Tencent has aligned with state-backed GAC Group to launch a ride-hailing platform named OnTime in the southern Chinese city of Guangzhou this week. Chinese tech companies and automakers are battling to secure a piece of the ride-hailing industry in order to gain a stake in the mobility market of the future.

OnTime on Wednesday announced in a WeChat post that it began a two-day trial in four urban districts in the city, offering rides costing RMB 0.01. The Tencent-backed startup plans to officially launch the service in Guangzhou later this month, expand into the Greater Bay Area region, and then the rest of the country. The company’s namesake app has been available for download starting from Wednesday.

Earlier this year, GAC unveiled its investment plan to set up a RMB 1 billion ($150 million) mobility firm with a list of investors including Tencent and Guangzhou Public Transport Group. GAC and Tencent are the two largest shareholders, owning a respective 35% and 25% of the joint venture. The two companies first partnered in November 2017 when they inked a strategic partnership to explore cloud-based, intelligent, and connected vehicle solutions.

China has become the world’s largest ride-hailing market, and it is expected to double in volume to $70 billion over the next three years, research figures from Bain & Company show. Following entries by Meituan and Hellobike into the market, state-owned SAIC also launched a high-end ride-hailing service Xiangdao in December. The company says it is available in more than 154 domestic cities with upwards of 1.3 million users and 1,000 business clients. Global auto brands are also offering ride-hailing in China, including BMW, Ford, and Daimler.

However, ride-hailing giants worldwide are struggling to keep their cash-bleeding businesses afloat, prompting concerns about their sustainability. Tencent-invested Didi laid off 2,000 employees to refocus on its core business earlier this year, after reportedly losing nearly RMB 11 billion in 2018. Both Uber and Lyft recorded around $1 billion losses in the first quarter of this year and expect the heavy losses to continue in 2019.

Jill Shen is Shanghai-based technology reporter. She covers Chinese mobility, autonomous vehicles, and electric cars. Connect with her via e-mail: jill.shen@technode.com or Twitter: @yushan_shen

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