Within a decade, Didi Chuxing envisions an electric proprietary fleet of 10M EVs. The nearer term goal, however, is to have 1M EVs in Didi’s network by 2020, up from some 260,000 EVs as of November 2017. The Chinese company also seeks to quadruple the number of Didi users to 2Bn people worldwide over the next 10 years, up from today’s 450M users.
Didi, which has a comprehensive array of transportation options including taxi, express pool, social ride-sharing, enterprise solutions, car rental, bike-sharing and minibus, said in a statement in February that it also plans to build an “open electric car-sharing system” that would allow members to use vehicles on demand through an app-based system.
To achieve these targets, Didi said at 2018’s Beijing auto show that it had forged an alliance with 31 automotive companies to develop cheap, electrified vehicles in China for its platform. Furthermore, Didi began talks last week with Volkswagen, to form a joint venture to manage at least 100,000 vehicles of the ride-hailing company’s fleet, of which, two thirds would be the Volkswagen brand. The deal would also involve Volkswagen’s help to develop “purpose-built” vehicles for Didi’s services. Didi even plans to build its own charging network for electric cars.
Roskill view: Despite Uber being the first market disruptor with its hail-ride services, Dixi Chuxing, the so-called Chinese Uber, may become the global leader. Competition between the two was stiff until Uber sold its Chinese operations to Didi in 2016. After winning the domestic battle to Uber, the Chinese ride-hailing giant now seems to have re-focussed its efforts in AI, international expansion, and transport electrification, all backed by the US$4Bn raised in late 2017 and with the support of three Chinese tech-giants, Alibaba, Tencent and Baidu.
The 10M EVs on- the-road target seems, however, an overambitious plan despite Didi’s current EV fleet. For more perspective, automakers jointly plan annual sales of 15M EVs by 2025, or a 44% annual growth from current global sales. This annual growth rate is, coincidentally, the same annual growth observed in Didi’s 10M target when compared to its current fleet. In this regard, perhaps Didi intends to grow its electric fleet to the beat of the automaking industry. Although this is theoretically possible, as already observed, consistent delays in policy targets in the US and Europe that would further accelerate OEM electric efforts, plus the constraints already arising in the cobalt and nickel supply chain for batteries, will very likely delay Didi’s EV target.
Didi’s plan to become a “transport operator” instead of making, selling or leasing out cars is probably one of the most challenging strategies ever faced by the traditional auto industry, especially in terms of operational complexity, marketing, and impact on overall car sales. Nevertheless, urban concentration, pollution, traffic, and increasingly stringent policies, make a strong business case for cars as shared-services instead of individual ownership.