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Alibaba’s Ant Financial Forms Bike Battery Joint Venture

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Jun. 27 2019, Published 3:12 p.m. ET

Joint venture to set up battery swapping networks

Alibaba (BABA) affiliate Ant Financial has formed an electric bike battery joint venture with Chinese battery maker CATL and bike-sharing firm Hellobike, according to a report from Reuters. Ant Financial owns a stake in Hellobike, one of China’s leading bike-sharing firms.

The joint venture plans to build a network of battery swapping stations where riders can drop their used batteries and pick up recharged ones on the go. The goal of the venture seems to be to improve the experience for Hellobike riders, which is important at this time of intense competition for bike-sharing customers in China. China’s bike-sharing market is booming, but the competition is intense. According to data from iiMedia Research cited by the Financial Times newspaper, China’s bike-sharing market generated $1.5 billion of revenue in 2017, a sharp increase from revenue of $180 million in 2016.

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Promoting payment service through bike-sharing services

Hellobike is battling it out with Tencent-backed (TCEHY) Meituan-Dianping and Didi Chuxing in China’s bike-sharing market. Backing bike-sharing firms is one of the strategies companies like Alibaba and Tencent are applying to popularize their Alipay and WeChat Pay mobile payment services, respectively.

Didi, which is also into the car taxi business, is backed by Apple and SoftBank (SFTBF), both of which also provide mobile payment services. SoftBank is the parent of American mobile network operator Sprint (S), which is seeking to merge with its rival T-Mobile (TMUS).

Alibaba’s profit from Ant Financial was $77 million in the March quarter. But the profit-sharing arrangement has been a mixed bag and has produced profits and losses as illustrated above. Alibaba is in the process of replacing its profit-sharing agreement with Ant Financial for a stake in the business.

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