The world has witnessed the impact of Uber in recent years, but has completely ignored other ride-hailing companies. This ignorance will not be for long though. If you are not a mobility expert or a citizen of China, there are high chances that you have not heard of a name called DiDi. DiDi is one of the leading transportation platform providers. Given the size of the population in China it caters to and the company’s expansion to multiple other countries, ignoring the company would be a difficult task. Just like Alibaba, DiDi is also ready to establish its footprint on a global level. In 2018, CNBC ranked DiDi on the 4th position in the global disruptors list.
DiDi in Numbers
In China, DiDi has established itself in 400 towns and cities. Furthermore, it operates approximately 30 to 32 million rides every day and has created a portfolio of approximately 460 million customers. The company also offers solutions such as bike sharing, car sharing, food delivery, chauffeur, and other corporate services. The company dominates the Chinese market with more than 85% share in car-hailing and more than 80% in taxi hailing. In monetary terms, the company is valued at around $55 billion. It should be noted that DiDi has not received any investment from the top notch players such as Apple, China Merchant Bank, Softbank, Alibaba, and others.
The Impression in every Continent
At present, because of China’s population, every business tends to lean towards their biggest target market. DiDi is no different. It has also inclined toward China and most of the revenue collected is generated from China. China helped the company to yield approximately 97% of the profit in terms of revenue. The company is employing its huge profits range to expand its global presence via investments and collaborations. DiDi has invested $100m in the US private car-hailing company called Lyft. Over time, the company has made many such investments around the world, such as an investment in Txify to make an impression in Europe. The company has further invested in the Middle East based car-hailing company called Careem. The company also has its presence in South Asia.
Furthermore, DiDi is trying to target India, the country with the world’ second largest population. DiDi invested around $30 million in a ride-sharing company called Ola. Ola has about 80% market share in India. DiDi has also invested in a Southeast Asia Company called Grab. They acquired a company called 99 in Brazil and also established its presence in Mexico and Australia. It has collaborated with local taxi operators and Softbank in Japan to establish its footprint. The next step for the company would be to strengthen its presence in this market and consider it as an important source of revenue. The company needs to operate in a different countries and offer services by keeping in mind the customer expectations. At Automo, we believe that DiDi will be the next big thing in the future if the company gives importance to every market.
Assessing Other Opportunities
In terms of vehicle sales, China is the largest market, but in terms of vehicle ownership, it is far behind other countries such as the U.S., Germany, Japan, the U.K., Australia, and others. China’s vehicle penetration rate is just one vehicle per thousand population. One of the reasons for this is China’s population size, a gap which needs to be filled.
DiDi has understood the market gap, and to address these challenges, the company has collaborated with the participants from the automotive industry to provide an alternative to vehicle ownership. The on-demand and cheap alternative will help increase the penetration rate in China. DiDi with its 31 founding partners has created an alliance called D Alliance. The alliance aims to develop a low-cost electric vehicle. The founding partners include OEMs such as Volkswagen, KIA Motors, Cherry, and Toyota; manufacturers of parts and components such as Bosch and Continental;; mapping providers; and EV services companies.
At Automo, we believe that DiDi is aiming at transforming the existing business model in the automotive industry by partnering with different participants in the value chain. The alliance will help reduce the cost of an electric vehicle by a major percentage. If this works out, it will be the biggest alliance in the auto industry and will also have the capability to take on every competitor in the industry. An electric vehicle with more than 50% cost reduction will revolutionize the industry.
DiDi is expected to offer all these services and products in countries where the company has established its presence. DiDi’s ambition is to disrupt the industry by smartly collaborating as well as competing with the same partners in the long run.
In 2018, DiDi set up its AI Lab for R&D purposes. The focus of the lab is to develop different technologies such as computer vision, machine learning, voice recognition, operations, and others. This further suggests that DiDi is also interested in autonomous vehicle technology. The company has showcased its interest by being a launching partner to Toyota’s L4 autonomous electric vehicle. The partners are allowed to install an automated driving system for their own mobility services. This further gives a huge boost to DiDi AI Labs. The company is investing and collaborating in an efficient way. The company sees the future as autonomous and is involved in the competition right from the initial stages.
Driving with Range and Power: A Very Difficult Combination to Achieve
DiDi is expected to collaborate with the other automotive players to grow its current businesses of car sharing, ride-hailing, and others. Taxi and ride-hailing will be the primary business from which the company plans to generate most of its revenue. The company also is planning to leverage new technologies and strengthen its presence in new markets. The global presence will be the main focus, and the company’s open mind attitude will be the main driving factor fora very long time. The company is expected to offer subscription services to customers with low-cost EV. The company’s vision and current operations to achieve that vision suggest that DiDi will be the market leader in ride-hailing services in the medium to long term.