Didi Chuxing Is 'An Emerging Autonomous Superpower,' Says Morgan Stanley

Chinese ride-hailing service Didi Chuxing, which offers commuting options for 450 million users across 400 Chinese cities, recently completed a new round of financing and raised $4 billion.

The Analyst

Morgan Stanley analyst Adam Jonas termed the Chinese ride-hailing company, an Uber competitor, as "an emerging autonomous superpower" in a Wednesday note. 

The Thesis

The latest funding round propels the Chinese company into a trajectory where it is expected to see a sharp acceleration into AI driving and EV infrastructure in the international market, Jonas said in a Wednesday note. (See the analyst's track record here.) 

Over the last eight months, Didi has raised about $10 billion, for a total of $19.7 billion, the analyst said. Didi's post-financing valuation is $56 billion, more than Ford Motor Company F and nearly as valuable as General Motors Company GM, according to Morgan Stanley. 

Didi's cash reserves are reportedly over $12 billion, Jonas said.

Morgan Stanley said it hopes Didi uses its latest funding to further build up its intelligent driving and smart transportation capabilities.

The investments in electric vehicle charging infrastructure Didi referred to in its financing announcement are the company's most direct reference to EV powertrains to date, "potentially reflecting recent Chinese government policy," Jonas said. 

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Didi is using its market positioning in China to apply leverage in important global markets, the analyst said. The company has invested in a number of other foreign ride-sharing players, including Lyft in the U.S., 99 in Brazil, Careem in the Middle East, Ola in India, Taxify in Estonia and Grab in Singapore.

This is in addition, the company's outright purchase of Uber's Chinese operations, Jonas said. 

Morgan Stanley also noted that Didi is pursuing a ride-sharing platform in Taiwan and is seeking to enter the Mexican market directly in 2018.

"We note that the acceleration of Didi's international and technological expansion efforts coincide with a number of setbacks for Uber over the past year." 

Any leader in ride-sharing must be a leader in autonomous technology to ensure its competitive moat and market position, Jonas said. DiDi Labs, which the company established in Mountain View, California in May, is focused on cloud-based security, deep-learning algorithms, human-machine interfaces, computer vision and intelligent driving technologies, according to Morgan Stanley.

"In our opinion, Didi should be counted amongst the world's largest, best-resourced and most aggressive players in shared autonomous mobility on a global scale," Jonas said. 

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