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A taxi driver uses the Didi Chuxing app while driving along a street in Guilin, in China's southern Guangxi region. Photo: AFP

Why Apple’s US$1b investment in Didi might not take it far in China

Didi Chuxing

Apple’s US$1 billion investment in Chinese ride-hailing service Didi Chuxing is proof of its self-driving car ambitions but the tech giant should not expect a big leap into the world’s largest auto market anytime soon.

Didi has huge data on China’s ride-hailing market that would be useful for Apple to build its autonomous vehicles but the question is whether the Chinese company is willing to share that treasure trove of data, said independent auto analyst Zhang Zhiyong.

“An investment of US$1 billion is significant but I don’t think it’s big enough for Didi to share such valuable data with Apple. It may share part of the data but I am doubtful how much it wants to share,” Zhang said.

As China’s largest ride-hailing service provider, Didi said it does more than 11 million rides a dayand has a market share of more than 87 per cent.

While industry insiders are awaiting the two companies’ future plans in smart cars, Didi president Liu Qing refused to say whether car technology or Apple Pay would be the specific areas of collaboration.

The two companies have a huge overlap in customer base and a lot could happen, Liu said in an interview with CNBC last week after meeting Apple CEO Tim Cook in Beijing.

“Although we can see Apple’s ambition to bring its cars to China with the investment in Didi as it may be able to get some useful data, it’s a long way until we can really see a car here,” said Zhang Yu, an analyst at consultancy Automotive Foresight.

Tesla is testing self-driving cars while Chinese tech giant LeEco has unveiled its concept car. But Apple has yet to disclose the details or a time frame for its own car, Zhang said.

“We will wait and see Apple’s self-driving car plan but it’s too early to predict its impact on the Chinese market,” Zhang said.

There have been rumours that Apple is working on its iCar to rival Tesla. Apple CEO Tim Cook hinted at the company’s electric car ambitions for the first time in February when responding to shareholders’ queries at an annual general meeting. But avoiding a direct answer, he only said: “Do you remember when you were a kid, and Christmas Eve, it was so exciting, you weren’t sure what was going to be downstairs? Well, it’s going to be Christmas Eve for a while.”

Apple can learn much about trends and characteristics of China’s ride-sharing market through its investment, said Egil Juliussen, research director and principal analyst at IHS Automotive.

The information will help Apple to make a better self-driving car based on customer knowledge if that is indeed Apple’s plan, he said.

“Also, if Apple introduces driverless cars, Didi would be a very desirable customer,” Juliussen said.

Zhou Xin, an analyst at Chinese technology consulting firm iResearch, said it would not be difficult for Apple to win consumers’ recognition if it launched smart cars in China as they are already familiar with the Apple brand name and its products such as iPhone and iPad.

“Apple will be able to pave the way for its smart car project as Didi has a huge customer base in the mobile internet sector, but the timing is not great for Apple cars to tap the Chinese market as it is not mature enough,” Zhou said.

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