Fare Warning

Speaking anonymously, local cabbies revealed they had reduced fares to compete with ride-hailing apps that have been undercutting them for years.　

“They have no choice,” Qiao Zhe, a ride-hailing driver in Hefei, said about the protestors. “The ride-hailing market is also quite distorted. There are too many drivers, and the platforms keep recruiting more. The price per ride keeps dropping. I have been doing this for over two years and the price per kilometer has dropped five times,” he said.　

Despite these measures, neither taxi drivers nor ride-hailing app drivers have come out on top in the price wars. Adding to their pressures are robotaxis. Touted by tech companies to cut costs and open new industries, unmanned vehicles are arriving as employment options continue to shrink in an already strained job market.　

“I can’t stand it any longer,” said Zhou Sen, a licensed ride-hailing driver in Hefei, who shared his recorded call to the local government complaint hotline 12345. “I paid 100,000 yuan (US$13,810) for my car and spend 10,000 yuan (US$1,381) a year on insurance. I only see 200 yuan (US$28) a day,” Zhou said.　

According to amended ride-hailing regulations from 2022, cars registered on ride-hailing apps must be no more than eight years old and have no more than 600,000 kilometers on their odometers. “These restrictions make the work even less worth it,” Zhou added.　

Flouting transport regulations that mandate taxi drivers must charge the exact fare shown on their meters, taxi driver protests have spread beyond Hefei to cities like Kunming, capital of Yunnan Province and Wuhan, capital of Hubei Province.　

The situation is similar even in first-teir cities like Guangzhou, Guangdong Province, where between September 2023 and May 2024, licensed ride-hailing cars increased from 97,400 to 121,200 and the number of registered drivers rose from 129,100 to 138,500, according to official data.　

This growth reduced the average daily fares per car from 14 to 12 yuan (US$1.9-1.6) between last December and May, causing driver revenues to drop from an average of 343 yuan (US$47) to 311 yuan (US$43) per day. This decline means most ride-hailing drivers can no longer net 10,000 yuan (around US$1,375) a month, even if they work every day, TMTPOST reported on July 7.　

The plight of online ride-hailing drivers reflects the broader stagnation in the industry, not only for market leader DiDi Chuxing (DiDi) but especially among mid-tier platforms like Caocao Chuxing (Caocao). Most smaller platforms are aggregated in navigation apps such as Baidu Maps and have looser requirements for drivers and vehicles.　

Since 2023, at least three Chinese ride-hailing platforms, including DiDi, Ruqi Mobility (On Time) and Caocao have filed for IPOs in Hong Kong, seeking capital to offset their losses and support sustainable growth.　

To stand out from the competitive market, platforms like On Time are investing in the robotaxi sector, anticipating that unmanned vehicle tech will reshape the ride-hailing industry, Huatai Securities told NewsChina in May.　

Ride-hailing has been one of the most common options for laid-off workers. However since May 2023, several cities such as Shanghai and Changsha, Hunan Province have halted issuing new licenses for ride-hailing vehicles.　

In China, there is a three-tier approval process for drivers: a ride-hailing operator permit, vehicle permit and special driver license from the city, according to the 2022 amendment.　

Each comes with strict requirements and threatens hefty fines. This forces unlicensed ride-hailing drivers, like Li Qiang in Beijing, to find ways around traffic police.　

A former window washer for the city’s high-rises, Li turned to ride-hailing after work dried up. Li is on the road 12 to 13 hours a day and brings in about 300 yuan (US$41).　

When Li was caught without the right paperwork, traffic police slapped him with a 7,000 yuan (US$967) fine. Luckily, the ride-hailing platform covered it. His son has since created a map to help Li circumvent regular police checkpoints.　

The reluctance to issue new ridesharing licenses is reflected nationwide. According to data from the Ministry of Transport (MOT), a total of 7.033 million ride-hailing driver certificates and 2.948 million vehicle transportation certificates were issued as of May 31, reflecting a meager month-on-month increase of 1.0 and 0.7 percent.　

DiDi remains the most popular platform for drivers, despite its stringent rules that are increasingly pushing unqualified drivers to smaller platforms, said Yang Xu, an EV salesman in Beijing whose company rents cars to rideshare drivers.　

Among them, more than 100 of these smaller platforms belong to Gaode Jiaoche, a subsidiary of Beijing-based mapping and traffic data firm AutoNavi (Amap), which Alibaba Group acquired in 2014 for US$1.5 billion.　

Industry investor Guo Tao told NewsChina that the consistently low profitability of ride-hailing platforms, exacerbated by numerous discount coupons and costly marketing schemes, hit drivers hardest.　

“A group ride shared by three people is charged the same as a single passenger fare,” said Li, who added he hands over 27 percent of his income to a smaller platform. Last April, the MOT capped platform commissions at 30 percent.　

Qiao also accused platforms of bait-and-switch orders, where fare types with different commission rates can be reclassified automatically without the driver’s knowledge, leading to discrepancies between displayed and actual payments.　

As a result, smaller platforms that operate under aggregators like Amap can collect higher commissions from drivers to offset the increasing charges from their parent companies. According to Qiao, these rates can sometimes reach as high as 50 percent.　

Smaller apps have become increasingly dependent on aggregation platforms for market penetration. For example, Caocao, the third-largest ride-hailing app, has seen its gross transaction value (GTV, a metric to evaluate the transaction volume in a specific period) from third-party aggregation platforms grow significantly from 43.8 to 73.2 percent between 2021 and 2023, according to its company prospectus from April 29.　

Meanwhile, “By creating access to numerous drivers and subsidiaries without scrutinizing their qualifications, giant platforms like Amap have aroused significant concerns over the safety and quality provided by ride-hailing services,” Huatai Securities warned.　

Established in 2015 and backed by automaker Zhejiang Geely Holding Group, Caocao operates a fleet of about 31,000 customized cars across 24 Chinese cities including Hangzhou, Zhejiang Province, Wuxi, Jiangsu Province and Guiyang, Guizhou Province, according to a report by the California-based consultancy Frost & Sullivan.　

Despite its substantial fleet, Caocao faces challenges in market expansion. By 2023, DiDi remained the top ride-hailing platform with 75.5 percent of the market share by GTV, while third-ranked Caocao held only 4.8 percent of the market, the consultancy revealed.　

“Our major competitors, subsidiaries of global conglomerates, benefit from strong financial backing,” Caocao’s prospectus noted.　

“With considerable investments, they can subsidize drivers, offer passenger discounts, innovate new service models and maintain a dominant role in pricing, making their services more attractive to users.”　

Caocao is not alone in turning to the HKEX for funding. On March 19, DiDi filed its fifth application in four years. Established in 2014, DiDi is seeking funds to offset declining profits from 2021 to 2023, according to newspaper China Business Journal.　

After DiDi suspended its IPO on the New York Stock Exchange (NYSE) in July 2021 over an investigation by Chinese authorities into its data privacy practices, several ride-hailing aggregation platforms emerged, such as Amap, Meituan and Baidu, which bundle various smaller companies like Caocao for price comparison.　

After withdrawing from the NYSE and facing more than 8 billion yuan (US$1.1b) in privacy violation fines, DiDi resumed operations in January 2023.　

In March that year, DiDi averaged 28.2 million orders, 6.85 times more than second-ranked T3go and 14.31 times more than Caocao, according to Analysys, a technology analysis institute.　

The ride-hailing sector in China raised 17.5 billion yuan (US$2.42b) in financial capital in 2022, which dropped to 4.8 billion yuan (US$660m) in the first 11 months of 2023, according to the State Information Center.　

The most critical challenge for all domestic firms in the industry is the shortage of investments, Huatai Securities told NewsChina.　

Coincidentally, HKEX announced a new listing pathway in March for special technology companies focused on next-generation IT, advanced software and hardware and new materials, even if they are not yet profitable. This led to a flood of mobility companies preparing to enter the stock market, including On Time, which applied on March 25.　

If approved for IPO, the company plans to allocate 40 percent of capital to robotaxi R&D and aims for large-scale commercialization around 2026, according its prospectus.　

On Time is not alone. Chinese companies like Apollo Go, Pony.ai and AutoX are joining the fray alongside startups like WeRide and DeepRoute in the race to develop a viable robotaxi.　

Recent years have seen numerous vehicles equipped with video cameras, LiDAR systems and more for advanced testing rounds of driverless vehicles in Yizhuang, a tech development zone in the capital’s southeast.　

As of June 27, robotaxis provided by Pony.ai and WeRide Go have been deployed across more than 1,000 sites between Yizhuang and Beijing Daxing International Airport. This autonomous driving service, which includes a human supervisor in the car for safety reasons, charges fixed prices on various platforms and has plans to expand between more transportation hubs, according to the Beijing Evening News.　

“The development of robotaxis must be sustainable. Once autonomous vehicles are commercialized, they could lead to significant supply-side reforms,” Huatai Securities told NewsChina.　

According to Frost & Sullivan, the cost of manned taxis is projected to rise from 1.7 yuan (US$0.23) per kilometer in 2019 to 2.4 yuan (US$0.33) in 2030, while robotaxi costs could decrease from 23.3 yuan (US$3.22) to 1.0 yuan (US$0.14).　

“The scalability of robotaxi commercialization with reduced costs hinges on timing, localization and consumer acceptance,” Pony.ai Vice President Zhang Ning told NewsChina.　

Sales of robotaxis in China are expected to reach 488.8 billion yuan (US$67.45b) by 2030, capturing 58.5 percent of the global market. Frost & Sullivan forecasts a robotaxi penetration rate of 69.3 percent in China’s smart mobility industry by 2035.　

Zhang further highlighted Pony.ai’s cooperation with On Time in Guangzhou’s Nansha District, Guangdong Province, which aims to enhance understanding of traffic patterns, passenger flows and optimizing taxi stand locations.　

Despite the nearly seven million registered ride-hailing drivers currently grappling with a saturated market to earn a living, Pony.ai’s vice president forecasts that the robotaxi industry will boom in the next five to 10 years.　

However, some ride-hailing drivers do not see robotaxis as a significant threat to their careers, citing consumer acceptance as a major obstacle.　

“I know about the robotaxis in Yizhuang, but I don’t see them as a serious challenge,” a female ride-hailing driver in Beijing surnamed Liang told NewsChina. “Just a simple question: would you dare to take a ride in a driverless car?” she asked, shaking her head.