BMW, Daimler establish joint venture to get a slice of pie in mobility sector

BMW and Daimler officially announced the establishment of a 50-50 joint venture on March 28, merging their untraditional operations—everything from car-sharing and ride-hailing to parking locator services and electric vehicle charging—into a single joint business.

The two rivals are both leaders as automakers, but they are not so powerful when it comes to mobility services. What is behind the cooperation? Will it challenge the position of traditional mobility companies such as Uber and China’s Didi Chuxing?

Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University told that the intention of the two companies is to improve competitiveness and expand market share.

To expand the business from manufacturing to offering mobility services, BMW and Daimler will better the environment of the ridesharing industry, helping new energy and autopilot vehicles make higher achievements, noted Bai Ming, deputy director of China’s Ministry of Commerce’s International Market Research Institute.

He said that car-making and mobility services will have more advantages if combined together.

Uber and Didi Chuxing have already taken a great share of the market. The cooperation between the two top carmakers is expected to bring them a slice of the pie.

Statistics indicate that the service of Didi Chuxing covered more than 400 Chinese cities in 2017, offering services more than 7.43 billion times.

According to Bai, at present the joint venture established by BMW and Daimler is not likely to become a real rival of Didi Chuxing and Uber, however on the other hand the combination of information and manufacturing technologies will serve as a highlight for the joint venture in the future.

Apart from opportunities, what is ahead for the joint venture are also challenges. So far, neither BMW nor Daimler has released customized models for ridesharing, especially designed for Chinese roads and customers.

Besides, both Chinese startup companies and mobility giants such as Mobike and CAR Inc. will compete with the joint venture. More importantly, whether it can run the business smoothly depends on Chinese policies and regulations, since ridesharing is closely related to high-resolution maps and big data.