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China tech

Like Uber, China's Didi spins off self-driving arm

Separating risky and costly business seen as preparation for IPO

Didi is testing autonomous-driving tech in Beijing. (Photo courtesy of Didi)

CHONGQING -- Chinese ride-sharing leader Didi Chuxing is turning autonomous driving operations into a separate company, seeking to accelerate fundraising and partnerships in a move seen as groundwork for an initial public offering.

Didi did not disclose the size of its own stake in the unit or how much capital the new company launches with. Didi Chief Technology Officer Zhang Bo will serve as the new company's CEO. Meng Xing, a veteran of a major Chinese investment firm who spearheaded investments in automated driving, will serve as chief operating officer.

The move appears to parallel one by American rival Uber Technologies, which decided on the spin-off of its automated driving segment in April ahead of its own listing. Separating the risky, costly business could make the ride-hailing app more attractive to investors should it go public.

"The new company looks forward to further strategic collaborations with automakers and industry partners to promote the application of self-driving technologies in people's everyday lives," Zhang said in Didi's announcement.

Didi's autonomous driving team, set up in 2016, now has 200-plus engineers working in China and the U.S. Its ranks include veterans of Google's autonomous driving cousin Waymo, as well as of GM Cruise and Apple and Microsoft, according to Chinese media.

Prominent Didi investor SoftBank Group and Toyota Motor, which has announced an investment in the company, have also taken stakes in Uber's self-driving unit and could do so with Didi's new company.

Developing autonomous driving tech is costly and does not yield immediate returns. Shifting the business to a stand-alone company and seeking investments from partners would help Didi solidify its earnings model and defray risk.

Didi, founded in 2012, rose to the top of China's ride-hailing market through mergers with domestic rivals and the purchase of Uber's Chinese business. It has over 30 million registered drivers and about 550 million users. It is also using its huge troves of driving data to work with the central government on measures to ease congestion.

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