Didi Chuxing in talks with SoftBank to raise capital for self-driving cars unit

The logo of Chinese ride-hailing firm Didi Chuxing is seen at their new drivers center in Toluca, Mexico, April 23, 2018. REUTERS/Carlos Jasso

Didi Chuxing, China’s largest ride-hailing platform, is in talks with SoftBank and other investors to raise capital for its self-driving cars business. This was first reported by The Information.

SoftBank, Didi’s largest shareholder, has previously expressed interest in self-driving cars. Earlier this year, SoftBank, Toyota and Denso, a Japanese auto parts maker collectively paid $1 billion for a 14 per cent stake in Uber’s autonomous vehicle development arm. SoftBank also owns a stake in General Motors’ Cruise, which develops robo-taxis for San Francisco.

The Didi-SoftBank talks indicate a rising trend of ride-hailing companies and automakers bringing in external investors to raise capital for their autonomous driving divisions. The report added that doing so is a more cost-effective way of bankrolling these projects, which tend to be capital and time intensive.

If successful, these driverless vehicle divisions may then be spun off as a separate unit to provide financial returns to its investors.

Didi meanwhile continues to suffer widening losses on its balance sheet. The company is burning vast amounts of cash – up to $1.5 billion last year – as it faces stiff local competition, regulatory hurdles and a public backlash involving the deaths of two passengers in its cars last year.

Partnering with strategic players like SoftBank could relieve Didi of the R&D cost that will come with autonomous driving – technology that has yet to gain wide traction in terms of execution. Didi currently has an R&D centre called Didi Labs, based in California’s Mountain View and Los Angeles, where it has been testing its autonomous car. According to Chinese corporate filings, Didi also formed an autonomous driving subsidiary in China earlier this year.

Last year, Didi signed an alliance with 31 other automotive companies including Renault-Nissan-Mitsubishi to collaborate on areas such as fleet management, car manufacturing and autonomous driving. It also set up a joint venture with Volkswagen and China’s BAIC to develop “next-generation connected-car systems” and technologies related to ride-hailing services.