Didi’s Vision for Chinese Car Market Echoes Global Trends

Chinese ride-hailing company Didi’s effort to work closely with automakers is only the most dramatic example yet of partnerships that are inevitable as the car industry evolves.
Didi, China’s biggest transportation network company (TNC) and the new owner of what was Uber’s business there, reportedly is forming an alliance with 31 companies to supply, manage and develop vehicles in the coming years. The plan envisions both human-driven cars and autonomous vehicles, and current models as well as future designs crafted from the start for ride-hailing.

On April 30, Reuters reported that the company is in talks with Volkswagen on a specific deal to manage about 100,000 new cars and eventually develop new models together.

It’s not yet clear what shape partnerships between manufacturers and mobility companies will take, either in China or elsewhere. But as many consumers change how they get around, the two will need to work together, car technology expert Doug Newcomb told The Connected Car.

“It’s a symbiotic relationship,” Newcomb said.

Automotive original equipment manufacturers (OEMs) need to keep making vehicles, and TNCs need cars that work. Automakers know how to design and manufacturer cars but know little about where they’re driven, while ride-hailing companies have fine-grained data about consumer behavior.

The availability of ride-hailing doesn’t seem to have cut into sales of private vehicles in the US, said Newcomb, who is president and co-founder of Newcomb Communications and Consulting. TNCs may actually drive up car sales, especially if they replace their cars more often than consumers do, he said. Either way, OEMs are trying to adapt in order to capture sales.

Early notions that emerging AV leaders such as Google — now Waymo — would design and build their own cars have given way to the reality of arrangements like Waymo’s adoption of modified Chrysler Pacifica minivans and a version of Jaguar’s upcoming I-PACE crossover for its driverless ride-hailing service.

Uber works with Volvo for its current self-driving test vehicles and is a partner with Toyota — also an Uber investor — on its e-Palette concept, a flexible platform that could become different types of AVs. In 2016, Lyft and General Motors announced a $500 million investment and a partnership on AVs and short-term rentals to Lyft drivers. GM’s Maven Gig service rents cars to both Uber and Lyft drivers in some cities.

Didi is putting together something much bigger, according to news reports. With its partners, it would develop a new mobility business model for China and beyond, Reuters said. The vision includes alternative-energy vehicles, charging networks and driving technologies. In some cases, Didi aims to help OEMs run their own ride-hailing services in exchange for car design expertise.

Didi already has a growing team of automotive designers and engineers and is working with two Chinese car companies to develop electric cars. The potential VW deal would let the German automaker manage a fleet of about 100,000 vehicles for Didi — including some that VW didn’t make — and help Didi buy new vehicles, as well as co-develop future models. The companies would share revenue.

Designing cars specifically for ride-hailing might lead to entirely new kinds of vehicles. They might have fewer seats because customers like to ride alone, or less power because there’s no need to go 150 MPH giving rides across a city, Didi has said.

These trends may play out differently in the US, where private car ownership has a much longer tradition and the major automakers are more established than in China, Newcomb said. But even in mature car markets, the old and new will need each other.

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