The artificial intelligence (AI) revolution isn’t just powering chatbots. It’s steering the future of transportation. As AI fuels breakthroughs in self-driving tech, robotaxis are shifting into high gear. These autonomous vehicles, designed to offer ride-hailing services without a human driver, are set to reshape urban mobility. And the numbers speak for themselves. According to Fortune Business Insights, the global robotaxi market is projected to soar to a whopping $118.6 billion by 2031, with an astonishing compound annual growth rate (CAGR) of 80.8% from 2022 to 2031. 

With numbers like that, the autonomous vehicle space is shifting from a futuristic concept to a red-hot investment opportunity. Given this backdrop, while electric vehicle (EV) king Tesla (TSLA) continues to make headlines with its robotaxi ambitions, an under-the-radar Chinese company, Pony AI (PONY), could be a smarter bet for investors in this space. Let’s understand why. 

The Case for Tesla Stock 

Once the crown jewel of the EV world, 2025 has delivered a harsh reality check for Tesla (TSLA). The spotlight has shifted from innovation to controversy, with CEO Elon Musk’s growing political ties stirring unease among investors and consumers alike. Add to that the slumping sales in Europe and mounting competition from global rivals, and Tesla’s dominance suddenly looks vulnerable.

Despite boasting a hefty $1.1 trillion market cap, the Texas-based EV maker’s stock performance this year reflects its struggles. Shares are still down 16% year-to-date, underperforming the S&P 500 Index ($SPX), which has only seen a modest dip during the same stretch. 

Tesla started 2025 on the wrong note, delivering a lackluster first-quarter earnings report on April 22 that missed the mark on all fronts. Revenue fell 9% year-over-year to $19.3 billion, missing Wall Street’s $21.3 billion target. The bigger blow came from adjusted earnings, which dropped 40% to just $0.27 per share, 34.9% below analyst expectations. 

Tesla’s core automotive business also hit a major speed bump. Revenue from the segment plunged 20%, sliding from $17.4 billion to around $14 billion. The company pinned part of the drop on factory upgrades ahead of the highly anticipated refresh of its best-selling Model Y SUV. Lower average selling prices and aggressive sales incentives further dragged down Tesla’s revenue and profits. 

Faced with these headwinds, the company took a cautious tone, sidestepping any bold growth promises for 2025 and opting instead to “revisit our 2025 guidance in our Q2 update.” Speaking of Tesla’s robotaxi ambitions, the company is gearing up for a pivotal moment. Elon Musk recently revealed that Tesla will launch a pilot robotaxi program this June in Austin, Texas, starting with a fleet of around 10 vehicles. 

If the initial test goes smoothly, Tesla plans to scale rapidly, expanding into the thousands. This much-anticipated robotaxi rollout could be a major breakthrough, opening a fresh revenue stream and solidifying Tesla’s leadership in the autonomous vehicle race. 

Nevertheless, Wall Street is keeping its guard up, with the consensus still leaning toward a cautious “Hold” rating overall. Of the 41 analysts offering recommendations, 16 give it a solid “Strong Buy,” two suggest a “Moderate Buy,” 13 advocate “Hold,” and the remaining 10 give a “Strong Sell.” While the stock trades above its average analyst price target of $287.86, the Street-high price target of $465 suggests that TSLA could rally as much as 36.4% from here.

The Case for Pony AI Stock 

Pony AI (PONY) is racing ahead in the autonomous mobility race with its vehicle-agnostic Virtual Driver technology, a full-stack solution that blends proprietary software, hardware, and services to power self-driving vehicles at scale. Founded in 2016, the company has gone global, expanding across China, Europe, East Asia, and the Middle East, all while building a commercially viable model for mass production and deployment. 

Valued at roughly $7.3 billion, shares of this Guangzhou-based company, which made its Nasdaq debut just last year, have delivered an impressive 24% so far this year, easily outshining the broader market YTD. Over the past month alone, the stock is up an astounding 227%. 

Pony AI shares accelerated more than 5% on May 20 after the company delivered a strong fiscal 2025 first-quarter earnings report that turned heads on Wall Street. Revenue shot up 11.6% year-over-year to $14 million, fueled by a jaw-dropping 200.3% surge in Robotaxi service revenue, which hit $1.7 million for the quarter. This explosive growth was driven by expanded fare-charging operations in China’s top-tier cities and smarter strategies tailored to a broader customer base. 

While gross margin dipped to 16.6% from 21% last year, ongoing operational improvements helped cushion the impact. Impressively, Pony AI trimmed its quarterly loss to just $0.10 per ADS, down from $0.28 a year ago, and ended the quarter with a solid $738.5 million in cash, short-term investments, and restricted funds, putting it in a strong position to continue its autonomous push.

The company is gearing up to scale its robotaxi fleet to 1,000 vehicles by the end of 2025, a bold move that signals its accelerating ambitions. Strategic partnerships with major players like Uber (UBER) and a top Singaporean transport firm are opening doors to global expansion. 

Adding to the momentum, the company is preparing for the mass production of its next-generation Gen-7 vehicles. With significantly lower costs for autonomous driving kits and LiDAR systems, these sleek new models are designed to boost profitability and bring scalable autonomy one step closer to reality.

In addition to investors, PONY stock is also winning over Wall Street analysts, earning a unanimous “Strong Buy” rating from all three analysts covering it. The average analyst price target of $23.50 indicates 35% potential upside from the current price levels. The Street-high price target of $26 suggests that PONY could rally as much as 53% from here.

TSLA Vs. PONY: What’s the Bottom Line? 

While Tesla continues to grab headlines and its robotaxi ambitions appear solid, its recent struggles are hard to dismiss. Sluggish financial results, political controversies, slipping sales, and mounting global competition have put a cloud over its near-term prospects. In contrast, Pony AI is gaining traction with strong robotaxi revenue growth, strategic partnerships, and plans for more efficient vehicle production. Supported by solid analyst ratings and notable stock gains, Pony AI is emerging as a noteworthy player in the autonomous vehicle space, offering a different, potentially more promising path forward compared to Tesla right now.