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Chinese ride-hailing giant Didi Chuxing, the world’s most valuable startup, is partnering with 12 automakers, including the Renault-Nissan-Mitsubishi alliance, to build an electric car-sharing network in China, Bloomberg reports.
Other automakers joining the agreement include Kia Motors, and several Chinese automakers such as Chang’an Automobile, BAIC, and JAC Motors.
The startup announced on Wednesday the launch of its new car-sharing platform, which will give automakers a valuable portal for monetizing investments in electric vehicles (EVs) as China’s government sets aggressive EV quotas. The country is already the world’s largest auto market, and the government is pushing EV adoption partly to help solve growing air pollution issues in China’s major cities. Automakers will need to collect “credits” for EV sales that make up 10% of all their sales in the country next year, when the new quotas go into effect, although one vehicle can be worth multiple credits in some cases.
China’s market for EV sales to consumers maintained steady growth last year, despite the government cutting some subsidies for EV purchases. However, the new car-sharing platform will give automakers a lucrative additional revenue stream from their EV investments by leveraging Didi Chuxing’s massive brand recognition in the country, where the startup’s ride-hailing network boasts more than 450 million users.
These types of agreements between mobility startups and traditional automakers will become a valuable opportunity for automakers, especially with the arrival of self-driving cars. Autonomous vehicles deployed through ride-sharing and car-sharing fleets are widely expected to lead to declines in car ownership in the coming decades, particularly in large cities.
One way to replace revenue lost from reduced consumer vehicle purchases would be supplying autonomous vehicles to such fleets, an opportunity several automakers are already exploring. Volvo inked a deal last year that could be worth up to $1 billion to supply self-driving cars to Uber, while Chrysler has agreed to supply vehicles for Waymo’s forthcoming autonomous ride-hailing service. Several carmakers, such as GM and Ford, also plan to eventually launch their own ride- and car-sharing fleets with self-driving vehicles they manufacture.
However, Didi Chuxing’s dominance in the Chinese on-demand mobility market would make it difficult for traditional automakers to compete. Supplying vehicles to the startup’s various services — either through direct sales or revenue-sharing schemes — likely represents an easier path for automakers to monetize the Chinese market for such services.
The self-driving car is no longer a futuristic fantasy. Consumers can already buy vehicles that, within a few years time, will get software updates enabling them to hit the road without the need for a driver.
This autonomous revolution will upend the automotive sector and disrupt huge swaths of the economy, while radically improving energy efficiency and changing the way people approach transport around the world.
Automakers and tech companies are racing to develop the technology that will power self-driving cars in the coming years. That tech is advancing, but leaves observers with a bigger question: will consumers trust driverless car tech, and will they want to use autonomous cars?
- Sizes the current and future self-driving car market, forecasting shipments and projecting installed base.
- Explains the current state of technology, regulation, and consumer perception.
- Analyzes how the development of autonomous cars will impact employment and the economy.
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