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Jon LeSage

Jon LeSage

Jon LeSage is a California-based journalist covering clean vehicles, alternative energy, and economic and regulatory trends shaping the automotive, transportation, and mobility sectors.

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Is This The Next Global Leader In Ride Hailing Services?

Didi ride hailing service

Chinese ride-hailing giant Didi Chuxing took another step forward in its strategy of being a global leader in mobility services.

Booking Holdings, which runs popular online travel services like Priceline.com, just invested $500 million in Didi. While Didi is best known for rivaling Uber and Lyft, the Booking investment is part of something much larger.

The half-billion dollar deal follows a $4 billion funding round Didi took in late 2017 as the company prepares to roll its business model to other global markets — including Mexico, Australia, Taiwan, Brazil, and Japan.

Booking Holdings opens the door for Didi to expand its transport services to the travel industry, which used to be owned by traditional transportation modes such as car rental. Didi will be able to offer its ride-sharing and other mobility services to business and leisure travelers through Booking.com apps. Its customers will be able to book hotels through Booking.com, its sister site Agoda, and tap into its popular travel subsidiaries — Kayak, Priceline.com, Rentalcars.com, and OpenTable.

According to the Certify Q1 2018 SpendSmart report, which analyzed over 10 million business receipts and expenses, ride-hailing use from companies such as Uber and Lyft has increased 63% over the past four years — and 12% in the year ending March 30 of this year.

Car rental usage has decreased 32% and taxi rides have decreased 31% over the past four years, according to the study.

Adding travel services to its portfolio comes at a time when the Chinese mobility firm has expanded its global reach. That includes acquiring Brazilian ride-hailing company 99 in Brazil, along with recent plants to enter the Japan market.

Founded in 2012, the Chinese ride-hailing firm started out as Didi Kuaidi. Headed by Chinese business executive Cheng Wei, the company has evolved into Didi Chuxing, which now provides transportation services to more than 450 million customers in over 400 cities in China. Related: Why Is Venezuela Still Sending Subsidized Oil To Cuba?

During 2016, Didi acquired Uber’s China business for $35 billion. The two arch rivals had been fiercely battling for market share through a price war cutting deeply into profits. Uber has had to stay out of the burgeoning China market since that time.

Earlier that year, Didi had received a $1 billion investment from Apple. The Silicon Valley tech giant, like Google and Amazon, have been investing heavily in autonomous vehicles and other mobility services of the future.

Like Apple, Didi sees the future of autonomous tied to electrified transportation. Along with being known for its testing of self-driving vehicles and artificial intelligence, Didi has been taking electric vehicles seriously through its alliance with a European automaker.

In October 2017, Swedish automaker NEVS AB forged an alliance with Didi Chuxing,

NEVS (National Electric Vehicle Sweden) is producing electric cars adapted from automaker Saab’s assets — including the Saab 9-3. NEVS is backed by Chinese investors.

NEVA and Didi plan to develop an electric vehicle fully optimized to DiDi’s mobility service. That includes going the route of self-driving and on-demand mobility services of the future. It will probably tap into the InMotion concept that NEVS unveiled in June 2017. The first vehicle used in the new cooperative venture will be the NEVS 9-3. Related: Who Actually Benefits From Sanctions On Iran?

Didi investments are also being made in other transportation modes like biking, designed to lessen dependence on cars and bring a greater share to mobility services of the future.

For Didi, autonomous vehicles will play a big part in that future. In May, the company was granted approval by the California Department of Motor Vehicles to test its self-driving vehicles in the state. The company had been testing self-driving vehicles in a closed internal environment and had been finalizing plans to test autonomous vehicles out on U.S. roads.

In 2017, Didi opened its main research facility in Mountain View, Calif., to focus on developing artificial intelligence, including autonomous driving. Didi is positioning itself as both a Chinese tech giant and as a major player in Silicon Valley.

A study released in December by global research firm IHS Markit states that mobility services popularized by Didi, Uber, and Lyft will create a trillion dollar industry by 2040. Smartphone-app based mobility services are booming in usage in countries like China and India where workers seek affordable, convenient commuting alternatives in increasingly crowded cities.

The future is just around the corner, according to Dr. Daniel Yergin, who headed up the study in his role as IHS Markit vice chairman.

“The growth of mobility services will lead to more miles traveled by cars and increased access to mobility via the car around the world. People will have greater access and other options than ever before,” Yergin said.

By Jon LeSage for Oilprice.com

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