For the last two years, Didi has been the dominant car-hailing force in China and its success has spawned a handful of competitors initiated by both internet firms and old-school carmakers. Just last week, another notable challenger has stepped up.
T3, which is short for “top 3”, officially launched after a dozen entities, including three major automakers, agreed to lay out a total of 9.76 billion yuan ($1.45 billion) for the joint venture following an initial agreement in July, according to an announcement released last week.
The big pile of cash will go towards “car-sharing services powered by renewable energy,” an offering that nicely aligns with Beijing’s push to electrify the transportation sector. T3’s investor list is also stellar, with the participation of three state-owned Chinese carmakers and the country’s largest internet companies, Alibaba and Tencent.
The marriage of private and state-owned players comes as China works to attract more private money into the clunky state sector to breathe innovation and efficiency into the latter, an effort dubbed the “mixed reform”. T3 will be purely-market driven, with a mission to build what it calls a “smart mobility ecosystem” by combining the data capability of its technology partners with the manufacturing know-how of its automakers, said the announcement.
China’s ecommerce giant Alibaba and social media leader Tencent lock horns on many fronts and it’s rare to see them co-invest. They are both Didi’s investors, although that bond came in a more roundabout way through the merger of Tencent-backed Didi and Alibaba-backed Kuaidi in 2015.
At T3 this time, the pair’s roles remain secondary as home appliance retailer Suning is set to be the largest shareholder by acquiring 17.42 percent equity. Suning’s leadership also explains why T3 debuted in Nanjing, the eastern Chinese city where it’s headquartered. Automakers FAW Group, Dongfeng Motor, and Changan Automobile will each pick up 16.39 percent of the new entity as the second-largest holders. Tencent, Alibaba and the rest of the affiliates will divide the remaining shares between them.
T3 didn’t go to lengths at its launch regarding how its ride-hailing venture will take shape, though it did mention a fleet 5,000 cars will start running on the streets of Nanjing in late May or early June. The assault comes at a critical time for Didi, which has been recovering from two controversial passenger murders by doubling down on security measures.
T3 isn’t the first time old-school carmakers have moved into car-hailing. Indeed, manufacturers are flocking to the red-hot industry as a series of new regulations give companies with car assets an edge to play. Didi, too, has been busy partnering with automakers to secure access to vehicle fleets.
Some of Didi’s foremost challengers from the carmaking sector include Caocao, a chauffeur ride-hailing app backed by Geely, and Shouqi Limousine & Chauffeur, which is started by state-owned Shouqi. BWM also became the first foreign automaker to join the race.
There is also intense rivalry from the internet camp. Alibaba’s financial affiliate Ant Financial has backed one of Didi’s most serious competitors, Hello TransTech (formerly Hellobike). Tencent-backed food delivery and hotel booking giant Meituan also drove into ride-hailing although that segment has yet to make a dent amid ruthless competition.
Source : Alibaba, Tencent and other major names form $1.45B ride-hailing venture
