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Exclusive: Didi is in talks to buy a third of China's Sinomach, according to sources

Image: Reuters Berita 24 English -   Didi is in talks to sell a third of its electric vehicle subsidiary to state-backed Sinomach Automobile...

Image: Reuters

Berita 24 English -  Didi is in talks to sell a third of its electric vehicle subsidiary to state-backed Sinomach Automobile, according to two sources, indicating that the ride-hailing company's regulatory issues are in the rearview mirror as it concentrates on expansion.

If completed, the deal would signify Didi Global Inc's strategic pivot into the world's largest EV market and demonstrate how regulators are loosening their grip on the company.

Didi has been compelled to pursue a delisting from New York and rein in its business due to Beijing's scrutiny, although there are hints of a thaw. The Wall Street Journal reported on Monday that the company's investigations are nearing completion.

One of the sources told Reuters that Didi intends to buy shares in local automaker Sinomach Zhijun Automobile from minority owners and invest new funds into the company. According to the other source, a stake of such size would cost Didi more than 1 billion yuan ($150 million).

According to the sources, negotiations for a stake in Sinomach Zhijun are far advanced. According to one of them, the two sides have given themselves until the end of the month to finalize the agreement, which will see Didi become the EV maker's second-largest stakeholder behind Sinomach Automobile.

According to the corporate registry, the parent and its connected companies own 67 percent of Sinomac Zhijun.

Didi has been secretly moving forward with a car-making project code-named "Da Vinci," which has 2,000 employees working on it, according to one source. According to the sources, it is eager to form a cooperation with an automaker that holds an EV production license, which is required to manufacture such vehicles in China.

Requests for feedback from Didi and Sinomach Zhijun were not returned. Sinomach Automobile, whose shares rose by the daily limit of 10% in afternoon trade on Wednesday, didn't fare any better.

Due to confidentiality concerns, the sources who have firsthand knowledge of the negotiations declined to be identified.

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