Baidu to create electric car company

Chinese internet search giant Baidu announced on Monday that it plans to establish an intelligent electric vehicle company and has formed a strategic partnership with auto manufacturer Zhejiang Geely Holding Group as the country's new energy vehicle market gets in the fast lane.

It is an inevitable trend that more and more technology companies will make their forays into the emerging new energy vehicle sector, ramp up production and roll out new smart vehicles in a bid to seek new growth engines and expand business landscapes, industry experts said, while noting the competition in this sector will intensify.

The new company, which will operate as an independent subsidiary of Baidu, will oversee the entire industrial chain, from vehicle design and research and development to manufacturing, sales and service, Baidu said in a statement.

The Beijing-based technology behemoth will produce the vehicles with intelligent driving capabilities while Geely will contribute its expertise in automobile design and manufacturing.

Baidu will support the new company's growth with its full portfolio of core technologies, including Apollo autonomous driving, Duer-OS voice assistant for Apollo and Baidu Maps. The company aims to reshape intelligent vehicle offerings and bring about a revolution in intelligent transportation.

"China has become the world's largest market for electric vehicles, and we are seeing EV consumers demanding next generation vehicles be more intelligent," said Robin Li, co-founder and CEO of Baidu.

Li said Baidu has long believed in the future of intelligent driving, and over the past decade it has invested heavily in artificial intelligence to build a portfolio of self-driving services.

"The collaboration marks a significant expansion into auto making for Baidu, which is in need of a new platform to showcase its accumulated cutting-edge technologies, such as autonomous driving, intelligent connected vehicles and artificial intelligence, as well as to promote its technology upgrades," said Jiang Zheng, an expert at the research and development center affiliated to Guangzhou Automobile Group.

Jiang explained Baidu only served as a supplier of technology solutions when partnering with other car manufacturers in the past and couldn't give full play to its overall strengths, especially in the self-driving segment, in consideration of current laws and regulations, costs and safety issues.

"It is of great significance that Geely, as an automobile and EV manufacturer, is teaming up with Baidu. Vehicle manufacturing is a typical asset-heavy industry, which requires huge investments in land, production facilities and factory construction and may take a long time," Jiang said.

China's NEV market will see robust growth in the next five years driven by government promotion, investments from vehicle manufacturers and advancements in battery technology, a report from global market research firm IDC said.

According to the latest development plan for the NEV industry from 2021 to 2035 approved by the State Council in November, the nation's NEVs sales are expected to account for 20 percent of all new vehicle sales by 2025, and vehicles used in public transportation will be completely electrified by 2035.

It may take two or three years for Baidu to mass produce its intelligent electric vehicles, said Zhang Xiang, an automobile analyst at the new energy and intelligent connected car industry think tank under the Ministry of Industry and Information Technology.

"China's internet companies, which possess a large number of users and abundant capital, have encountered some development bottlenecks, such as facing difficulties in making profits continuously," said Zhang, adding that they hope to find new business growth points and that developing autos in collaboration with traditional automobile makers is a good choice.

Local players including Nio, Xpeng and Li Auto have already tapped into the NEV sector, with sales rising and stocks soaring in recent months. In addition, e-commerce giant Alibaba Group has formed a joint venture with automaker SAIC Motor Corp to produce smart EVs, while ride-hailing company Didi Chuxing launched the purpose-built car model for ride-hailing services in partnership with BYD.

Statistics from the China Association of Automobile Manufacturers showed that about 200,000 NEVs were sold in November in China, more than double the previous year.

Li Fusheng contributed to this story.