German auto giant Daimler and its Chinese shareholder Zhejiang Geely Holding Group have joined forces to take on the booming ride-hailing market in China, which is currently dominated by Didi Chuxing.
The two automakers on Tuesday established a 50:50 joint venture to offer various mobility services, starting with a premium ride-hailing service in the city of Hangzhou, which has a population of more than 10 million and is also home to Geely's headquarters.
The service, called StarRides, will initially rely on a fleet of 100 vehicles, made of up Mercedes-Benz S-Class, E-Class and V-Class models. The service will be expanded to more Chinese cities in 2020 and could eventually include some Maybach models. And further reflecting its premium positioning, only professionally trained drivers will be used by the service.
Daimler and Geely establish mobility joint venture in China
Daimler and Geely are equally represented on the board of the joint venture. The two are also looking at additional services and plan to jointly develop the software infrastructure required to support the services.
The joint venture represents the second major partnership between Daimler and Geely following Geely's acquisition of a 9.7-percent stake in Daimler in 2018, a move that made Geely the single biggest shareholder in the German automaker. In March, Daimler and Geely also formed a joint venture to oversee the Smart brand.
Geely boss Li Shufu previously said he wanted to join Daimler to help reshape the automotive landscape toward one filled with electric and self-driving cars, as well as to fend off new entrants in the industry like the tech and ride-hailing companies.
StarRides premium ride-hailing service launched in China
Daimler is also working with Chinese tech giant Baidu on a self-driving system for Chinese roads, so we could potentially see StarRides or a similar service eventually feature driverless cars.
Taking on Didi in China's ride-hailing market won't be easy. After a long battle, Uber in 2016 finally threw in the towel and sold its Chinese operations to Didi which counts not only Uber but also Apple and Softbank as major investors.
Geely already has some experience in the mobility space. It currently offers a ride-hailing service called Caocao across 28 Chinese cities. Likewise, Daimler has experience with its Free Now service, which is a ride-hailing service that relies on taxis and is offered in parts of Europe. Daimler is also in the process of merging all of its mobility services into a new 50:50 joint venture established with BMW Group in 2018.