Analysis: Strong First Quarter Shows Promise of China’s Robotaxi Business

China’s autonomous ride-hailing industry is experiencing accelerated growth, as demonstrated by the strong first-quarter 2025 financial performance of leading companies such as Pony AI and WeRide, bolstered by increasing consumer demand and a rebound in favorable regulatory conditions [para. 1]. Pony AI, listed on the Nasdaq, reported $1.7 million in revenue from its robotaxi services in Q1 2025—a 200% year-on-year surge—with fare-based income rising by an impressive 800% [para. 2]. WeRide’s figures reveal robotaxi revenue reaching $2.2 million, accounting for 22.3% of its total revenue, a sharp rise from 11.9% the previous year. Its product revenue overall grew nearly 50%, primarily due to increased sales of robotaxis and robosweepers [para. 3]. Meanwhile, Baidu’s Apollo Go robotaxi service, though not disclosing revenue, completed over 1.4 million rides in the first quarter, marking a 75% year-on-year increase [para. 4].

Despite these promising numbers, the industry continues to face significant profitability challenges, remains highly reliant on policy support, and must still overcome resistance from traditional taxi operators [para. 5]. In 2024, the sector underwent what was described as a “policy cooling” period following intense opposition to Apollo Go’s low pricing strategy in Wuhan that was seen as undercutting local cab drivers, prompting regulators to be more cautious [para. 6]. However, by the end of 2024, the regulatory climate improved as major pilot cities such as Wuhan, Beijing, and Guangzhou enacted new robotaxi rules, reinvigorating industry prospects [para. 7].

The current industry focus is on scaling operations, cost reduction, and striving for vehicle-level profitability [para. 8]. Pony AI CEO James Peng highlighted mass production and deployment of the seventh-generation (Gen 7) robotaxi, aiming for a fleet of 1,000 units by year-end, up from 270 as of April 2025 [para. 9][para. 10]. The Gen 7 system delivers a 70% reduction in component (BOM) costs versus the previous generation [para. 12]. Baidu CEO Robin Li emphasized that the unit cost for its RT6 robotaxi has dropped below $30,000, compared to $66,000 for its 2021 RT5 model, enhancing the path toward profitability as scale increases and both hardware and labor costs decline; Apollo Go already operates over 1,000 driverless vehicles globally, with more than 400 in Wuhan as of August 2024 [para. 13][para. 14]. WeRide has slashed sensor costs by more than 70% over the past five years and projects a further 20-30% cost reduction for its next robotaxi model, currently maintaining a total fleet of over 1,200 vehicles, including about 500 robotaxis [para. 15].

Strategic alliances underpin the sector’s expansion, utilizing the "golden triangle" approach where automakers mass-produce vehicles, mobility platforms connect users, and tech firms supply autonomous driving solutions [para. 17]. Pony AI partners with industry giants like Toyota, BAIC, and GAC [para. 18], and, along with WeRide, has recently launched collaborations with Tencent to integrate robotaxi services into WeChat and Tencent Maps [para. 19]. International expansion is underway, with WeRide teaming up with Uber to deploy robotaxis in the Middle East, targeting 15 new cities and backed by $100 million in funding, Uber’s largest autonomous vehicle investment to date [para. 20]. Pony AI is also set to integrate its fleet with Uber in the Middle East in late 2025 [para. 21].

Robotaxis promise over 50% cost savings compared to traditional taxi services in developed markets and may address widespread driver shortages, presenting a compelling case for global expansion [para. 22].