China’s Pony.ai to receive $50m from Beijing Kunlun Tech

The transaction coincides with local rival AutoX announcing the completion of the third tranche of its Series A round - said to be worth tens of millions of dollars - which was led by state-owned car maker Dongfeng Motor Corporation. The first two tranches came in 2017, with participation from microchip giant MediaTek and SAIC Capital, the investment arm of SAIC Motor Corporation.

Kulun's acquisition of a 3% stake in Pony.ai will be structured as a balance sheet investment from one of its subsidiaries, according to a statement. It is described as “an important step” for Kunlun, which primarily operates in the mobile gaming and social media spaces, but wants to expand into artificial intelligence. The company believes autonomous driving is one of the most important verticals in this area, with huge scope for expansion.

Founded in 2016 by James Peng, formerly the chief architect for  Baidu's autonomous driving division, Pony.ai claims that its products enable cars to perceive their surroundings accurately, predict what others will do, and maneuver accordingly.

The company operates an autonomous ride-hailing fleet that is said to be the first of its kind in China. To date, it has provided more than 1,000 rides to the general public in Guangzhou over an area of about 30 square kilometers. In 2018, it became the first start-up to secure an autonomous vehicle testing license in Beijing. The staff is said to have tripled in size since the beginning of 2018.

Pony.ai has raised around $229 million in private funding. Most recently, ClearVue Partners and Eight Roads Ventures led a $112 million investment that was part of a Series A round. Other backers include IDG Capital Partners, Sequoia Capital China, Legend Capital, Morningside Venture Capital, and DCM China.

AutoX was established in 2016 by Jianxiong Xiao, formerly a professor at Princeton University. It has offices in Hong Kong, mainland China, and Silicon Valley. Last August, the company started offering grocery delivery services in San Jose. Customers place orders through an app and a self-driving car is assigned to deliver their goods.

The company opened its first China R&D center in Shenzhen in January. At the launch, video footage was shown of cars equipped with AutoX technology driving smoothly on the city's bustling streets. These systems are to be installed in Dongfeng's new self-driving cars, to be rolled out at an unspecified date.

Investor confidence in the space in China is underpinned by a number of fundamental changes in user behavior trends, as well as growing affluence and initiatives aimed at reducing urban congestion. Roadstar.ai. WeRide.ai and Momenta are among the other start-ups that have received funding. 

However, Roadstar appears to be an early casualty. Following the recent row erupted between the company's three founders, investors have reportedly moved to dissolve the business.

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