U.S.' Lyft and China's Didi Kuaidi are ganging up against Uber in a partnership that is aimed to topple the latter's dominant status in the ride-sharing market.
If plans push through, riders of both Lyft and Didi will be able to hail rides easily in each of the apps' host country while allowing them to pay for the services using their local country's currency. This means that a Lyft user who is visiting China can use the app and then will be able to ride one of Didi's ride-sharing vehicles. The same thing goes to a Didi user who is visiting the U.S.
The alliance of the two companies was confirmed at a press conference held in New York where they also talked about the investment involved in the ridesharing collaboration. Didi reportedly made an earlier investment worth $100 million which adds up to the $530 million that was earned in Lyft's latest round of funding. Shortly afterwards, investor Carl Icahn added $100 million to the funding placed by Didi. Lyft now has reached a valuation worth $2.5 billion.
Lyft is currently the No. 2 ride-sharing service in the U.S. and operates in around 65 cities in the nation. The company had made plans of becoming a global service towards the end of 2014. John Zimmer, co-founder and president of Lyft, said that the partnership will allow Lyft to bring the service to international visitors while they focus their resources on key domestic markets such as New York City.
"Our calculation for the Chinese market is this is absolutely the winning strategy," said Zimmer.
Now that the partnership has been sealed, it seems like Uber will have an even tougher time to expand its operations in China. The country already has several homegrown taxi hailing services with Didi Kuadi being the largest competitor. The latter is said to operate in around 360 cities and has around three million rides a day. In other words, the number of riders in China is three times higher than the number of those riding Uber.
While Zimmer refused to shed light on speculations of future partnerships with other companies, rumors say Lyft will also extend to India and South East Asia.
"I wouldn't be surprised if Grab Taxi and Ola were also part of this partnership to bring India and South East Asia into the mix," said industry analyst Aswath Damodaran who is also a finance professor at New York University's Stern School of Business.
Didi Kuaidi is said to be gearing up for an upcoming funding round worth around $3 billion. The company is said to have a valuation of $16 billion.