The title of this article suggests that Didi is the center of the issue, but in fact, behind the scenes, the real hero of our story is Japan's SoftBank.
Didi Chuxing is China's largest privately invested company and a global gig economy. It pushed Uber out of China in 2016, making a stock transfer agreement between the two giants. Didi recently raised a further $4 billion in funds from a private round led by SoftBank to help push its global reach as well as invest heavily in the ever-competitive autonomous vehicle (AV) development sector. This round of funding pushes Didi's value to $56 billion, and it holds $12 billion in cash reserves.
One of Didi's moves is to invest in Estonia's Taxify that is present all-around Europe and the Middle East. Didi is also deploying a franchise model in Asia to expand its reach around the continent. The recent round comes at a crucial time in Didi's growth. The Chinese market is stable, and Didi's only way to expand its ridesharing presence is to step out of China and grow globally.
The recent round comes after a successful investment round in April 2017, where Didi managed to raise $5.5 billion from private investors led by Softbank and included Mubadala from Abu Dhabi. Among the many investors with cash in Didi is WeChat-operator Tencent Holdings Ltd., Apple Inc., and Alibaba Group Holding Ltd. What pulls all these large investments is not only the attraction of the new gig economy, but the potential they have once the autonomous vehicle becomes a feasible option. Billions are being invested in a crazy race towards the first driverless car economy.
The driverless car economy is a technology-based transportation system that cancels out drivers and their ego's and concentrates the technology on passenger comfort and safety as well as fuel efficiency. It goes beyond rideshare and taxi; it will change the face of roads transportation completely and also destroy an entire sector of employment overnight. Just as horse livery stables and drivers were replaced with car mechanics and drivers, the new technology will remove the driver from the equation and replace the driver with a technology-based car shop that adds software and hardware and optics to their mechanical maintenance teams.
The major global downside will be the eradication of professional drivers and literally, millions of professional car, van, bus and truck drivers will be out of work once the AV's take over. While car manufacturers and current gig economy giants such as Didi, Uber, Lyft, Grab, Taxify and more will get all cash into the AV technology success, the economics of unemployment will overload, and the world will face a crisis.
While waiting for this momentous crash, Didi will continue to invest in AV technology, invest in GPS mapping and invest in expanding its global reach. It has already invested heavily in setting up its research and development center and artificial intelligence laboratory in Mountain View, California earlier this year, with the intent to headhunt AI specialists. Didi will continue to expand globally, and has started to feel its way into Mexico, which might be their stepping stone to Central and South America.