Chinese mobility service provider Didi Chuxing has reportedly been in talks with Softbank for $300 million in fresh funding for its autonomous driving unit.
Why it matters: The investment is a vote of confidence in a Chinese AV startup during a low point in investment activity compounded by the Covid-19 outbreak.
- China’s deal-making activity for startups reached its lowest point, shrinking by more than half year on year to 168 deals worth $1.79 billion as of February, according to the South China Morning Post citing figures from financial research firm Preqin.
- Expectations about widespread AV adoption has flagged in recent years, as the development of the technology proves to be more difficult and time-consuming as initially thought.
Details: Softbank is expanding its commitment to Didi and is on the brink of reaching a deal to lead a $300 million investment into the ride-hailing startup’s self-driving unit for an undisclosed valuation, The Information first reported Monday citing people with knowledge of the situation. TechNode verified Softbank’s investment in Didi with a person close to the matter on Tuesday.
- The other investors involved in the deal are unknown. SoftBank did not respond to a request for comment and Didi declined to comment.
- Rumors of Didi seeking funds for its AV unit have been circulating since July, just a month before the ride-hailing platform spun off its self-driving car department to transfer some of the considerable cost to external investors.
- Didi has been playing catch-up in the global self-driving race. It began testing robocars in California in June 2018, two years after Baidu and lagging Pony.ai by a year. It reported one disengagement from a human driver every 1,535 miles on California public roads last year, a decent result for a first-timer.
- Industry insiders TechNode spoke with view the company as having significant potential to succeed in light of the huge volumes of human driving and public transport data it is able to feed into its algorithm. Didi late last year unveiled plans to launch a robotaxi pilot service in Shanghai, though there has been no progress since then due to regulatory hurdles.
- Softbank has invested aggressively in AV. It poured $2.25 billion into General Motors-backed Cruise for a 20% stake in May 2018, making it the largest deal at the time for the nascent industry.
- This was followed by a $1 billion deal a year later from the Japanese investment giant and other investors including Toyota with Uber’s autonomous driving team, which also became an independent business soon after the investment was unveiled.
Context: Softbank has had a rough past several months. It has been sharply criticized over its once-hyped investment strategy, following the downfall of two of its biggest rising stars, WeWork and OYO, which face falling revenues and plunging valuations.
- The Japanese tech investor wrote down its Wework investment by $3.4 billion late last year, and reported its first quarterly loss in 14 years during the quarter ended Sept. 30, totaling $6.5 billion. It announced plans on Monday to sell $41 billion in assets to buy back shares and reduce debts.