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Didi Chuxing Is Taking Aim at Driverless Cars

By Chris Neiger – Oct 9, 2016 at 5:00AM

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The company is said to be in talks with a China-based driverless car technology company -- and that could mean Didi may soon have its hands in yet another major transportation market.

Image source: Getty Images.

Didi Chuxing has found yet another area of the transportation sector it has yet to venture into -- driverless cars -- and it's now attempting to remedying that quickly. The China-based ride-hailing company is looking to Silicon Valley to hire engineers and data scientists for an autonomous car push, according to a new Bloomberg article

Apparently, Didi co-founder and CEO Cheng Wei has already spoken with the founder of UiSee Technology, which is a driverless car start-up based in Beijing. UiSee is working on road-scanning technology for self-driving cars and is expected to debut some of its technology at the Consumer Electronics Show early next year.

Gansha Wu, the former director of Intel Labs and CEO of UiSee, told Bloomberg that Didi and his company "share the same vision that driverless cars can do wonderful things for society."   

There aren't anymore details right now on whether Didi is looking to purchase a driverless car company like UiSee, or if it is simply getting started by hiring its own team at the moment. Still, news that the company is pursuing self-driving vehicles would be a very big, and logical, step for the company. 

Why Didi would be crazy not to pursue self-driving cars

The revelation that Didi wants to join the driverless car revolution makes sense on several levels. First, many of the company's competitors, investors, and partners are already working on autonomous car technology. It's nearly impossible to be in the automotive space right now without working on some self-driving technologies.

Apple (AAPL 0.99%) is not-so-secretly working on its own car with some level of autonomous capability built in. The company is expected to debut the vehicle, or some sort of driverless car system, by 2021. You may remember that over the summer, the iPhone maker made a $1 billion investment in Didi. 

Didi's former rival in China, Uber, is testing driverless cars in Pittsburgh. Uber has made it clear that self-driving vehicles could become a bigger part of its business in the near future. Didi and Uber fought in China for several years until Didi purchased Uber's business in the country just a couple of months ago, including its brand and data from its China operations, with a $1 billion investment in Uber.

Then there's the openness China already has to driverless car technology. An article in The Guardian said last year that the Chinese government has the ability to "rapidly mandate the kind of wholesale changes that would be required to unleash self-driving cars." China-based tech giant Baidu (BIDU -2.62%) is taking advantage of this and is already working on autonomous cars, and it plans to put its technology on Chinese roads sometime in 2018.

Didi Chuxing currently serves up 11 million rides per day to its 300 million users. With its size and China's openness to autonomous car technology, it would be crazy for the company not to purse this market. In addition, driverless cars are expected to be worth $77 billion by 2035, according to Boston Consulting Group, and China is expected to be the largest driverless car market by just a few years before that.

Didi is continually building its transportation dominance with this latest push into driverless cars. The company already leads in private ride-hailing and has its hands in taxi services, bus transportation, and new car test drives, and it even has investments in bike sharing. If the company can figure out a way to bring driverless car technology to its a growing ride-sharing business, then Didi might end up owning even more of the ways China's population gets around. 

Chris Neiger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Apple and Baidu. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. The Motley Fool recommends Intel. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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