Chinese ride-hailing giant Didi Chuxing has formed a joint venture with BJEV, a subsidiary of Chinese state-owned automaker BAIC, to co-develop electric vehicle (EV) technologies, according to Quartz.
The joint venture is officially called the BAIC-Xiaoju New Energy Auto Technology Co., and will develop fuel cell cars, plug-in hybrids, EVs, and various supporting EV technologies, including battery swapping technology. The relationship appears to be in early stages, as Didi and BJEV didn’t specify any products or services that would come to market via the agreement.
Didi likely has a pair of aims with the agreement:
- Comply with China’s aggressive climate policy goals. Cutting carbon emissions is a critical cornerstone of the government’s Made in China 2025 roadmap for economic development. To that end, the country plans to phase out fossil fuel-powered cars from its roads, though it has yet to specify its timeframe for doing so. In preparation for this transition, some regions of the country have already taken steps towards making ride-hailing fleets greener. The city of Shenzhen now only gives new ride-hailing licenses to drivers using EVs, for example. Once China bans fossil fuel cars altogether, Didi will need to electrify its entire fleet to continue operating. Building EVs and related tech via this joint venture will help Didi facilitate its drivers’ compliance China’s looming climate laws.
- Capture a share of China’s massive, rapidly growing EV market. The flipside of China’s aggressive climate policy goals is that the country’s EV market — already the largest in the world, selling slightly less than half the global total of EVs last year, according to IHS Markit estimates — is set explode. By 2025, annual EV sales in the country will more than triple to reach nearly 5.5 million vehicles. Didi clearly hopes to capture a slice of the soaring market. The ride-hailing giant could do so by licensing or selling its technologies to other automakers, for example.
Didi’s electric vehicle strategy could give other global ride-hailing firms key insights into how they can navigate tightening climate policies. While China has the most aggressive goals for slashing carbon emissions in the world, other regions will eventually follow its lead — the EU, for example, has its own series of goals for cutting carbon emissions.
Ride-hailing firms in those regions will thus have to eventually integrate EVs into their fleets — that’s why Uber is already incentivizing its drivers to purchase EVs. Ride-hailing firms in other areas of the world should thus keep a close eye on Didi and BJEV’s joint venture. The partnership could provide invaluable lessons for transitioning drivers to EVs.
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