Didi mirrors Uber IPO path with self-driving unit spin-off
Aug 5, 2019
Didi Chuxing had spun off its autonomous driving unit into an independent company, it announced on Monday. The move may be part of efforts to refine its business structure ahead of a much-rumored IPO.
Why it matters: Didi is sharpening its focus on ride-hailing as well as vehicle-related services, while bringing other money-bleeding units under control following a reportedly RMB 11 billion ($1.5 billion) annual loss.
- Didi CEO Cheng Wei said in an internal meeting in February that ride-hailing is the company’s top priority this year and non-core businesses would be slashed or merged, while he set out plans to lay off 15% of staff.
- The company suspended the development of its online travel agency late last year, and the expansion of its food delivery business was paused after running for a mere six months.
Details: Didi CTO Zhang Bo will act as CEO to lead the autonomous driving while Meng Xing, former executive director at investment firm Shunwei Captial, will be COO, according to a company announcement.
- Didi entered the driverless business in 2016 and has over 200 employees working on developing autonomous driving technologies including HD mapping in China and the US.
- Didi’s self-driving push has had less success than its ride-hailing. It received permits for testing vehicles from regulators in both Beijing and California last year, though it only deployed two vehicles covering 78 kilometers on the streets of the Chinese capital last year.
- Uber went public one month after it divested its cash-burning self-driving unit with a $1 billion investment from Toyota Motors this April.
- Didi did not respond to comment when contacted by TechNode on Monday.
“The new company looks forward to further strategic collaborations with automakers and industry partners to promote the application of self-driving technologies in people’s everyday lives.”
— Zhang Bo, CTO of Didi Chuxing
Context: Didi is the latest Chinese company seeking external investors to help share the increasing cost of developing autonomous vehicles.
- Ford and Volkswagen AG announced last month that the two will jointly develop electric and self-driving vehicles. VW will invest $3.1 billion into Ford’s self-driving unit Argo AI and the collaboration is expected to save huge amounts of money for each company.
- Apple June acquired Mountain View-based Drive.ai, one of the promising AV startups was once valued at $200 million in 2017, before it would have shut down the business in late June.