Didi is reportedly in talks to buy a third of EV operations of state-backed Sinomach Automobile, indicating that the ride-hailing company's regulatory issues are in the rearview mirror as it concentrates on expansion.
If approved, the transaction will help Didi Global Inc. accelerate its strategic expansion in the world's largest EV market while also mitigating the impact of the virus on its main ride-hailing company.
Didi has been compelled to explore a delisting from New York and curtail its business due to scrutiny from Beijing for potential data security violations, although there have been some signs of thawing. According to experts, regulators are close to wrapping up their probe into the corporation.
To that effect, Didi intends to buy shares in local automaker Sinomach Zhijun Automobile from minority owners and invest new funds into the company. A stake of such size might cost Didi over USD 150 million.
Negotiations for ownership in Sinomach Zhijun have been going on for a while as the two parties are taking some time to finalize the agreement, which will make Didi the second-largest stakeholder behind Sinomach Automobile in EV manufacturing sector.
The ride-hailer has been secretly moving forward with a car-making initiative code-named "Da Vinci," for which it has enlisted the help of roughly 2,000 personnel. According to the sources, it is looking for collaborations with manufacturers that have an EV production license, which will be required to manufacture such vehicles in China.
Didi’s entry into the electric vehicle market comes as major Chinese IT companies such as Xiaomi Corp. and Huawei Technologies Co. Ltd. have stepped up their efforts to get a foothold in the EV space, as Beijing pushes for greener vehicles to cut carbon emissions.
Didi, which will eventually develop autonomous driving technologies, intends to mass-produce two electric vehicles in the second half of next year, one for the online ride-hailing industry and the other for the consumer market.