Autonomous driving is just a story for Didi, not reality

Didi’s “big transportation” story may have been told distortedly.

At the end of June, Didi Robotaxi self-driving cars were put into commercial use on a small scale in Shanghai, and CCTV anchor Zhu Guangquan broadcast the whole process live. In addition, Didi plans to hire another 200 engineers this year to strengthen its self-driving technology. As an "online car-hailing" company, what practical significance does it have to turn to self-driving technology that "Google-level" companies have been researching for years without success, instead of studying how to improve transportation capacity and optimize service processes?

Didi needs a new story

Although Didi has gained an absolute advantage in the online car-hailing market after the merger of the taxi wars, occupying more than 60% of the market share, its data, including financial data, has always been lackluster. As of mid-2020, Didi's average daily orders were only 50 million, and the number of monthly active users was 340 million. Moreover, Didi has been losing money since its establishment in 2012, and has lost a total of 50 billion yuan to date.

More importantly, as the leader with the highest valuation in the "TMD" portfolio, Didi's latest valuation is only US$51.6 billion, about US$4 billion lower than in 2017. In contrast, Meituan, a player that started at the same time as Didi, currently has a market value of HK$1.12 trillion (about US$144.5 billion), nearly three times higher than Didi.

This also explains why Didi has frequently made investments in travel areas such as bicycles, freight, and community group buying in the past two years, because Didi needs a new story.

Of course, although Didi’s main business of “online car-hailing” can provide blood transfusions for these new businesses, considering that there are strong competitors in each track, Didi does not have an absolute advantage, so there will not be much room for imagination in its business.

Some media revealed that Didi is seeking about $2 billion in financing and may go public in 2020. Regardless of whether this news is true or not, considering that Didi has been established for 8 years and its core business has just broken even, how to tell a better story for the capital market based on the "online car-hailing" and horizontally expanded travel fields has become Didi's primary task.

Against this backdrop, Didi found autonomous driving.

In Didi's view, although technology is crucial to autonomous driving, data is also important, which is Didi's advantage. Because data can help train autonomous driving algorithms to improve the ability of autonomous driving. For example, Alibaba's DAMO Academy has previously launched a "hybrid simulation test platform" specifically for testing autonomous driving technology, which can bring 8 million kilometers of autonomous driving data every day. Didi has been operating online car-hailing for many years and has accumulated a huge amount of driving data. According to Didi, its in-vehicle equipment, Jushi, covers more than 50% of its own online car-hailing. These devices have collected hundreds of billions of kilometers of data and can be directly used for autonomous driving tests.

In addition, for Didi, autonomous driving can also reduce operating costs. Didi's biggest operating cost comes from drivers. Taking express as an example, Didi can only get 20% of the total revenue for each order, and the other 80% goes into the pockets of drivers. If Didi has mature autonomous driving technology, then the 80% of the cost taken by drivers can obviously be saved.

From this logic, we can see that Didi’s choice to focus on autonomous driving is to combine its own advantages to tell the capital market a story that is both appealing and long-term.

And this is exactly what the capital market likes to see the most. As long as time is long enough, the huge bubble of market imagination will not burst.

Stories are always stories

Unfortunately, Didi is currently just telling a story.

Taking into account the objective situation, we will find that there is still a huge gap between Didi’s story and reality.

The previous article introduced the importance of data to autonomous driving, but the real decisive factor is still the hardware. After all, a system that is separated from the terminal is useless no matter how excellent it is.

According to Didi, the Didi Robotaxi self-driving car equipped with 64-line LiDAR and 16-line LiDAR technologies, which was put into small-scale commercial use at the end of June, costs about 1 million yuan per car. Considering that Didi plans to officially put 1 million self-driving cars into commercial use in 2023, if Didi Robotaxi is used as the standard, then Didi will need at least 1 trillion yuan in funds to achieve its goal.

Unfortunately, so far, Didi's autonomous driving department has only received $500 million in investment from SoftBank. Given Didi's overall loss of 50 billion, it is obviously absurd for Didi's autonomous driving to obtain a trillion-dollar start-up capital within two years.

Of course, from a cost perspective, Didi's autonomous driving can also adopt a strategy of cooperating with car companies. However, this involves the game between companies.

Take Didi Robotaxi as an example. Although it has received support from Volvo, it does not mean that Volvo cars will be fully connected to Didi Robotaxi in the future. Because no car company is willing to install someone else's brain in its own body. It's not like they don't have brains, so why should they use someone else's?

Elon Musk, who is quite radical in the field of autonomous driving, said last year that if Tesla achieves full autonomous driving in the future, it may no longer sell cars, but instead operate Tesla cars as taxis. Musk also said that Tesla may become "Uber" in the future. When car owners no longer use their cars, they can choose to let Tesla cars join the "shared fleet" and become taxi operators to generate revenue for car owners.

From this, we can see that, from a macro perspective, Didi currently only has the operational data advantage brought by online car-hailing in the field of autonomous driving. At the terminal level, which is more important for autonomous driving, due to the lack of sufficient funds and inherent hardware advantages, the little advantage Didi has seems particularly weak in front of car companies - car companies have a much greater advantage than Didi in obtaining these data. It is completely feasible for car companies to replace Didi, but it is absolutely impossible for Didi to replace car companies.

In other words, although Didi's online car-hailing model is highly complementary to autonomous driving, the online car-hailing platform is not a natural breeding ground for autonomous driving. On the contrary, from Musk's remarks, we can see that with autonomous driving, car companies will only be better at online car-hailing. Therefore, although Didi has invested heavily in autonomous driving, it is likely to be just a capital story when you look deeper, and this story is very far from reality.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.