What it is: Apple invested $1 billion dollars in Didi Chuxing, a Chinese ride sharing service.
Back in May 2016, Apple invested $1 billion dollars in Didi Chuxing, the most popular ride sharing service in China. At the time, many people wondered why. The answer likely revolves around the rumored Apple Car.
The idea that Apple will develop and sell a car to compete with Ford, Toyota, General Motors, and Honda makes little sense. Why would someone rush to buy an Apple Car over a Chevy or Hyundai car? When you look at cars from all the different manufacturers, they all look the same with similar features. The main difference is quality or perceived quality, which is why so many people still shy away from American cars after American car makers let their quality plummet back in the past.
An electric car still won’t make the Apple Car different enough to buy over an electric car from Nissan or Tesla. A self-driving, electric car also won’t necessarily be a major difference from rival cars. What’s likely is that the Apple Car isn’t just another product to sell to consumers, but a way to change transportation with a combination of greener technology (less pollution and dependence on fossil fuels) and reducing the number of cars on the road through ride-sharing services.
In other words, the Apple Car isn’t likely just another car for consumers, but an entirely new transportation system that will provide cheaper, less toxic ways to transport people to free up their time, protect the environment, and reduce congestion in cities as well. It’s a bold goal but it’s far more likely than simply building a car to compete with every other car manufacturer.
What Apple gets from their $1 billion dollar investment in Didi Chuxing is ride sharing data. Now Didi Chuxing has purchased Uber China to dominate the ride-sharing business in China. Didi Chuxing also has business relationships with Lyft in the US, Ola in India, and Grab in Southeast Asia.
So by investing in Didi Chuxing, Apple now has data from nearly every major ride-sharing service in the world in all the major countries. Access to that data can greatly aid in the development of a new transportation paradigm that doesn’t require people to buy their own cars, drive them themselves, and park them all day where they sit idle until they’re needed later that afternoon.
Didi Chuting’s value to Apple is ride-sharing data, which gives a big clue that the Apple Car is likely directed at a future where fewer people own cars but more people simply share them. When it becomes cheaper to use ride-sharing services like Uber on a daily basis, several times a day, rather than owning a car and maintaining it, that’s when car ownership will plummet and that’s when the Big There auto makers will suddenly wake up and realize their business model is gone for good.
Apple only enters markets that they can disrupt and rewrite the rules for, so it’s highly unlikely Apple will sell cars to consumers. Instead, Apple will sell transportation services. By learning how ride-sharing works through Didi Chuxing, Apple can optimize their Apple Car for the future of ride-sharing.
This is a long-term bet that likely won’t reach its full potential for a decade or so, but it’s the time of long-term thinking that separates Apple from most companies that simply react to changes in the market with no plan beyond simply reacting. Think how successful Microsoft was by reacting to the iPhone with Windows Phone 7 or reacting to the iPad with Windows RT.
Reacting is never a substitute for long-term vision and planning so you can expect Apple will keep their eye on the future of transportation while other companies will focus on short-term goals to boost profitability for the next quarter regardless of its impact on the long-term future.
The Apple Car is coming, but it’s coming partially because of Apple’s investment in Didi Chuxing.