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Didi raises $5.5B. After the global truce, is it time for a global cab war?

Didi raises $5.5B. After the global truce, is it time for a global cab war?

Friday April 28, 2017 , 5 min Read

And it's confirmed. Didi Chuxing, Uber’s biggest rival, often touted to be China's Uber, has raised a fresh $5.5 billion in funding. The Chinese cab aggregator confirmed the funding in a statement to TechCrunch. The focus of this fund raise will be to ensure global expansion and deeper investment into emerging areas like AI. While Didi’s current valuation remains undisclosed, all reports guestimate the valuation to be a little over $50 billion, putting it next after Uber among worldwide competitors in the space. Didi has so far raised $13 billion, and Uber, $9.8 billion.

It has been less than a year since Uber conceded defeat of sorts in China, selling its Chinese subsidiary to Didi for a stake. The current fund round was led by Silver Lake Kraftwerk, and was joined by existing investors Banks of Communications Co., China Merchants Bank Co., and SoftBank. This makes the game of the cab aggregators very interesting on a global level.

Early last month, Didi also launched DiDi Labs in Mountain View, California. The PR Newswire states that DiDi Labs will focus on AI-based security and intelligent driving technologies, with an aim to attract top engineering talent to advance transformation in the transportation sector. And with DiDi’s focus on the global battle, it looks like the two global cab aggregator Goliaths are going to be locking horns again.

The statement that the company shared with TechCrunch said that, as a global technology leader, Didi is striving to advance the transformation of the transport and automotive industries. The Chinese giant also said that it will be building on its competitive AI-based analytics capabilities.

The artificial intelligence lab it opened last month is already believed to have Uber’s former auto-security expert Charlie Miller onboard, and with this funding, the team intends to hire more top tech talent.

After a four-year strong focus on China, the company is now looking at expanding into more countries, while also focusing on areas like autonomous driving and artificial intelligence, putting it once again in competition with Uber, and now even Alphabet Inc.

When we look at the global market, we realise there is a lot brewing already. Currently, Uber is a global leader, with a whopping valuation of over $68 billion. But the year didn’t exactly start on a high for the San Francisco-based cab aggregator. It began with the #DeleteUber campaign, then the issue with Susan Fowler brought to light the cases of sexual harassment within the company, which was followed by several top level exits.

Travis Kalanick was also caught on video fighting with an Uber driver, after which an apology followed. He later went on record seeking a COO. Most recently, The Information brought out the Uber ‘HELL’ Program, which showed the practices Uber uses to kill competition. However, while Lyft did see an increase in market share during the #DeleteUber campaign, the market leader was able to regain its position after a while.

But now, with Didi possibly entering the fray, the battle lines might soon be drawn. While the transportation and ridesharing business might be fought between Uber and Didi, the autonomous driving scene already has powerful players like Apple and Google. All four giants seem to be investing heavily in the space.

While Didi has been the ruler of its turf, it will be interesting to see how it will make its move to expand its other parts of the globe. Currently, it has made partnerships and alliances on a global scale. In December 2015, Ola, GrabTaxi, Lyft, and Didi Kuaidi had formed a global alliance to take on Uber in India. With it looking at a global expansion, will Didi look at investing more in the Indian market, and thus pump more money into Ola? Or will it look at a deeper partnership?

In its statement, Didi said that with this new investment, it will continue to work with communities and partners around the globe to provide better mobility services and expand. Ola has over the past year been locked in a battle with Uber. The Bengaluru-based cab aggregator has been ramping up its operations, and has expanded its base to a larger market segment. They also raised $350 million from existing investor Softbank.

In that sense, Ola has Didi and Softbank as an investor. SoftBank, on the other hand, has invested in Didi. Uber and OIa have a common investor in Tiger. Uber also has a stake in Didi. Between the three players, the mixed blood is strong. Is it time for a global consolidation?

Also, in India, the battle is tougher. The regulatory war is something both Ola and Uber are still handling, the driver unions continue to lobby against the cab aggregators, and both the giants themselves are fighting each other. Adding to the mix, many believe that the need for a transportation solution in India is high. Indonesia-based Gojek and Grab Taxi have already ramped up their India R&D centres. Neither intends to start operations in India at the moment, but only time will tell if Asia has a different battle to fight.