Didi made the headlines again this week - this time with plans to expand China's electric vehicle (EV) infrastructure.
Chinese ride-hailing app Didi Chuxing announced on Thursday that it has partnered with energy group BP to develop an EV charging network across the country.
“We look forward to combining our strengths to create a robust EV charging network in China,” said Didi chief executive Cheng Wei. Didi connected its platform with BP’s pre-existing charging stations in Guangzhou in a test run in May this year.
It is not the first time that Didi’s name has appeared alongside international conglomerates. Didi has previously encouraged greater cross-sector cooperation, and last year the company partnered with Volkswagen in another EV joint venture. Last month, Didi embarked on another round of funding with a $600 million strategic investment from Toyota.
Didi wants to ride on the momentum of China’s electric vehicle development in its tie-up with BP. The ride-hailing company hasn’t turned a profit since it was founded seven years ago. In the first half of 2018, the ride-hailing platform recorded $585 million in losses.
The ride-hailing market in China has gradually become saturated as the retail consumer growth has slowed. Didi’s daily active users have been declining since August 2018, according to third-party research firm Jiguang. Didi still ranked first among all Chinese ride-hailing companies with more than 11 million daily active users as of December. New users' growth for Didi has also slowed down since October. The report said that the penetration rate of Didi’s app dropped to 14.7% in December from over 15% in October, while still ranking first in China.
Didi didn’t comment immediately on this data.
For BP, this JV is the latest in a string of renewable energy initiatives around the world. Earlier in 2019, the group invested in PowerShare, a Chinese renewable energy startup.
“As the world’s largest EV market, China offers extraordinary opportunities to develop innovative new businesses at scale,” BP’s downstream chief executive Tufan Erginbilgic explained. “We see this as the perfect partnership for such a fast-evolving environment.”
China’s EV market has been boosted by massive government support. Beijing included electric vehicles as a pillar of its Made in China 2025 programme, and officials hope the vehicles will make up 12% of cars on the roads by 2020.
The Chinese government, however, has gradually halted its large-scale subsidies to EV companies, hoping that they can become more self-sufficient. But the EV industry has faced low profitability for a long time.
International EV brand Tesla reported more than $1 billion in losses for the first half of his year, and Chinese EV company stocks are getting battered as well. In March, shares of China-based Tesla competitor NIO fell by 47%.
It is still unknown whether Didi will make a profit from its EV-related JV with BP. But Didi said that more than 600,000 electric vehicles operate on the ride-hailing platform, which services upwards of 550 million users globally.
It is trendy for ride-hailing companies to partner with energy companies and ride the EV wave around the world. Last year, Grab partnered with the Singaporean government’s SP Group to add 200 electric vehicles to the ride-sharing platform’s fleet. SP Group offers discounts to Grab’s EV charging at its own stations.
Didi didn’t specify what role each of the partners will take in building the charging station or clarify the structure of their commercial relationship. As growth from retail consumers slows, it remains to be seen whether their electric vehicle push will electrify Didi’s business.
This article has been corrected in the fifth paragraph to remove a reference to Didi shifting its focus away from retail clients after a Didi spokesperson said that this was not the case. The last paragraph was also corrected to show that BP is not one of Didi’s clients.