Pony.ai self-driving car.
pony eye
Shares of China’s Pony.ai fell more than 12% on Thursday, while rival WeRide also fell nearly 8% after the self-driving company began trading in Hong Kong.
pony eye and we rideAlready listed in the United States, they raised HK$6.71 billion (approximately $860 million) and HK$2.39 billion in initial public offerings, respectively.
Companies are striving to keep pace with larger competitors such as: BaiduChina’s Apollo alphabetAs interest in self-driving technology grows, Waymo has been introduced in the United States.
Pony.ai and WeRide, headquartered in Guangzhou, China, said the funding will go toward scale-up efforts and the development of Level 4 autonomous driving, a means of driving automation that does not require human supervision or intervention in certain environments.
WeRide CEO Tony Xu Han told CNBC that proceeds from the latest funding will also be used to increase the company’s artificial intelligence capabilities and data center capacity.
The Hong Kong listing comes as both companies aim to expand outside of China, where fully autonomous robotaxis have already begun operating in some cities.
New regions include the Middle East, Europe, and Asian countries such as Singapore. Most of these regions do not yet have full approval to operate robotaxis.
In the United States, both companies are looking to partner with a California-based company. Uber The move is to allow the company to introduce robotaxis to its ride-hailing platform once it receives regulatory approval.
But the U.S. plan faces headwinds after the government earlier this year finalized rules effectively banning Chinese technology in connected cars, including self-driving systems.
“Dual listing is important for risk mitigation, given the uncertainty in markets around the world and the fact that Pony and Willide seeking to enter the US market will be subject to intense scrutiny,” said Tu Le, founder and managing director of Sino Auto Insights.
He added that the listing also recognizes that Pony.ai and WeRide will need significant funding and support from markets outside the US to succeed.
In U.S. trading on Wednesday, Pony.ai shares were down about 2%, and WeRide shares were down 5.3%.
Hong Kong IPO shift
The competing listings of Pony.ai and WeRide highlight the recent trend of Chinese companies seeking dual listings in Hong Kong, which has been a year of recovery for the city’s IPO market.
Both companies received approval for dual listing from Hong Kong regulators in mid-October.
“For the Hong Kong Stock Exchange, concentrating the listings at the same time will help strengthen investors’ perception that Hong Kong is a technology hub for Asia-focused technology companies,” Rolf Balck, equity research analyst at New Street Research, told CNBC.
In May, Chinese battery manufacturing and technology company CATL completed its secondary listing in Hong Kong, raising $5.2 billion in the world’s largest IPO so far this year.
Increased trend emerges amid US geopolitical tensions and regulatory uncertainty
According to New Street Research’s Bulk, the Hong Kong listing of Pony.ai and WeRide will help both companies gain access to Asia-based capital and expand their presence in China and the region.
“However, that will do nothing to advance the technology stack and regulatory approvals in Western markets. If anything, a Hong Kong secondary listing may find it more difficult to obtain approval in Western markets.”
The listing could also help the company catch up with competitors such as China’s Baidu Inc.’s ApolloGo and Alphabet Inc.’s Waymo in the US, which currently have larger fleets.
“Pony and WeRide are on the doorstep of world leaders,” said Le of Sino Auto Insights. “WeRide has diversified its service portfolio a bit more, and we both see Uber and the Middle East as two strong partners in terms of being able to launch more pilots outside of China.”
“Investors should pay special attention to how their technology evolves as AI and other new tools become mainstream,” Lee said.
—CNBC’s Elaine Yu contributed to this report.
