Didi, Germany’s Continental Form Partnership for Internet-Connected Vehicles

Didi Chuxing has struck a partnership with German automobile-part supplier Continental AG to develop internet-connected vehicles — the Chinese car-hailing giant’s latest push to bring emerging smart-driving technologies into its fleets.

The companies agreed to jointly develop internet-connected and custom-made new-energy vehicles, combining Continental’s technology capacity with Didi’s expertise in mobile-based transportation services, the companies said on Tuesday.

“Didi will work together with Continental to advance the technology and lead the innovation in automotive hardware, software, and services,” Didi Vice President Yang Jun said.

Under the partnership, Continental will supply intelligent networked car products and on-board communication solutions for Didi’s new generation of vehicles for use in its car-hailing service.

The partnership with Continental is Didi’s latest step in its efforts to tie up with traditional automakers to build custom-made vehicles as it strives to defend its position as an industry leader. In April, Didi launched the Didi Auto Alliance with 31 automakers and technology companies to jointly develop new technologies and vehicles designated for the car-hailing business. Members of the alliance include BAIC Group, FAW Group, BYD Auto Co., Volkswagen China, and Robert Bosch GmbH.

Didi founder and CEO Cheng Wei said in April that “the Auto Alliance will become a provider of integrated transportation services combining auto leasing and sales, auto finance, auto service, fleet operation and car-sharing solutions in China and beyond.” But to date, Didi has not released any detailed plans with its partners.

Founded in 1871, Hanover-based Continental specializes in tires, chassis components, automotive safety, car-body electronics, powertrains, and interior accessories. Continental entered the Chinese market with a joint venture in 1994, and has since opened several production and research-and-development bases in China.

Didi became China’s undisputedly largest car-hailing service provider in 2016 after buying out Uber’s business in the country. Didi now claims over 90% of China’s market for matching drivers and riders on its mobile platform. Currently, Didi serves more than 450 million users and provides 25 million rides daily. It is also developing a self-operated fleet that is expected to reach 50,000 vehicles this year, most fueled by new energy.

Didi aims to become the world’s largest operator of vehicle networks and a global leader in smart transportation systems by 2022, Didi said. In a December fundraising of $4 billion, Didi was valued at $56 billion, making it one of the most valuable tech startups in China.

But Didi’s dominant position in China is not unassailable, as new rivals keep emerging.

Several Chinese companies — including the Alibaba-backed mapping business AutoNavi, the deep-pocketed food-delivery provider Meituan-Dianping, and Ctrip.com International, China’s largest online travel service — have launched their own competing ride-hailing platforms.

The fierce competition has pushed Didi to actively expand beyond its core business. In March, Didi announced it had formed a strategic partnership with Beijing-based automaker BAIC Group in electric vehicle operations, big data applications, mobility services, customized vehicle design and electric vehicle charging services. Didi also set up a joint venture with electric-car startup Beijing Chehejia Information Technology to produce electric-powered, partially autonomous cars designed for ride-sharing services. The vehicles will be ready for mass production by 2020, sources told Caixin.