A just-announced $1 billion investment in Chinese ride-hailing service Didi Chuxing serves to expand Apple Inc.’s China strategy on several fronts including self-driving cars.
As reported by Reuters, the U.S. tech behemoth’s decision to invest in Didi aligns Apple with Uber’s main competition for the Chinese market. According to Apple, a key driver of the investment was a chance to gain valuable insight into the Chinese consumer market, an area where Apple has struggled recently as iPhone sales level off.
“We are making the investment for a number of strategic reasons, including a chance to learn more about certain segments of the China market,” said Apple chief executive Tim Cook. “Of course, we believe it will deliver a strong return for our invested capital over time as well.”
The Didi deal gives Apple access to insight from the ride-sharing service’s 11 million rides a day, representing over 87% of the Chinese market for private car-sharing services. However, Didi has been losing billions in its ongoing battle for market share with the aggressive U.S. ride-sharing firm Uber.
From a larger perspective, the Didi investment comes amidst a trend where technology and automotive companies are increasingly collaborating and cross-investing. For example, General Motors recently invested in U.S. car-sharing service Lyft and bought Cruise Automation, a maker of autonomous vehicle technology.
Apple has been closely watched by technology investors for indications that it was diving headlong into developing self-driving cars. The Didi investment is seen as an important step towards Apple’s entry into the automotive business.
Didi investment ties together other Apple interests
The Didi investment is also seen as neatly tying together a variety of Apple businesses, such as mobile payment platform Apple Pay, while diversifying away from its dependence on the iPhone which is seeing sales flatten.
“After all the hints about the service business and what they would like to do in the future, it’s all starting to fit together,” said Moor Insights & Strategy analyst Patrick Moorhead.
Recent studies have found that the Chinese consumer is notably less inclined towards car ownership than their U.S. counterparts, which is advantageous to firms like Didi. But more significantly, the Chinese consumer’s indifference to the freedom car ownership can offer makes China an ideal market in which to develop self-driving cars. And the data on consumer behavior that Didi will provide would be pure gold to Apple in any initiative to develop self-driving cars for the Chinese market.
And the environment for developing autonomous cars just got more amenable. The Chinese government recently made a major commitment to developing the regulatory framework to speed the introduction of autonomous vehicles on its highways and city streets.
