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Asia on Track to Expand and Electrify Ride-Hailing Services

Chinese ride-hailing giant Didi has announced a joint venture into the development of electric vehicles with state-owned OEM BAIC, while Indonesian-based Go-Jek is on track to raise another $2 billion for continuing expansion in the area [1,2].

Didi currently has around 400,000 drivers that use some kind of New Energy Vehicle (NEV) in China, a definition describing different types of battery electric vehicles (BEVs) and plug-in hybrid vehicles (PHEVs). Although that may seem like a big number, it represents less than 1.3% of Didi’s total vehicle fleet, which clocks in at a massive 31 million drivers to date. To boost the share of NEVs, Didi has now partnered with BAIC to form the new venture “Jingju”, which will focus on developing the “next-generation connected-car systems” through expansion into AI and fleet management to name a few [1].

In the southeast Asian region, there is currently a battle being fought over the crown of top mobility-provider for a fast-growing market, and the two main players are Indonesian based Go-Jek and Singapore based Grab. Recently, both companies have been in an arms-race to raise capital and expand within the area. Go-Jek is now announcing that they’ve come half-way in their most recent round to raise $2 billion, with investors such as Google, Tencent and JD.com pledging $920 million to the company [2]. Just six months ago, main rival Grab managed to get a cash injection of $2 billion in Series H funding, with half of that coming from Toyota [3]. The latest figures suggest that Go-Jek is now valued at $9.5 billion, while Grab is valued at $11 billion.

 

Personal comments

The direction of the joint venture between Didi and BAIC is not surprising given Chinese pollution laws and new subsidies towards electric powertrains. For Didi, a major player in the global ride-hailing sector, BAIC seems like a suitable partner since they have vowed to go all-electric by 2025 [4] and will most probably continue to be a major supplier of vehicles for the Chinese market in the future.

It seems that the race for top mobility-provider in the Southeast Asia region is starting to morph into something bigger, and not only limited to mobility. With such huge injections of cash for both Grab and Go-Jek, both companies are now trying to widen their horizon and service offering into other areas, such as payment solutions, e-commerce and other “O2O” (Online-to-offline) services. As they expand, the real race is leaning toward becoming the top supplier of digitalization and all its services to a digitally emerging economy.

 

Written by Darijan Jelica, RISE Viktoria.

 

Sources

1. 2019-01-28. China’s Didi teams up with state-owned BAIC to deepen electric vehicle push.

2. 2019-01-26. Go-Jek makes first close of $2 billion round at $9.5 billion valuation.

3. 2018-07. Grab picks up $2 billion more to fuel growth in post-Uber Southeast Asia.

4. 2017-12-18. Chinese auto giant BAIC going 100% electric by 2025.