China's Didi in talks to sell smart auto assets to state-backed NavInfo's unit, say sources

MEDIATEK

26/08/2024 09:17

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      Sale would value Didi assets close to 500 mln yuan, say
sources
    

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      Didi plans to invest over 200 million yuan in AutoAi, say
sources
    

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      Didi to become No.2 shareholder of AutoAi, says source
    

  
 (Adds more comments from sources about deal and background, in
paragraphs 8-19)
    By Julie Zhu
       HONG KONG, Aug 26 (Reuters) - China's Didi Global is in
advanced talks to sell its smart driving and cockpit assets to
state-backed digital mapping firm NavInfo's  002405.SZ  unit, as
the ride-hailer focuses on its core business after a bruising
regulatory crackdown, three sources said.
    Didi plans to sell the assets to AutoAi, a provider of
intelligent cockpits-related software and hardware, in exchange
for a stake in AutoAi, said two of the sources.
    China's largest ride-hailer expects to pull back
significantly from the ultra-competitive electric vehicle market
with the deal, which will value the assets at close to 500
million yuan ($70 million), said the two people.
    Electric vehicle (EV) makers are competing fiercely in a
consolidating Chinese market and are seeking new technologies
such as smart cockpits and autonomous driving to appeal to
consumers.
    Didi sold its EV development business to Chinese EV maker
Xpeng  9868.HK  a year ago in a deal worth $744 million in
exchange for a roughly 3.25% stake in the vehicle maker. That
accounted for the bulk of its EV-related assets, said the three
sources.
    The deal with AutoAi could be announced in the coming days,
they said, declining to be identified as the information was
private.
    Didi, NavInfo and AutoAi did not respond to requests for
comment.
    As part of the deal, Didi also plans to invest more than 200
million yuan in the currently loss-making AutoAi, also known by
its Chinese name of Siwei Zhilian Technology, said two of the
people.
    The deal will help Didi forge a deeper partnership with
AutoAi and NavInfo, one of China's top internet mapping firms,
to explore strategic cooperation in a number of areas including
ride-hailing and intelligent driving, they said.
    
    DIDI'S ROAD TO RECOVERY
    Shenzhen-listed NavInfo, which offers services such as
high-definition maps and navigation solutions to automakers and
internet firms, provides mapping-related data and technical
support to Didi.  
    NavInfo, which counts BMW  BMWG.DE  and Mercedes Benz
 MBGn.DE  among its automaker clients, has also been competing
with Baidu  9888.HK  and Tencent  0700.HK  as a major supplier
of mapping data and other software solutions. 
    The smart driving and cockpit assets its unit is acquiring
from Didi are set for mass production, said one of the people. 
    The asset sale and the investment, if completed, would see
Didi become the second largest shareholder of AutoAi, added
another of the people. 
    Spun off from NavInfo in 2018, AutoAi currently counts the
parent as its biggest shareholder with a 30% stake, followed by
a unit of Taiwanese chip design giant MediaTek  2454.TW  with a
stake of nearly 20%, as per the Chinese corporate registry. 
    Didi had previously pushed ahead with an EV-making project,
code-named "Da Vinci", which used to house about 2,000
employees, and had ambitions to move into manufacturing, sources
have said. 
    It invested more than 10 billion yuan in the EV business
which includes the development of vehicles, smart driving and
smart cockpit since the project's inception in 2021, said two of
the sources.
    Didi has in recent weeks informed potentially impacted
employees, most of whom are based in Beijing, about the
impending AutoAi deal, said the sources, with one source adding
that about 200-300 people would be affected.
    Last year's divestment was Didi's first major transaction
since its apps returned to domestic app stores in early 2023
after a regulatory crackdown on its business that forced it to
delist from the U.S. in 2022.
    The company said last week it swung to a net profit of 1.4
billion yuan for the second quarter from a 300 million yuan loss
a year earlier and saw revenue rise 4.1% to 50.9 billion yuan
for the quarter.  
($1 = 7.1380 Chinese yuan renminbi)

 (Reporting by Julie Zhu; Additional reporting by Zhang Yan;
Editing by Muralikumar Anantharaman)
 ((julie.zhu1@thomsonreuters.com;))