Kyle Stanford May 18, 2016
As if the ridesharing battle needed another huge corporation stepping into the ring in some capacity, Apple has invested $1 billion in Didi Chuxing (f.k.a. Didi Kuaidi), or more commonly known as Uber’s chief rival in China.
Apple CEO Tim Cook mentioned in a statement that the move was made to better understand the Chinese market, which Didi is dominating in every way, but also because Apple believes it will see a strong return from the invested capital over time.
A strong return may be an understatement. Didi was valued at roughly $16.5 billion when it raised $3 billion in September 2015, not long after former rivals Didi Dache and Kuaidi Dache merged in a $6 billion deal. Since the merger, the company has continued to grow in China, now reportedly holding 87% of China’s private ride-hailing market—much to the dismay of Uber, whose world-domination model has hit a snag in China where it loses $1 billion each year, according to CEO Travis Kalanick. Didi claims to have more than 14 million drivers around the country giving 11 million rides each day (for those counting, that equates to more than 4 billion rides a year).
Seeing those numbers, it's no surprise that only Uber has been able to mount even a marginal challenge to Didi within the Chinese market. It's also worth noting that other ridesharing services Lyft (U.S.), GrabTaxi (Southeast Asia) and Ola (India) all entered into a strategic agreement with Didi to allow customers to use their "local" apps to book a ride in partner regions (i.e. the Lyft app can be used to order a ride in Southeast Asia from a GrabTaxi driver).
Apple’s investment is large in its own right, to be sure, but its potential for Apple and the autonomous car revolution is massive. Much like other major companies, such as Google, General Motors, Uber, Toyota and Ford, Apple has been developing self-driving car technologies. The company’s investment into Didi provides an infrastructure to begin testing and, ultimately, roll out full integration of autonomous cars into the Didi platform.
General Motors began a similar partnership with Lyft when the auto company invested $500 million as part of Lyft’s early 2016 financing. That partnership has grown so much that last week the two companies announced that within a year they will launch a pilot program where certain markets in the U.S. will begin to use electric, autonomous vehicles for Lyft’s services.
China will be a much more difficult market to crack by Apple with this strategy. But securing a partnership with one of the largest smartphone-based ridesharing services in the world isn’t a bad place to start.
Not to mention, China is also becoming Apple’s largest iPhone market.