhen. We also observed that China has established the regulatory framework for global taxes in a swifter and more transparent manner compared to many other regions.

As a result, we believe the Tier one cities in China are right and ideal for mass deployment of robotaxis. Not only is robotaxi representing the largest market, it is also representing the most difficult technical and deployment challenges. The safety requirements in handling the bad weather conditions such as rain and snow and other unpredictable corner cases. Are very challenging. We have proven our capability to handle such challenges by successfully operating fully driverless global taxes in the last two years. It is from a commercialization perspective that we are currently more focused on robotaxi in China's Tier one cities. But certainly, our know how can enable us to transfer to other transportation modes and also the global markets. In the future. So thank you. Now back to second question.

Thank you, James. My second question is about business model. Could you differentiate your business model against OEM ride sharing company and also the taxi company? And any collaboration with these companies? Thank you.

For this question, I think our CFO, Liu, is the right one to answer.

Thank you, James. I'll take this. Question.

So for our [indiscernible] actually it's focusing on providing a virtual driver who takes charge of the driving in the transportation service.

And if you look at the traditional transportation service, that's actually provided by a human driver to take charge of the driving.

And we charge our passenger based on the distance driven by our virtual driver. During the ride, actually, we provide a more private and safer experience to the passengers.

So if you look at this business model, you can regard that as like upgrade to the current ride hailing business model. Not a disruption. From a right platform company perspective, its business still will be matching passenger demand with driver resources.

In which you can consider our virtual driver to be part of the driver pool. Optimakers or OEMs on the other hand, they get revenues from selling purposely built vehicles that are co developed with Pony. And these vehicles will be sold to robotaxi operators for example, Pony itself.

In a nutshell, actually each party in the value chain in white heating business will still play its role. In the transportation mobility service sector.

We consider this will be a win win concept And because this concept not only supported by us, but also supported by our partner. You can see that we have secured mass production plans with OEM partners such as Toyota, Beijing Auto and Guangzhou Auto.

We have also integrated into different traffic net companies such as AMAP, Alipay, OnTime and etcetera. So this is my answer to your question. Now I will turn back to the operator.

The next question comes from Ming Sun Li with Bank of America. Please go ahead.

Thank you for giving me the opportunity to ask a question. So my first question, do you foresee any challenges before MEMS commercialization? Maybe we can elaborate more in terms of the user acceptance. Technology maturity, and the regulation. Thank you.

I'm James Feng. I'll take this one first. Thanks, Vincent. As I described in my opening remarks, I'm very confident that the four key pillars for the mass production of global taxi namely the technology [indiscernible] mass production and the large scale deployment are actually all in place for Pony. I particularly want to emphasize that our technology has advanced the safety of our robotaxis to a level that actually allow us for the large scale commercialization of robotaxis. We do not foresee any insurmountable challenges that us from achieving as Thirdly, we work hand in hand with OEMs and the supply chains to launch a new generation of cost effective robotaxis successfully reducing our unit cost by 70%. Along with continued improvements in operational efficiency we're now on the right track to achieve breakeven at the individual vehicle level. In other words, we will have a positive contribution margin from the seven generation global taxes. In general, we have seen supportive regulatory environment from both the central and the local governments. We take pride in being among the first companies in China to secure licenses for operating fully driverless global taxi across all four Tier one cities. Furthermore, we are the only autonomous driving technology company that has obtained all the necessary regulatory permits required to offer commercial public facing global taxi services in Tier one cities.

Moving forward, our main priority will be expanding our fleet size. Operational areas, and vehicle density to scale up revenue. And enhance our profitability. So that's the answer to your first question.

Thank you, James. Second question what are the key technological milestones that need to be achieved to enable your mass production of robotaxis service in 2025. Thank you.

Thank you, Min Chen. I think this one is related to technology. So I'll hand over to Tien Tsin to answer it.

Yes, sure. This is Tien Tsin. So as I described in my remarks, so Pony technological development is centered around enabling mass [indiscernible] To achieve successful roboTaxi commercialization, autonomous driving technology must meet the three key criterias. They are safety, cost effectiveness, and intensive service coverage. So through years of effort, we have been commercially operating fully Japanese robotaxi for over two years. During this time, safety has already surpassed tip to human driver by an order of magnitude. And the cost wise, as we progress, costs are expected to decrease by 70% in the next generation, which will be mass produced in the second half of this [indiscernible] over service coverage has received rigorously approval and licensing all Tier one cities in China. Which are capable of operating tens of thousands of robotaxis. So according to our operational and safety record, we believe Pony's technology hasn't matured to a level that can support mass commercialization. And moving forward, our technical goal will remain focused on enhancing cost efficiency and operational capability without a compromised safety. Yeah, thank you and back to the operator.

The next question comes from Bin Wong with Deutsche Bank. Please go ahead.

Thank you. I just have one question. [indiscernible] technology.

How do you achieve a very higher safety level compared to human driver? And why you believe the level four autonomous driving technology depends on more You would generate a high quality data, lot of end the massive data you'll get from the street. Thank you.

Tien Tsin, this one is yours. Sure.

Yeah. So this is Kintang. So, yeah, good point. Let me reemphasize that the L four AI driver is trained using reinforcement learning. [indiscernible] Where data is generated. So as a result, reinforcement learning does not require huge amount of real world data. Let me further elaborate on why using real world driving data to mimic human driving behavior cannot meet L4 safety requirements. The fundamental reason lies in the double standard applied to human drivers versus AI drivers. Sociality holds AI to have to a much higher standard than human drivers. People are far less tolerant to AI mistakes. Where AI is perceived as a machine except to expected to eliminate human shortcomings. This creates a paradox L4 system must meet safety expectations far beyond that human driver can achieve. Imitation learning by its nature is limited by the feeling of human performance, [indiscernible] safety requirements. So although the amount of data used for imitation learning driving [indiscernible] extremely large. It still cannot ensure that the driving capability can surpass that of a human. Another important factor is that leveraging real world data cannot understand the reasoning behind driving behavior. Because it only mimics the driving path of a human drivers, There's a common thing that describe this phenomena. [indiscernible] But doesn't know why it is still.

Merely mimicking the action of human drivers and not guarantee our understanding of the reasoning behind this action. So in summary, compared to most IL-two systems, IL-four systems use a different data solution where generated data is the key, not the real world data.

Thank you. [indiscernible] The next question comes from Pirty Ho from Hoytay Securities. Please go ahead. Hello, management. This is Pony from Quartet. And my questions are from below, I guess, because most of them are on cost and revenues. So would you mind giving some colors on why your 2024 costs and expenses were higher year over year?

And also, any guidance on costs going forward that you can provide?

I'll take this question. So as I mentioned in my earlier remarks, actually excluding share based compensation, our non GAAP R and D expenses were US137.8 million dollars It represents an increase of 14% compared to 120,000,000 in 2023. That's mostly because since the second half of twenty twenty four, we have been working on three vehicle models of our seventh generation autonomous driving system. This incurred the corresponding R and D expenses growth. We consider this ongoing development is very critical to implement our robotaxis first China First and Tier one city first strategy. And much of this development work will be accomplished in this year. So on the other hand, during our IPO late last year, we raised over US400 million dollars So now we have a strong balance sheet with a total of US825.1 million dollars combined with cash, cash equivalents restricted cash short term investments and long term debt instruments.

For wealth management.

As of December 31, 2024. This provides amplified power to execute our strategy. But also as a start up we still need to carefully manage our resource allocation and investment to seek for the best efficiency and the returns.

So we will continue and even accelerate our seventh generation system development. As our top priority.

And deploy these vehicle in Tier one cities from hundreds to thousands. Therefore, we expect the corresponding expenditure will continue to this year.

So get back to you.

Okay. Sure. Yes, I got a follow-up. So yes, we also noticed that revenues in the entire year 2024 was up. But for the quarter, the fourth quarter, revenue was down. So any comments on that and any guidance going forward? Thank you.

So I'll continue to take this question. So if you look at our current revenue, it consists of recurring revenue such as we provide a robotaxi fare charging service to the public.

We also provide robot truck logistics service to our business partners. And we also have so called project based revenue For example, launching a proof of concept robotaxis fleet with our partner for a certain amount of time in certain markets. Given we have a portion of revenue that is tied to milestone based projects, So that revenue will be recognized upon delivery of contractual obligations.

Revenue recognition naturally would fluctuate across different quarters. This is very common for this type of revenues.

But look, we are focusing on our seventh generation autonomous vehicle development. And the deployment And these new and more cost effective vehicle will be put into global taxi fare charging operations later this year. Starting from hundreds to thousands, So as such, I think it will increase the recurring revenue portion. And gradually to change our revenue mix. Hence, we think we can mitigate the fluctuation in the revenue stream in the future.

And we also expect our overall revenue will gradually to grow in the near term. Following the revenue trajectory in the recent years. So this is my answer to your question. Get back to the operator.

The next question comes from Xiaoyi Li with Jefferies. Please go ahead.

Thanks for taking my question. I have two questions. My first question is from the technology perspective of Given recent emergence of disruptive technologies like DeepSeq, how do you see these play out in the development of for [indiscernible] From the industry level? Will they have a positive or negative impact on your technology roadmap? And how also will they impact Pony's timeline for the mass deployment of robotaxi? This is my first question.

Yes, thank you. Is Tien Tsin. I can take this one. I would say let's broaden the topic a little bit. In the past few years, many disruptive technologies have emerged. Including end to end architecture transformer, and also other technologies using the DIP SIC. They all are giving companies like a greater greater advantage. For example, integration of the entry and the technology has significantly enhanced Pony service coverage. More importantly, the successful commercialization of Robotex involves multiple factors. The destructive technology can only impact a wealth For instance, the factors include number one, driving capability, such as safety, comfort, and efficiency. Number two, cost. As sensors computing operations, And then lastly, partnership such as OEM suppliers, TNCs, The key to success [indiscernible] is ensuring that all these factors meet a certain standard. Destructive technology can only affect wealth then can only affect one effect, And any singular breakthrough only provides marginal help for the entire autonomous driving system. Yeah, thank you. And back to you.

Thank you. That's very helpful. And my second question is regarding your cooperation with OEMs. Could you please share more details about the current progress? How does such partnership help you to achieve your mass production goals?

This is regarding partnerships, so I'll take it. I'm James. So our deep collaboration with OEM is one of the keys to actually ensure ensuring our robotaxi commercialization at scale. We work closely with OEMs to co develop and produce autonomous vehicles across various vehicle platforms. Most importantly, as I mentioned earlier, [indiscernible] will be instrumental to enabling us to achieve positive unit economics at a quicker pace. Our collaboration with OEMs affect to significantly reduce unit costs. Slashing the bomb by 70% compared to our six generation robotaxi. In 2024, we have reached agreements with three OEMs, Toyota, Beijing Auto and Guangzhou Auto to produce three new vehicle models. Our collaboration with BAIC and the GAC will also indulge us with more robust government support in our key markets. So in summary, I think our partnership with OEMs actually also goes beyond manufacturing. For example, the joint venture we established with Toyota last year is actually have a more comprehensive partnership It will provide capitals for vehicles [indiscernible] as a fleet company to burden the CapEx and also utilize the existing Toyota dealer network. For the vehicle maintenance. So that's the answer to the question. Now back to the operator.

There are no further questions. Now I'd like to turn the call back over to management for closing remarks.

Hi, this is George Chao again. Thank you everyone once again for joining us 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.

This concludes the conference call.

You may now disconnect your lines. Thank you, and have a great day.