Didi Chuxing spins off its autonomous driving unit into a separate entity

Didi has been active in its pursuit of autonomous vehicle testing, gaining approval to test its vehicles in California, apart from testing its vehicles in China. Nonetheless, the company has long been playing catch-up, lagging behind its American competitors like Waymo and GE by a fair distance, especially in the number of miles clocked in public road testing. 

Ground zero in China, Didi is still far behind search engine giant Baidu, which has registered nearly 90,000 miles testing on Beijing-area roads alone. Over 90 percent of all the self-driving miles recorded in Beijing have been by Baidu. 

Just like Uber, Didi finds itself in a sticky situation in the context of profitability. Didi’s cab-hailing business model is unsustainable in the long run as it banks heavily on venture capital money and incurs considerable losses every quarter – a position that is justified at this time due to aggressive market expansion. Didi understands that to truly realize a profitable venture in its cab-hailing business, eliminating the taxi drivers is key, because now a significant percentage of its revenue goes into the drivers’ pockets. 

The SoftBank factor in the decision to spinoff Didi’s self-driving unit must have been vital, as the firm is its largest stakeholder, and has a major say in the company’s activities. SoftBank, with its $100 billion Vision Fund, has been known to loosen its purse in the autonomous driving sector, investing heavily in Uber’s self-driving unit, self-driving delivery startup Nuro, and even in a self-driving car service platform called Monet – a joint venture between SoftBank Corporation and Toyota Motors.