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Pony.ai (Nasdaq: PONY), a manufacturer of autonomous vehicles, inked a deal with Uber on Tuesday to deploy its robotaxis on the Uber rideshare platform.

The news sent the stock of this Chinese company soaring, as the price jumped about 4% to just over $10 per share.  

The partnership with Uber will officially launch later this year in a key market in the Middle East, officials said. From there, the plan is to deploy the autonomous Pony.ai robotaxis in additional international markets. 

How it works is, when a rider requests a pickup on the Uber app, they can opt for a ride from a Pony.ai autonomous vehicle if it is available in their area. Initially, during the pilot phase, the vehicles will have a safety operator onboard. Eventually, after the full commercial launch, it will be completely autonomous with no safety operator.

“At Pony.ai, our vision is to develop autonomous driving technology that is not only safe and reliable but also scalable, transforming daily transportation,” James Peng, co-founder and CEO of Pony.ai. “Partnering with Uber accelerates our shared mission to make autonomous mobility a real, everyday experience for more consumers around the world. By combining our proven autonomous systems, with Uber’s unparalleled ride-hailing platform, we’re poised to set a new standard for the commercialization of driverless services, starting in the Middle East before expanding to new markets.”

Analysts see big upside

Last month, Pony.ai rolled out its new robotaxi lineup with its seventh-generation autonomous driving system. The new driving system facilitates the mass production of its robotaxis on a “more scalable and cost-effective basis.” This advancement aligns with the strategic goals of Uber, allowing it to more quickly and safely integrate the autonomous vehicles onto its platform.

“Our partnership with Pony.ai is another meaningful step towards introducing the benefits of autonomous mobility to the world,” Dara Khosrowshahi, CEO of Uber, said. “As the leading on-demand platform of its kind, spanning mobility, delivery, and freight, Uber is uniquely positioned to help accelerate the commercialization of this exciting technology.”

In April, Pony.ai struck a partnership with Tencent Cloud and Smart Industries Group to make its autonomous driving vehicles available on Tencent’s WeChat app. It will also be integrated into Tencent’s Weixin “Mobility Services” platform and its digital mapping tool, Tencent Maps, among other uses.

Pony.ai stock went public last November and it is down about 32% since then, trading at around $10.30 per share.

The company is not yet profitable, but the outlook, based on the potential of these key partnerships, should be brighter. The company reports first quarter earnings on May 20 so investors should tune in for that for more visibility.

But analysts see big upside for Pony.ai stock, with a median price target of $20 per share. That suggests close to 100% return over the next 12 months.

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