Volkswagen and Chinese ride-hailing company Didi Chuxing have struck a partnership to co-develop self-driving cars.
As part of the deal which is expected to be signed in early May, the German automaker will initially manage a fleet of about 100,000 new vehicles for Didi, according to Reuters. The partnership will benefit both parties as it gives Volkswagen access to Didi’s customer behavior data while allowing Didi to expand its fleet.
“The joint venture with Didi is not just about ride-hailing. We want to explore mobility projects as well as autonomous driving and robo-taxis,” Weiming Soh, board member in charge of strategy at Volkswagen Group China, told the Wall Street Journal.
By sharing data and technology, the two companies hope to produce autonomous cars. Although this is a lofty goal, Volkswagen has deep pockets. The world’s biggest automaker has 15 billion euros ($18.2 billion) dedicated for investments in ride-hailing, autonomous driving, digitalization, electric mobility, and other services in China by 2022.
The move demonstrates that Volkswagen wants to get a foothold on the Chinese market where it competes with rival General Motors for the biggest-selling automaker in the country. By partnering with Beijing-based Didi, Volkswagen hopes this alliance will give it an edge.
As GGV Capital partner Hans Tung previously told Fortune about investors or companies trying to make it in China — a good local partner is key. “You need people who can provide you with local knowledge and local relationships when it comes to hiring, obtaining necessary licenses, and setting up Chinese subsidiaries,” he said.