For the past two years, Didi has been the dominant force in China, and its success has spawned a handful of competitors started by internet companies and old-school automakers. Just last week, another notable challenger has escalated.
T3, which is short for “top 3,” was officially launched after a dozen entities, including three of the major automakers, agreed to set a total of 9.76 billion yuan ($ 1.45 billion) for the joint venture. following an initial deal in July, according to an announcement posted last week.
The large amount of cash will go towards “car-sharing services powered by renewable energy,” an offer that perfectly aligns with Beijing’s push to electrify the transportation sector. T3’s list of investors is also stellar, with participation from three Chinese state-owned automakers and the country’s largest internet companies, Alibaba and Tencent.
The marriage of private and state players comes as China works to attract more private money to the clumsy state sector to bring innovation and efficiency into the latter, an effort called “mixed reform.” The T3 will be exclusively market-driven, with a mission to build what it calls a “smart mobility ecosystem” by combining the data capacity of its technology partners with the manufacturing know-how of its automakers, the announcement said. .
China’s e-commerce giant Alibaba and social media leader Tencent are biting their heads on many fronts and it’s rare to see them co-invest. Both are Didi investors, although that bond came more indirectly through the merger of Tencent-backed Didi and Alibaba-backed Kuaidi in 2015.
In Q3 this time, the pair’s functions remain secondary as appliance retailer Suning, which will become the largest shareholder by acquiring 17.42 percent of the capital. Suning’s leadership also explains why T3 debuted in Nanjing, the eastern Chinese city, where it is based. Automakers FAW Group, Dongfeng Motor and Changan Automobile will each get 16.39 percent of the new entity as the second-largest holder. Tencent, Alibaba and the rest of the affiliates will divide the remaining shares among themselves.
T3 did not put much effort into its launch as to how its arrival venture will play out, although it did mention that a fleet of 5,000 cars will start racing on the streets of Nanjing in late May or early June. The assault comes at a critical time for Didi, who has been recovering from two controversial passenger killings by doubling down on security measures.
T3 isn’t the first time old-school automakers have moved into the car. In fact, manufacturers are turning to the industry red-hot as a series of new regulations give companies with auto assets an edge to play with. Didi has also been working to partner with automakers to ensure access to vehicle fleets.
Some of Didi’s top challengers from the auto manufacturing industry include Caocao, a chauffeur app that’s backed by Geely, and Shouqi Limousine & Chauffeur, started by the state-owned Shouqi. BWM also became the first foreign automaker to join the race.
There is also intense rivalry from the internet field. Alibaba’s financial partner Ant Financial has backed one of Didi’s most serious competitors, Hello TransTech (formerly Hellobike). Meituan, the Tencent-backed hotel booking and food reservation giant, also drove travelers, though that segment has yet to make a dent in cutthroat competition.