Recently, in many cities of China , people have been spotting some fresh new light green cars that resemble frogs. The vehicle in question is the D1, a customized ride-hailing car developed by DiDi through a joint venture with the Chinese car manufacturer, BYD. Its small body contains a big dream, representing a remarkable and innovative business model which harmonizes with sustainable development and could help reshape the future of transportation.
The debut of DiDi’s D1 represents the company’s endeavor to establish an all-new ride-hailing ecosystems covering three unique features: customized vehicles, new usage patterns and rapid business evolution. To design the D1, BYD and Didi established a joint venture called Meihao Chuxing (Hangzhou) Automobile Technology Co Ltd in 2019, of which BYD owns 65%, and the controlling interest, while Didi owns the remaining shares. BYD is one of China’s largest privately owned companies, founded in 1995, and has established itself as a pioneer in making rechargeable batteries and providing renewable energy solutions globally. Its Zero Emissions Energy Ecosystem has helped it to become a leader in the energy and transportation industries.
University of Nottingham Ningbo China
The D1 was built on DiDi’s business insights derived from its database of accumulated feedback from over 550 million passenger and 31 million drivers. For the benefit of passengers, the D1 is equipped with an in-cabin temperature control system, a color-coded pick-up light, an automatic sliding side door and greater interior space. With a wheelbase of 2.8 m, much longer than average, it provides spacious head and leg room. All these details are designed to resolve passengers’ most common complaints about Didi’s services offered through conventional car models, including an uncomfortable in-vehicle microclimate and the danger of opening the car door upon exiting the vehicle. For the benefit of drivers, the D1 applies an Autonomous Emergency Breaking system (to force the car to stop when it encounters obstacles), Level 2 Driving Automation (providing automatic steering and brake/acceleration support) and Lane Departure Warning (to warn the driver when the car veers out of the lane) to enhance safety. The redesigned seat and extra driver space help drivers adapt to long periods of driving.
The D1 can be bought by ordinary customers at a retail price, whilst leasing options are also available. DiDi's approach to leasing encompasses the concept of ‘total cost of ownership’, as stated by the interviewee, under which not only the production costs, but other costs, including insurance, charging and maintenance, are included in lease. The price charged to drivers on a monthly or per mile basis thus reflects the “true cost”, unlike the conventional model, which is solely based on the vehicle purchase price. The upgradeability and continuous evolution are another highlight of the D1. According to Cheng Wei, founder and CEO of DiDi, as new passenger and driver feedback is continuously received, DiDi’s algorithms and app are simultaneously optimized. By leveraging data analytics, the D1 will rapidly evolve into the ‘DX’, to better resolve potential pain points and satisfy various stakeholders’ needs. Users will benefit from this continuous self-improvement process, enjoying better product and service quality. The D1 and subsequent models will be able to increase the market share and achieve profit growth in a sustainable manner by taking advantage of such positive feedback mechanism, which allow DiDi’s products to self-evolve in coping with the ever-changing demands. This unique model will contribute to the realization of the ultimate vision of intelligent shared mobility with autonomous driving capability.
DiDi’s D1 and the related business model were inspired by the actual needs of drivers, passengers and environmental considerations. One goal is to increase the usage of electric vehicles in urban transportation and cut down air pollution. In terms of passengers, the aim is to offer a more convenient and seamless riding experience at affordable prices. Enlarged internal space, smart control, reduced cost per kilometer are expected, which would jointly enhance passenger satisfaction and build up their confidence in ride-hailing services.
For drivers, the increased demand in shared mobility is expected to increase the number of orders and therefore raises their daily earnings. Such potential profitability will attract more job seekers, increasing the driver base and strengthening DiDi’s capability to meet the growing demand. Also, the currently available plans of either purchasing a new car to join or leasing a vehicle from a DiDi-certified lessor at a high monthly rental is costly to them. They desperately require an affordable vehicle. This need is met through the new leasing plans for the D1.
D1’s leasing operating model significantly disperses the heavy asset of vehicles. Drivers no longer need to purchase a vehicle, which attracts more to join. When the vehicle reaches a certain degree of service life or expected profit, it can even be put into the recycling channel to realize the recapture and reuse or recycling of resources.
Furthermore, thanks to the accurate cost management and customization concept, D1’s rental is significantly lower than the prevailing leasing plans available to ride-hailing models drivers. Based on market data, the monthly rental of car with the similar interior space as D1 is approximately 5100 RMB, significantly higher than a D1 at 4299 RMB. Moreover, the D1 connects the car and DiDi through a 10.1-inch screen to better integrate the vehicle and network. The "button" on the steering wheel allows the driver to receive orders with single click so that drivers will not be distracted by operating a smartphone.
The D1’s design focuses on maximizing the quality of user experience and safety performance, while functions of less significance for ride-hailing purposes, such as instantaneous acceleration, were removed, to control cost. This lowers the car production cost and leasing fee. Hence, the design of the D1 reduces unnecessary use of resources and amplifies benefits.
Traditionally, ride-hailing platforms must accept the prices and specifications set by car manufacturers. At the same time, these manufacturers are unable to identify the requirements of these platforms in addition to facing a bottleneck in new energy vehicle sales because, conventionally, car manufacturers must bear the cost of R&D, production, sales and marketing, putting tremendous pressure on profit margins. Through its collaboration with a major car manufacturer, DiDi, as the end-user, can use its massive market data and insights to define specific demands for vehicle characteristics and place orders, while BYD will only need to produce accordingly without investing much on market research and promotion while still managing to increase sales volume.
Besides, the D1 equipped with BYD’s blade battery has obvious advantages in terms of battery life and production cost and according to China's leading Internet media site, Sohu, replacing ordinary EV batteries with blade batteries can cut down the cost of batteries by 20% to 30%.
From November of 2020 until July 2021, it is estimated that around 12,000 D1s have been sold at a price of 151,800 RMB (approx. $23,000/€20,000).
If shared mobility could bear more of the demand for urban transportation, there will be much less need for private vehicles. If ride-hailing cars are powered by batteries, as the D1 is, instead of burning fossil fuels, air pollution and carbon emissions generated by private cars can be considerably reduced. At the same time the usage frequency of vehicle is increased, which leads to greater efficiency. This helps achieve SDG 13 (Climate Action) and SDG 11 (Sustainable Cities and Communities).
As Didi takes ownership and responsibility for the D1, and subsequent models, over its entire life cycle, the company will wish to maintain its value as much as possible so that it continue to generate business benefit. This creates incentives to lower resource consumption, design products carefully to prolong their useful life, and make them easy and less costly to repair and upgrade. As said by the interviewee, this process forms a circular economy and as a result resources waste is naturally cut down since resource-saving now converges with profit-earning. This helps achieve SDG 7 (Responsible Consumption and Production).
Importantly, this is an innovation that could be scaled as it would be profitable for other ride-sharing platforms in other countries to adopt and employ it.
Cheng Zhang, Strategy Manager
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Business Website: https://www.didiglobal.com/
Year Founded: 2012
Number of Employees: 10000+
DiDi, established in 2012 in Beijing, is a world leading mobile transportation and local service platform with more than 15,000 employees, providing diversified internet-based services including ride-hailing, shared bicycles, designated driving, automobile solutions, delivery, freight and logistics across Asia Pacific, Latin America, Africa, and Russia. Passengers can book a car on DiDi’s app, and then pay for the cost of the ride, based on travel distance and time. DiDi takes 25% of the fee paid by passengers as its revenue and the remainder goes to the driver. In the past five years, DiDi has served more than 10 billion passengers per year and in 2020, DiDi’s market share reached 360 billion RMB, and it also set a record-breaking 60 million orders per day. In 2021, Didi become a public corporation, when its shares were listed on the New York Stock Exchange. DiDi aims to ‘become a global leader in the revolution of future transportation and automotive technology’, as stated on its official website. In addition, since its establishment, DiDi has made much effort to contribute to sustainable development by providing travel options for disabled people, promoting new energy vehicles, and creating a corporate culture supportive of inclusion, equality and diversity.