Didi Chuxing is launching a program to alter the very nature of car ownership and shake up the automobile manufacturing supply chain in China—and beyond. The company masterminded a shift to “car operation” announcing the move at a glitzy event in Beijing attended by auto industry top brass.

“In the future, software, hardware, and user services will be integrated,” said Cheng Wei, Didi CEO. “And we will be the service provider.” He has hopes that China will become a great automotive nation (汽车强国) in the next five to ten years. This involves Didi becoming the biggest one-stop solution to transport worldwide, to manage the car operation platform and be the world leader in smart transportation.

Didi will also be involved in the design of a car specially developed for ride-hailing with a predicted market of 10 million units in 10 years’ time with the help of the D-Alliance. The alliance, also called Didi Auto Alliance or Torrent (洪流联盟), is a platform that brings together 31 auto partners. The name in Chinese (hongliu or “torrent”) comes from the water drops in the characters for Didi (滴滴 or “drip drip”) as the company sees its drivers and vehicles coming together as droplets to form a torrent.

The platform includes some of the biggest players in China’s automakers and original equipment manufacturers (OEMs)—FAW, BYD, Beijing Automotive Group (BAIC), and Guangzhou Automotive Group (GAC). Didi is already working with BYD to develop the “D-1,” the first car developed specifically for ride-hailing. According to the figures, the D-Alliance would let DiDi control 50% of the transport needs of 2 billion people.

Panel discussion with top automaker C-suite. (Image credit: Didi Chuxing)

The platform would mean car manufacturers become car operators in an end-to-end chain from car manufacturing to refueling/recharging to maintenance. Private individuals would not need to own their own cars, nor would Didi. Instead, the ride-hailing giant would be involved in car design and would coordinate the entire system, making the vehicles available for ride-hailing or short-term hire. The platform will even look into ways of providing financing.

As the biggest provider of transport both in China and the world, Didi is well positioned to lead such an alliance—and take a cut in more areas of transportation than just rides. The company has 30 million rides per day and envisions a user base of 2 billion people worldwide.

Ride-hailing by Didi is based on private car owners in countries such as China. However, in markets where private car ownership is low, a new model is needed. Didi has tried leasing vehicles to drivers, but it was not cost-effective. The current solution could be to do away with private ownership and, eventually, with leasing.

“No cars have been designed specifically for sharing [ride hailing] as they are all owned by drivers,” said Cheng, “Manufacturers should provide more customization of vehicles that are used for sharing.”

Safety, efficiency, and emissions reduction are three of the goals of the Alliance. 260,000 electric vehicles—almost a third of all electric vehicles in China—are currently taking passengers for Didi. The company has China’s largest fleet of EV numbering around 15,000 at present via a joint venture with BYD, with the aim to be “operating” over a million by 2020, said Didi VP Jesse Yang Jun.

Didi D-Alliance launch ceremony Beijing
Attendants dressed like bridesmaids worked at the ‘alliance’ launch. (Image credit: TechNode)

Didi has already been working with BYD for two years, including on the D1—the first car to be designed for sharing. “The data from our hundreds of millions of journeys show the importance of safety,” said Yang. The model, expected to be ready within five years, will incorporate AI features to enhance traffic safety, passenger safety, and battery safety.

Efficiency modifications focus on city-wide traffic congestion, but also on the cost per kilometer for operating the vehicles. The aim is to reduce the overall running cost of a vehicle by half, in part by utilizing the company’s big data.

“We want Didi to become the incubator for the whole chain,” said general manager Chen Xi referring to the manufacturing to maintenance model of “car operation.”

Members of the alliance shared their opinions in a panel hosted by Didi president Jean Liu who shared that it was a Didi requirement that senior management all learn to drive so they can experience it for themselves. Xu Heyi, chairman of Beijing Automotive Group, said the D-Alliance supports the call of Chinese President Xi Jinping and the central government to embrace innovation.

The general consensus among manufacturers was that attention would shift from the exterior design and appeal of cars to the interior. Xu Heyi said the car constitutes the third most important place in people’s lives after the home and the office.

Frank Hersey is a Beijing-based tech reporter who's been coming to China since 2001. He tries to go beyond the headlines to explain the context and impact of developments in China's tech sector. Get in...

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