Guangzhou, China — China’s search giant Baidu has set up an independent electric vehicle company, a person familiar with the matter told CNBC.
The Beijing-based company will be the majority shareholder, and Chinese car maker Geely will be the minority shareholder, he said. Geely is in charge of manufacturing the vehicle, and Baidu focuses on the software behind the vehicle.
Baidu and Geely declined to comment when contacted by CNBC.
Geely’s Hong Kong-listed stock has risen more than 13% since Reuters first reported the news.
Although Baidu relies heavily on advertising revenue, it aims to diversify its business into areas that analysts see as promising for the company, such as cloud computing and self-driving software.
The company has already tested self-driving car software named Apollo in a public robotaxi test in Beijing. Baidu also has a unique map app called DuerOS and voice assistant technology that you can equip in your car.
China’s electric vehicle market continues to grow, supported by government support in the form of subsidies and charging infrastructure.
According to the Ministry of Industry and Information Technology of China, the number of pure electric vehicles sold from January to November increased by 4.4% from the same month of the previous year, and the total number of passenger cars sold decreased by 7.6%.
Baidu will enter an increasingly competitive market with Tesla and domestic electric vehicle companies such as Nio, Li Auto and Xpeng Motors.
The latter three companies all reported a surge in car deliveries in December.
All of China’s leading tech companies have invested in electric vehicles and automotive-related technologies. Alibaba is an investor in Zhiji, an electric vehicle business founded by Chinese state-owned automobile manufacturer SAIC Motor.
Meanwhile, ride-hailing service company Diddy has launched its own electric vehicle with BYD, a car maker backed by billionaire Warren Buffett.
Elsewhere, Hyundai said it was in an early stage debate over a partnership with Apple to build the car.
Chinese search company Baidu establishes electric car company
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