Chinese search engine giant Baidu (NASDAQ: BIDU) is in talks with automakers, including Zhejiang Geely, Guangzhou Automobile, and FAW Hongqi, on forming ventures, in a bid to produce its own electric vehicles, Reuters reported on Tuesday, citing unnamed sources.
The tech giant, which has been developing autonomous driving technology in recent years, expects to contract manufacturing capabilities or create a majority-owned venture with automakers, according to the report.
As of today, China’s car ownership has reached 275 million units, and the number is expected to surpass 300 million units by the end of the year, according to Fu Bingfeng, the executive vice president and secretary-general of the China Association of Automobile Manufacturers at an industry conference this week. Sales of new energy vehicles (NEV)—including electric, plug-in hybrid, and hydrogen-powered vehicles—are expected to rise to 20% of overall new car sales by 2025, from just 5% now, the State Council said in November.
In the third quarter of 2020, top Chinese EV makers saw substantial growth. Nio (NYSE: NIO) delivered 12,206 vehicles, with a year-on-year (YoY) growth of 150.4%, Xpeng (NYSE: XPEV) dispatched 8,578, a 265.8% annual increase, and Li Auto (NASDAQ: LI) 8,660, representing a 31.1% quarter-over-quarter (QoQ) increase. Baidu-backed WM Motor reported that it sold 3,003 units in October, a 46.1% YoY growth.
Baidu’s move into the car sector marks another intent at seeking new income streams, as growth of its core search business is flattening. In the quarter that ended in September, Baidu’s revenue reached USD 4.16 billion, 1% higher than in the same period of 2019.