Top ride-hailing companies from around the world are forming an alliance to beat their prime competitor, Uber, which has raised $2.1 billion in a recent round of funding led by Tiger Global Management and T. Rowe Price.
The funding, which is expected to push Uber’s valuation to $64.6 billion, comes on the heels of a strategic plan being laid out by its regional competitors — Lyft, Ola, Didi and GrabTaxi. As early as the first quarter of next year, this plan will essentially allow users traveling to other countries to hail a ride with a driver who is partner with one of the other companies that are part of the alliance.
It will also enable users to pay for the rides in their native currency. For instance, when an American tourist visiting China requests a Didi ride through his Lyft app, he will be able to pay for it in USD. Later, Lyft will remit the money to Didi, according to The Wall Street Journal.
“We’re not excluding expansion to other places, but we are a startup and cautious about how we grow,” a Didi Kuaidi spokesperson told TechCrunch. “The idea is not to merge and acquire but to find people we can work with. In China we have an urban population of 800 million, but we are only currently serving 250 million. So, we have a lot of room to grow, and this population will always be our priority.”
While the alliance has collectively raised $7 billion in funding to build its shared network, which will manage mapping, routing and payment through a secured API, Uber has opened up its war chest of $8.21 billion to offer discounting and incentives to new drivers and to stand up to the growing competition, TechCrunch reported.
The competition to take a bite out of Uber’s rapidly expanding network — spanning 67 countries and 350 cities — is being fueled by SoftBank, which is an investor in each of the four companies that are part of the alliance. The alliance together is expected to put up a strong business model against Uber.
Uber’s biggest competitor in India, Ola, currently provides its services in 102 cities; GrabTaxi is available in over 24 cities across Indonesia, Malaysia, Singapore, Thailand, Philippines and Vietnam. Didi Kuaidi is currently available in 360 Chinese cities and has invested $100 million in Uber’s biggest competitor at home, Lyft.
“Together, these companies now cover nearly all of Southeast Asia, India, China and the United States, reaching nearly 50 percent of the world’s population,” the companies said in a joint statement on Friday (Dec. 4).
The partnership further makes it difficult for Uber to expand in Asian markets like India. Despite India being Uber’s second biggest market, it still ranks behind Ola, which has an edge with a presence in 80 other India cities. Similarly, its presence in China is limited to 15 cities, whereas Didi Kuaidi is available in 300, according to Quartz India.
For now, Uber plans on using the strength of its growing network and its vast trove of VC money to fight off the growing competition and has expressed no intentions of partnering with other companies to expand its global footprint.