Softbank Leads $500 Million Investment in Didi Chuxing's Autonomous Driving Subsidiary
【Summary】After losing billions on investments in U.S. ride-hailing giant Uber Technologies Inc. and shared workspace startup WeWork, Softbank Group Corp is placing its next bets on self-driving cars in China. Softbank is leading a funding round in Chinese transportation company Didi Chuxing. The investment is in Didi’s autonomous driving subsidiary.
After losing billions on investments in U.S. ride-hailing giant Uber Technologies Inc. and shared workspace startup WeWork, Softbank Group Corp, is placing its next bets on self-driving cars in China. Softbank is leading a funding round in Chinese transportation company Didi Chuxing.
China's Didi Chuxing said on Friday it had completed a fundraising round of over $500 million for its autonomous driving subsidiary that was led by SoftBank Group's new Vision Fund 2.
Softbank announced its $108 billion Vision 2 Fund in July 2019. It's one of the largest funds of its kind. The objective of the Vision Fund 2 is to facilitate the continued acceleration of AI-based technologies through investment in "market-leading, tech-enabled growth companies."
Didi Chuxing operates one of the world's largest transportation networks in China and is developing self-driving vehicles it hopes to add to its ride-hailing fleet.
In August 2019, Didi announced that it had spun off its autonomous driving unit into an independent company. The unit is focused on research and development, product application, and business development related to autonomous driving technologies.
Softbank's original Vision Fund invested in some well known Silicon Valley companies, including location data platform Mapbox, food delivery company DoorDash, Cruise, the self-driving arm of General Motors, as well as chipmaker Nvidia.
Didi Chuxing's self-driving cars in China.
Didi said in a statement that the Softbank investment is its first external funding since it became a standalone unit last year. Softbank's investment was also the single largest fundraising round in China's self-driving sector.
Didi said it would use the capital to invest further in the research and development of autonomous driving technology as well as testing, and accelerate the deployment of autonomous driving services.
Didi was granted permits to test its autonomous vehicle on public roads in California, Beijing, Shanghai and Suzhou. The company first began to develop and test autonomous driving vehicles in 2016, about the same time as its U.S. rival Uber Technologies Inc. Both companies have big plans to add driverless vehicles to their ride-hailing networks.
Uber aggressively fought Didi for market share in China after the San Francisco-based company invested $2 billion to expand into the world's biggest transportation market. However, Uber had difficulty competing with Didi on its home turf and sold its China operations to Didi in 2016. Uber said at the time it was losing $1 billion a year in China. Didi claims to have an 80% market share in its home country.
The fundraising follows SoftBank's selling off other stakes after major losses which were magnified by the coronavirus pandemic. SoftBank posted an operating loss of $12.7 billion, in the fiscal year ending March 31, its first annual loss in 15 years. A year prior, Softbank reported a profit of $19.6 billion.
Some of Softbank's biggest investments were in Uber and Indian-based hotel chain Oyo, both of which have been hugely impacted by the coronavirus pandemic when severely impacted travel. However, money is still flowing to companies working on autonomous driving technology.
Autonomous driving startup Pony.ai raised $462 million led by Toyota Motor in February. The Pony.ai investment was followed by Waymo's first ever outside fundraising round.
In March, Waymo announced it raised $2.25 billion. That was followed by another $750 million investment earlier this month. So far this year, Waymo raised a total of $3 billion.
Waymo's is the self-driving unit of Alphabet Inc and spun out of Google's self-driving car project. The company is viewed as a leader in the field and has been working on self-driving cars since 2009.
In April, Didi Chuxing raised $150 million from SoftBank and Legend Capital for its bike-sharing unit. However Didi said the development of self-driving vehicles will be one of its main focus areas over the next three years.
Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.
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