Uber's top Chinese rival just raised $3 billion

Didi Kuaidi, Uber's number one rival in China, just raised $3 billion in venture capital funding, the company announced Wednesday.

Didi Kuaidi was created in February, when competing apps Didi Dache and Kuaidi Dache merged to cut the costs of competing with each other - and more importantly, with Uber.

Months later, the taxi app company raised a $1.5 billion investment at twice the valuation it had at the time of the merger.

Now, the company has closed a round of funding at $1 billion more than its initial target. Didi Kuaidi says it gives 3 million rides a day in the country across 80 cities.

In addition to its taxi service, Didi Kuaidi seems to be taking some tips from companies like Uber and Lyft by expanding its offerings. It launched Hitch, a carpooling service, this summer. To date, the company says Hitch is available in 338 cities, with 3.1 million drivers and 7 million users.

Didi Kuaidi also launched premium bus services in two cities, Beijing and Shenzhen - not unlike Uber's idea of "smart routes" and "perpetual trips." In this scenario, a driver, Uber CEO Travis Kalanick said at the Digital-Life-Design conference last fall, "picks one passenger up, picks another passenger up, drops off the first passenger, but then picks up passenger number three and drops off passenger number two." Think of it like a smart, premium bus system.

It makes sense for Didi Kuaidi to seek so much new funding. Uber China's top three most popular cities - Guangzhou, Hangzhou, and Chengdu - are all in China. And Uber's service is taking off in China much faster than it did in the United States; nine months after launching in Chengdu, Uber has 479 times the trips it had in New York after the same amount of time.

Uber's China branch recently closed a $1.2 billion round of funding. Uber is aggressively expanding its Chinese footprint, with plans to operate in 100 more cities in the country in the next year.

Didi Kuaidi's new financing was led by China Investment Corp, Capital International Private Equity Fund, and Ping An Ventures. Alibaba, Tencent, Temasek and Coatue Management also participated in the round. In July, Didi Kuaidi was valued at $15 billion. Uber, by comparison, was most recently valued at $51 billion.

Didi Kuaidi previously said it would give away about $161 million in free rides to battle Uber, and the fight looks to be a difficult one, with Uber eyeing the same market. "Simply stated, China is the #1 priority for Uber's global team," Uber CEO Travis Kalanick wrote in an email.