On September 9, Caocao Mobility said it had launched an AI ride-hailing service with the Doubao app in Beijing, Hangzhou and Suzhou. Users asking Doubao for route or local-life information can be presented with a travel plan that connects directly into Caocao's fleet, and Caocao is Doubao's only ride-hailing capacity partner. The announcement was well received — Caocao's Hong Kong-listed shares rose more than 10 percent in morning trading, according to a Huxiu report.
Behind that AI story is a compliance problem. Shanghai's transport authority has listed Youxing Technology's Shanghai branch — Caocao's main operating entity — as a “serious dishonest entity,” a regulatory label for operators that refuse to comply with administrative decisions or investigations. The designation is valid until September 15, 2028. Corporate database Qichacha shows that in the third quarter of 2026 alone, the company was penalized more than 200 times in Shanghai, with fines exceeding 13 million yuan (about $1.8 million). Most penalties involved vehicles lacking an online ride-hailing transport permit, or mismatches between vehicles registered online and those actually on the road.
The Shanghai branch was already listed in May 2026 for the same problem, so the second listing suggests the issue has not been systematically resolved.
Growth built on loose capacity
Caocao's expansion is ambitious. In 2025, revenue rose 38 percent to 20.2 billion yuan (about $2.85 billion) and city coverage grew from 136 to 195. Ride-hailing service revenue was 18.56 billion yuan (about $2.61 billion), monthly active riders averaged 41.3 million and monthly active drivers 631,000. In the first half of 2026, revenue exceeded 10 billion yuan for the first time in a half-year period, reaching 10.34 billion yuan (about $1.46 billion).
Caocao builds capacity in two ways. It owns customised vehicles — more than 38,000 “Caocao 60” ride-hailing cars in 31 cities by the end of 2025 — and it signs up external capacity partners. Selling those custom cars to partners was a major profit engine: in the first half of 2025, sales of the Caocao 60 to partners reached 7,993 units, up 182.8 percent year on year. But in the first half of 2026, car-sale revenue fell 60.3 percent to 295 million yuan (about $41.5 million), from 744 million yuan (about $105 million) a year earlier. The reason is that ride-hailing has moved from adding supply to fighting for existing riders, and partners are less willing to buy new vehicles.
The compliance risk follows that model. Youxing Technology now operates more than 200 branches, including in small county-level cities. When Shanghai tightened rules in August 2026 — 17 ride-hailing platforms signed a new self-discipline convention calling for periodic screening of existing capacity and phased removal of non-compliant vehicles — Caocao's exposure was higher than rivals' because its fastest-growing capacity comes from external partners rather than owned cars. The cost of a cleanup goes beyond fines: removing unlicensed vehicles temporarily cuts supply, which hurts order fulfillment and user retention, and can reduce the traffic that aggregation platforms (order-passing channels) allocate to Caocao.
A costly pivot to Robotaxi
Caocao's public strategy, RoboX, is built on “intelligent custom vehicles plus intelligent driving plus intelligent operations,” with intelligent driving relying on Geely's Qianli Haohan G-ASD L4 solution. R&D spending, however, is heading the other way. It fell to 206 million yuan (about $29 million) in 2025, down 12 percent year on year, after dropping from 339 million yuan (about $48 million) in 2023 to 234 million yuan (about $33 million) in 2024. The R&D expense ratio shrank from 2.6 percent in 2022 to 1.2 percent in 2025. Meanwhile sales and marketing spending rose 48 percent in 2025, mostly for aggregator commissions and user acquisition.
The capital-heavy phase is only starting. By the first half of 2026, Caocao had deployed 140 second-generation Robotaxis and plans a third-generation model, Eva Cab, developed with Geely, with mass production set for 2027 and a target of 100,000 vehicles on the road by 2030. CEO Gong Xin has said a city needs around 1,000 Robotaxis before daily orders per vehicle can cover operating costs. Caocao raised HK$380 million in a February 2026 share placement, with about 68 percent earmarked for Robotaxi.
The tension between the old business and the new one is visible in the balance sheet. In the first half of 2026, operating cash flow shrank to 66 million yuan (about $9.3 million) from 325 million yuan (about $45.8 million) a year earlier, and cash reserves stood at 1.563 billion yuan (about $220 million). Total borrowings were 7.363 billion yuan (about $1.04 billion), including 4.941 billion yuan (about $696 million) due within one year, while current liabilities exceeded current assets by about 3.785 billion yuan (about $533 million). Caocao narrowed its net loss in the first half of 2026 to 381 million yuan (about $54 million), but its own financial report says the situation may cast significant doubt on its ability to continue as a going concern. As Huxiu frames it, Caocao is telling an AI and Robotaxi story while still failing the basic compliance tests of its core ride-hailing business.
