Skip to main content

$1 billion annual losses are slowing Uber down in China

Uber
Image used with permission by copyright holder
Uber may be one of the biggest, baddest unicorns around (with its last valuation coming it at over $62 billion), but when you win big, it would seem that you also lose big. According to Uber CEO Travis Kalanick himself, the transportation giant is losing a stunning $1 billion a year in China, one of the hottest markets for tech startups across the globe. Attributing these massive losses to competition with other ride-sharing companies, Kalanick pointed to these numbers as signs of “irrational funding going on” in the startup world.

“We’re profitable in the USA, but we’re losing over $1 billion a year in China,” the CEO said in an interview with Betakit. “We have a fierce competitor that’s unprofitable in every city they exist in, but they’re buying up market share. I wish the world wasn’t that way. I prefer building rather than fundraising. But if I don’t participate in the fundraising bonanza, I’ll get squeezed out by others buying market share.”

Recommended Videos

The culprit behind Uber’s relatively poor performance in China is Didi Kuaidi, a homegrown company that has benefited immensely from the deep pockets of Alibaba and Tencent, both Chinese companies themselves. While an Uber spokeswoman insisted to CNN that Uber maintains “the sustainable financial strength to win in China in the long-term,” in the short-run, they’re definitely being outplayed by the home team. The spokeswoman continued, “… our largest competitor in China spends many multiples of what we do to buy up unprofitable market share.”

Didi Kuaidi, however, disagrees with Uber’s prognosis, with spokeswoman Casper Sun telling CNN that Uber has made use of “fictitious numbers” and an “unsustainable and severely challenged” strategy, which is costing the company a billion dollars a year overseas.

Another spokesman for the Chinese transportation company told Reuters that while “smaller competitors have to bleed subsidies to make up for their insufficient driver and rider network,” Didi Kuaidi has had no such issues. Indeed, the company is now active in 400 cities and, according to Reuters, has “passed break-even point in half of those cities.”

Uber, for its own part, claims to be active in 380 cities globally but only a bit over 100 cities in China, and while it previously claimed a 30 to 35 percent market share in China, it’s unclear as to just how accurate these numbers are given their massive losses. So strap down, Uber — it’s going to be a bumpy ride in this foreign territory.

Lulu Chang
Former Digital Trends Contributor
Fascinated by the effects of technology on human interaction, Lulu believes that if her parents can use your new app…
Hyundai 2025 Ioniq 5 is under $44,000, with more range and NACS port
hyundai ioniq 5 44000 nacs 64149 large631652025ioniq5xrt

Hyundai is on a roll. In October, the South Korean manufacturer posted its best U.S. sales ever, largely driven by sales of its popular Ioniq 5 electric SUV.

Now, all eyes are on the Ioniq 5’s 2025 model, which is set to become available at dealerships before year-end. As Digital Trends previously reported, the crossover model adds a more rugged-looking trim level called XRT and provides additional driving range as well as new charging options.

Read more
Mazda confirms a hybrid CX-5 and electric SUV are on the way
mazda hybrid cx 5 electric suv 2024 arata concept 4

Mazda might be making headway in the pursuit of bringing back an electric vehicle (EV) stateside.

Ever since it discontinued the MX-30 EV in the U.S. last year, the Japanese automaker has had zero EV offerings for potential U.S. customers.

Read more
Range Rover’s first electric SUV has 48,000 pre-orders
Land Rover Range Rover Velar SVAutobiography Dynamic Edition

Range Rover, the brand made famous for its British-styled, luxury, all-terrain SUVs, is keen to show it means business about going electric.

And, according to the most recent investor presentation by parent company JLR, that’s all because Range Rover fans are showing the way. Not only was demand for Range Rover’s hybrid vehicles up 29% in the last six months, but customers are buying hybrids “as a stepping stone towards battery electric vehicles,” the company says.

Read more