Chinese search giant Baidu (NASDAQ: BIDU), which is also a leading autonomous driving technology developer, is planning to establish a smart electric vehicles company for manufacturing, partnering with automaker Geely (HK:00175), Reuters reported on Thursday, citing sources familiar with the matter.
Earlier last month, Baidu reportedly was in talks with several automakers, including Zhejiang Geely, Guangzhou Automobile, and FAW Hongqi, on forming ventures, KrASIA wrote. Now, it seems that the firm has finalized a partnership.
Baidu will take a majority stake and have absolute voting power in the new company. The venture plans to revamp some of Geely’s existing car manufacturing facilities to produce the vehicles. It will be leveraging on Baidu’s in-car software and Geely’s experience in car production, as well as its EV-focused “Sustainable Experience Architecture.”
Geely declined to comment on the news when approached by local media. Its Hong Kong-listed stock on Friday morning surged by 17.45% to HKD 32.65. Baidu shares closed on Thursday at USD 207.89, up 1.92% from the prior trading day. Baidu is set to move forward with a secondary listing in Hong Kong in the first half of this year, aiming to raise at least USD 3.5 billion, Bloomberg reported. It has selected CLSA and Goldman Sachs Group to lead the listing.
China’s car ownership reached 275 million units, and the number was expected to surpass 300 million by the end of 2020. Sales of new energy vehicles—including electric, plug-in hybrid, and hydrogen-powered cars—are expected to rise to 20% of overall new car sales by 2025, from just 5% now, the State Council said in November.
Even if Baidu’s venture into the sector appears irrelevant to its main internet business, the company does have broad experience in the mobility industry. It has been working on self-driving technology over the past years and rolled out robotaxi fleets in Chinese cities including Beijing, Changzhou, and Changsha. It will however face stiff competition with top Chinese EV makers, including Nio, Xpeng, and Li Auto, which saw substantial growth in the past year.