Pony AI stock surges on speculation of major China OEM deal, year-to-date gains reach nearly 35%

Shares of Pony AI Inc. (NASDAQ: PONY), the U.S.- and China-based autonomous driving technology company, surged 13.94% on May 16, 2025, closing at $18.43. The spike came amid speculation surrounding a potential partnership with a major Chinese original equipment manufacturer (OEM), fueling strong investor enthusiasm and lifting the company’s year-to-date stock gains to an impressive 34.79%. Trading volume reached over 9 million shares on the day—more than eight times its typical three-month average—indicating intensified interest from both retail investors and sector-focused institutional funds betting on the future of autonomous vehicle (AV) technologies in China.

Why Did Pony AI Stock Rise on May 16, 2025?

The key catalyst behind Pony AI’s sharp intraday rally was unconfirmed but widespread market chatter about an upcoming tie-up with a prominent Chinese automotive manufacturer. Although the company did not issue an official announcement, the market quickly priced in potential upside from such a strategic alliance. Industry sources suggested that the rumored partner could be either Guangzhou Automobile Group Co., Ltd. or another top-tier domestic automaker, possibly linked to Pony AI’s long-standing testing operations in major Chinese cities such as Guangzhou and Beijing.

The stock’s surge followed a Reuters report earlier in the week indicating that Pony AI had confidentially filed for a secondary listing in Hong Kong. The move is seen as a hedge against ongoing U.S.-China geopolitical tensions and would offer the $5.75 billion AV company access to additional capital and liquidity in Asia, where its operations and commercialization plans are heavily concentrated.

How Are Policy Trends Supporting Autonomous Vehicle Stocks Like Pony AI?

Investors are increasingly viewing Pony AI as one of the top-performing AV stocks due to supportive regulatory and policy developments in both China and the United States. In China, new national guidelines released in April 2025 aim to accelerate the commercial rollout of Level 4 autonomous driving in urban environments. The policies include infrastructure investment, subsidies for AV developers, and insurance frameworks that reduce liability barriers—creating a fertile environment for companies like Pony AI to scale.

In the U.S., the National Highway Traffic Safety Administration (NHTSA) is reportedly considering updates to its autonomous vehicle framework that could ease testing and commercial restrictions in selected pilot zones. This bodes well for Pony AI’s U.S. operations, including its fleet testing initiatives in California, where the company has secured driverless testing permits from the Department of Motor Vehicles.

What Is Driving Institutional Interest in Pony AI Shares?

Institutional flows into Pony AI appear to be accelerating as thematic funds focus on artificial intelligence, electric vehicles, and mobility innovation. Multiple EV-focused ETFs and China tech baskets have reportedly increased their exposure to Pony AI over the past month, spurred by its growing visibility in the robo-taxi segment. Analysts point to its recent partnership with Uber Technologies Inc. to deploy autonomous vehicles in the Middle East as a sign that the company is actively pursuing global commercialization despite lingering regulatory risks.

Moreover, several hedge funds are believed to have built new long positions in Pony AI following the company’s confidential filing for a dual listing in Hong Kong. This listing would provide access to a broader base of Asia-Pacific investors and potentially improve valuation multiples in line with Hong Kong-listed tech peers. With geopolitical risk being a persistent theme across U.S.-listed Chinese tech stocks, investors appear to be rotating into names with viable “Plan B” capital access strategies.

How Does Pony AI Compare with Other Autonomous Driving Competitors?

Pony AI has differentiated itself from AV startups by maintaining a dual-market strategy in the U.S. and China, two of the world’s largest automotive markets. It was founded in 2016 and has since raised funding from major investors including Toyota Motor Corporation, Sequoia Capital China, and Eight Roads Ventures. Its valuation reached $8.5 billion during a prior funding round in 2021, though recent public market performance has adjusted the current market cap to around $5.75 billion as of mid-May 2025.

The company competes with well-funded players such as Waymo, Cruise, Baidu Apollo, and AutoX. While competitors like Cruise and Waymo have faced operational setbacks in the U.S., Pony AI has expanded its commercial pilot zones, including fully driverless operations in parts of Guangzhou and successful demonstrations in Dubai. Analysts view the company as a top contender in Asia’s commercial AV race due to its deep regulatory ties and iterative software stack tailored for dense urban traffic scenarios.

What Financial and Operational Metrics Stand Out?

While Pony AI remains a pre-profit company, its 2024 financials revealed revenue of $75.03 million, primarily from AV testing contracts, partnerships, and limited commercial deployment. However, it posted a net loss of $274.12 million, reflecting ongoing R&D and capital expenditure in fleet development and AI stack optimization.

The company’s burn rate has raised some investor concerns, but analysts argue that its cash runway remains solid, especially with the planned Hong Kong IPO. Forward-looking metrics such as operational miles driven, fleet size, and autonomous disengagement rates continue to improve, helping bolster confidence in Pony AI’s technical maturity relative to peers.

Sell-side analysts maintain a “Strong Buy” consensus on the stock, with a median 12-month target of $19.20, indicating modest upside from the current price level. The optimism is tied not only to potential partnerships but also to anticipated regulatory approvals for wider commercialization zones in both Tier-1 and Tier-2 Chinese cities.

What Risks Should Investors Consider?

Despite the growing institutional interest, Pony AI faces material risks, including regulatory uncertainties, high capital intensity, and public perception challenges. A recent incident in Beijing involving a fire in one of its autonomous test vehicles—though it was contained and no injuries were reported—served as a reminder of the potential pitfalls in deploying AVs in real-world conditions.

Additionally, geopolitical factors, including U.S.-China technology export controls, could affect Pony AI’s ability to procure key AI chips and sensors, which are crucial for its deep-learning algorithms and perception systems. While the company has been proactively localizing its supply chain, risks related to export licensing and IP protection remain on the radar for institutional investors.

Will the Momentum in Pony AI Stock Continue?

The sharp rally in Pony AI shares on May 16 reflects growing optimism around its strategic positioning in the AV market, coupled with speculative momentum tied to a potential OEM partnership. Should the company confirm a collaboration with a major Chinese automaker in the coming days or weeks, additional upside could materialize.

Beyond the immediate speculative gains, long-term momentum may depend on successful commercialization milestones, execution of its dual-market expansion strategy, and timely completion of its Hong Kong listing. As regulatory environments in China and the U.S. evolve to embrace AVs, Pony AI is well-positioned to capitalize on these tailwinds—though execution risks remain high in this capital-intensive and highly competitive space.