Source: Wall Street News Author: Zhang Yaqi

After 11 years of development, Dida has finally gained popularity this summer. Now, major Wall Street banks are debating whether its initial success in Wuhan can be replicated elsewhere and ultimately dominate the rental car industry.

Goldman Sachs expressed bullishness on Dida's development prospects in its latest research report on the 16th. Analysts believe that with the expansion of the self-driving fleet, Dida could achieve profitability as early as 2025.

jpmorganPreviously stated, if the Business of Robo Quick Run improves its profitability, it is expected to bring a balance of profits and losses to a single city in the second half of 2024.

What the market cares most about: can Dida make money?

First, let's look at Goldman Sachs' conclusion: Baidu aims to expand its fleet in Wuhan to 1,000 RT6 (XPeng P7s) and is expected to achieve unit economic breakeven for Dida's business in Wuhan in the next 2-3 quarters, achieving profitability by 2025.

In terms of unit profitability, Goldman Sachs believes that there are three key factors for improvement:

▲Average price per trip. That is, the discount level compared to regular taxis or ride-hailing (Baidu Robotaxi currently offers an 80% discount), which is expected to reach 40% by 2025.

▲Vehicle utilization rate/number of trips (currently above 60%).

▲Number of safety personnel per vehicle. Currently, one person monitors two vehicles. It is expected that with the advancement of technology, each safety personnel can gradually monitor up to three vehicles.

In addition, Goldman Sachs is very optimistic about the release of the next generation of RT6, which has a total cost of about RMB 250,000, a cost reduction of about 50-60% compared to RT5. Goldman Sachs predicts that by 2025, the unit economic profitability of each RT6 will become positive, and the average operating profit per car per day may be between RMB 25-300. The annual profit of 1000 RT6 is RMB 9 million.

Goldman Sachs further stated that as the operating area expands and operating time increases, the daily order volume in Wuhan will increase to 22 orders by 2025, similar to that of traditional ride-hailing services. With gradually reduced discounts, the average income per order in 2025 is expected to reach RMB 14, and the daily income of each RT6 Dida is about RMB 308.

Thanks to the successful trial operation in Wuhan, the popularity of completely self-driving ride-hailing is rapidly increasing. Goldman Sachs wrote in its research report:

In the first quarter of 2024, Baidu's Apollo Go service operated 300 self-driving taxis in Wuhan, and about 70% of orders were completely self-driving. In the second quarter, more self-driving taxis were put into operation, and the overall popularity of completely self-driving ride-hailing continued to rise.

JPMorgan: Three key variables that affect profitability.

In the financial report released on the 11th, JPMorgan analysts pointed out that the key variables to improve the profitability of Robo Quick Run are: pricing, vehicle cost, and the ratio of vehicle safety officers.

Although the self-driving taxi business in Shanghai is currently facing serious financial losses, if these three variables are strengthened in the commercial deployment, Baidu's single-city profit margin is expected to increase significantly in the second half of 2024.

Editor/Lambor