Uber to launch carpooling service for commuters in China

Uber has grand expansion plans in China, and it's chosen the country as its testing ground for a new carpooling service.

The San Francisco-based ride-hailing service on Tuesday announced the launch of UberCommute, a service that will connect drivers who commute long distances with passengers heading in the same direction to share the cost of the journey. The service will make its debut in Chengdu, China, but Uber ultimately plans to expand it to markets around the world.

"When people can push a button and get a ride in minutes, they are less likely to drive themselves," Uber said in a blog post. "Instead of 30 people using their own cars, you have one car serving them all."

UberCommute, the ride-hailing service's first major product launch outside the US, underscores China's growing influence in the technology world. The country's massive population of 1.35 billion and growing middle class have created a lucrative market for companies to capitalize on.

Highlighting that opportunity, Uber CEO Travis Kalanick announced earlier this month that the company plans to spread its service to 100 additional cities in China within the next 12 months -- twice the number of cities Uber previously said it would enter. In June, Kalanick reportedly sent a letter to investors that said the company planned to invest more than $1 billion for its China expansion during 2015. He called the company's growth there "remarkable and unprecedented."

Despite Uber's heavy emphasis on expansion in China, it hasn't necessarily been a smooth ride. The company, which pairs passengers with drivers via a smartphone app, has faced resistance from regulators and competitors. Transportation authorities have reportedly conducted raids at two of the company's offices in China ass part of a broad crackdown on illegal taxi services.


The new service could help it better compete with local taxi-hailing company Didi Kuaidi, which is estimated to control the vast majority of the local ride-hailing market share. Uber is currently in 20 Chinese cities, according to Reuters, while Didi Kuaidi is in more than 300. That competition is likely to intensify after Didi announced a partnership last week with Uber rival Lyft that will link the two companies' apps, enabling passengers to use their usual app while traveling abroad just like they would at home.

UberCommute works much like the company's popular ride-hailing app. After signing into the app, drivers indicate where they are heading. The app then pairs drivers with passengers who have requested rides in the same direction, as well as showing them how much payment they will receive. The driver then has the option to accept or reject the ride request.

Uber, highest-valued venture-backed company in the world with a valuation of more than $50 billion, enters a carpool market that has gained tech attention of late. Google confirmed in July that its Waze navigation app is running a "limited trial" of a new carpooling service in Israel called RideWith that connects drivers on their way to work with potential riders. BlaBlaCar, a French startup that finds vacant seats in cars for passengers traveling long distances, has raised $200 million, giving it a valuation of $1.6 billion.