RoboTaxi, is DiDi the biggest winner?

As the era of RoboTaxi approaches, a grand drama surrounding the distribution of new profits in the trillion-dollar mobility market is about to unfold. Who will become the biggest winner?

According to news from the Chasing Wind Trading Desk, a recent research report from JP Morgan on October 19 pointed out that while consumers will benefit the most from lower "ride-hailing fees," mobility platform operators with solid network effects and market dominance, especially DiDi, are most likely to share a significant portion of the profit pie in the value reconstruction.

The report depicts the future landscape of the RoboTaxi industry chain as a distribution game centered around the massive cake of "cost savings."

JP Morgan clearly stated that the core transformation from traditional ride-hailing to RoboTaxi lies in eliminating driver compensation, which accounts for up to 75-80% of the total gross transaction value (GTV). Even after deducting vehicle depreciation, technology, and financing costs, it can still release about half of the economic surplus of GTV.

Our conclusion is that the cost savings achievable by introducing RoboTaxis in shared mobility will reach about 50% of GTV.

The economic surplus released from the transition from human driving to autonomous driving will be redistributed among consumers, platform operators, technology enablers, and investors, the four key stakeholders.

Value Reconstruction: Who Holds the Power in the Value Chain?

JP Morgan's report divides the RoboTaxi ecosystem into four core roles:

1. Mobility Operators (such as DiDi): Responsible for aggregating demand and network management, holding demand, brand, and network effects, possessing the strongest bargaining power.

2. Consumers: The ultimate decision-makers of price elasticity, whose acceptance determines the speed of market expansion.

3. Technology Enablers (such as Baidu, WeRide): Provide autonomous driving hardware and software but face fierce competition from 3-5 major suppliers, leading to product commoditization.

4. Investors (financial institutions): Provide funding for the expensive RoboTaxi fleet, with their returns influenced by risk-free interest rates and risk premiums.

The report believes that most of the saved costs will be used to lower rates to activate consumer penetration and travel frequency. "It is expected that mobility operators will transfer the vast majority of the saved costs to consumers to enhance penetration."

• Consumer Surplus: Of the cost savings reaching about half of GTV, we expect most will be used to lower rates to activate penetration and travel frequency

• Mobility Operators: Capture value through scale of business volume (higher GTV), better utilization, and incremental monetization (advertising, subscriptions, priority matching). We predict that even if the unit profit margin per order is at a conservative level in the initial years, the absolute profit of operators will still grow.

• Technology Enablers: About 5% steady-state GTV share; higher if tied to fleet operations or proprietary edge hardware.

• Investors: At current interest rates, based on a 9% internal rate of return, the economic benefits of their leasing/asset securitization are equivalent to about 25% of GTV; as financing costs decrease, asset turnover improves, and residual values enhance, their share will shrink.

At the same time, the report believes that the advantage of operators comes from their grasp of demand, brand, and the "flywheel effect" driven by high utilization. In contrast, technology and capital investments tend to commoditize, with multiple qualified suppliers competing on metrics such as price, reliability, and safety.

DiDi's "Flywheel": Lower Prices for a 2 Trillion GTV Market

Faced with cost savings brought by RoboTaxi, DiDi stands at a crossroads that will determine its long-term growth trajectory. JP Morgan presented two distinctly different development paths in the report.

The first is to prioritize profitability, retaining most of the cost savings within the company. The report estimates that in this scenario, DiDi's GTV profit margin could significantly increase, but the market would only achieve about 9% annual compound growth, with its GTV for mobility in China reaching approximately 773.7 billion yuan by 2035.

However, the report leans towards the second option: transferring most of the cost savings to consumers, driving explosive growth in GTV by lowering mobility costs. The report compares this to the development of the telecommunications industry: the decline in data traffic fees once triggered a surge in internet usage. Similarly, the reduction in on-demand mobility costs could greatly stimulate demand for ride-hailing services.

According to the report's estimates, if this strategy is adopted, the annual compound growth rate of the shared mobility market is expected to reach 20%. This will create a powerful "flywheel effect": price reductions drive demand increases, thereby improving vehicle matching efficiency and utilization, which in turn supports a denser supply network, ultimately structurally lowering service costs. Along this path, DiDi's GTV for Chinese mobility is expected to reach approximately RMB 2.03 trillion by 2035. Although the average profit margin per unit is low, the substantial growth in total volume will bring about more considerable absolute profits.

Technology and Capital: Supporting Roles in the Cake Sharing

While operators are the main characters, technology enablers and investors are also indispensable parts of the industry chain, and they will share the economic dividends brought by RoboTaxi, although their share will be relatively limited.

For technology enablers, the report estimates that they will obtain about 5% of the GTV share in a steady state. The competition in China's autonomous driving technology sector is fierce, and it is expected that a pattern will emerge with 3-5 major suppliers (such as Baidu, Pony.ai, WeRide, etc.) competing on cost and reliability.

The report points out that due to the limited economic benefits of being pure technology suppliers, most technology companies are expected to enter the operator role through vertical integration to obtain higher shares. Baidu's "LuoBo Kuaipao" business is an example of this strategy.

For investors, since RoboTaxi is a capital-intensive business, most operators will rely on third-party financing leases or asset securitization.

Based on China's current interest rate environment, the report estimates that to achieve an internal rate of return (IRR) target of about 9%, investors may require a share equivalent to about 25% of the GTV. As financing costs decrease and asset turnover improves in the future, this proportion is expected to shrink.

Risks and Variables: A Bumpy Road to the Future

Despite the broad prospects, the road to the large-scale commercialization of RoboTaxi is not smooth. JP Morgan's report also points out several key risks and uncertainties that will directly affect the pace of industry development and the final landscape.

First is the regulatory pace. The speed at which service areas expand is the largest single variable affecting vehicle utilization and investment returns. The speed of advancing commercialization policies in various cities will be key to determining whether RoboTaxi can scale quickly.

Second is the cost curve and safety. Keeping the manufacturing cost of RoboTaxi vehicles at RMB 250,000 or below is crucial for achieving a reasonable total cost of ownership. Additionally, any setbacks in safety could delay the popularization and penetration of the technology.

Finally, there is competitive behavior. As technology suppliers engage in vertical integration, the competitive landscape of the mobility market may be reshaped. The integration or cooperation among operators (with the report citing the collaboration between Waymo and Uber as an example) will be worth close attention, as it may change the balance of bargaining power in the future.

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