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Baidu Makes a Bold Move in the Self-Driving-Car Market

By Danny Vena – Updated May 25, 2017 at 4:01PM

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In the ongoing battle for supremacy in self-driving cars, nobody saw this coming.

Autonomous driving is all the rage lately, and it seems that every large technology company is developing its own autonomous vehicles, or partnering with a company that is. The race here isn't necessarily about who can perfect the technology first, although that is certainly a consideration. The race is on for the title of industry standard in the space.

The early front-runner is the Waymo division of Alphabet Inc. (GOOGL -1.40%) (GOOG -1.65%), which has been working to develop the technology since 2009, much longer than any other player in the emerging field. The company has developed integrated hardware and software systems that other players lack.

Understandably, companies have been reluctant to share this intellectual property, and numerous lawsuits have erupted involving stolen trade secrets and employee poaching.

A fleet of self-driving cars topped with sensors.

Baidu surprises with a move to open-source its self-driving-car technology. Image source: Baidu.

The road less traveled

That's why it came as such a surprise last month, when Baidu, Inc. (BIDU 4.73%), the Chinese search leader and early contender for that country's artificial-intelligence crown, announced that it would open-source its autonomous driving technology. The company revealed that it was in discussions with several automakers in the U.S., China, and Germany to collaborate on self-driving cars, though it declined to identify those companies. According to the plan, Baidu wil begin a three-year process in July for gradually sharing its technology on the project, titled "Apollo" after the U.S. lunar-landing program. Baidu's president and chief operating officer, Qi Lu, said:

China is the world's largest market for automotive sales and production. It has many car brands and an open environment that is ripe for collaboration. Baidu took the initiative to open our autonomous-driving technology to the industry in order to encourage greater innovation and opportunities, making better use of our technology to drive the evolution of the entire industry.

Many consider Baidu to be the leader in autonomous driving in its native China, and it believes that this strategy is particularly well suited to its home market, where automakers don't necessarily have the resources to develop their own self-driving cars. By taking this route, Baidu hopes it can help reduce the redundancy that's occurring in autonomous-driving research and believes the rewards would come in the form of the data collected. Baidu also possesses extensive mapping data of China, which outsiders lack.

Both hands on the wheel

The decision may have been inspired by the strategy Google employed to dominate the smartphone market with its Android operating system. Electric-car maker Tesla, Inc. had also chosen to release its intellectual property to accelerate development in the field of electric vehicles. Baidu plans to gradually release its autonomous-vehicle technology over three years beginning in July.

This announcement by the search giant comes on the heels of a revelation that hackers had targeted Baidu's driverless-car technology, causing the company to increase its cybersecurity team. The company declined to reveal whether these events had any bearing on its open-sourcing decision. 

A self-driving car sensing pedestrians and other vehicles along the roadway.

NVIDIA partnered with Baidu on create a cloud-to-car self-driving platform. Image source: NVIDIA.

Riding shotgun

Even in the U.S. market, many have sought partnerships as the path to success. Earlier this month, NVIDIA Corporation (NVDA -0.46%) announced at its annual GPU Technology Conference that it was collaborating with Toyota Motor Corporation (TM 0.71%) on autonomous-driving systems. Toyota had chosen to use the NVIDIA DRIVE PX self-driving platform to process the massive amount of sensor data collected, and the engineers of both companies would work to develop software for the venture. NVIDIA and Baidu had previously announced a partnership to create a cloud-to-car self-driving platform, which would combine Baidu's mapping technology and cloud platform with NVIDIA's DRIVE PX 2 self-driving in-car supercomputer to provide an end-to-end solution.

NVIDIA has previously declared numerous partnerships in its quest to ensure that its technology remains in the driver's seat of autonomous cars. The company is working with several automakers, including German luxury-car maker Audi and Daimler AG unit Mercedes-Benz. NVIDIA is also working with Bosch, the world's largest automotive supplier, to create an AI supercomputer for highly autonomous vehicles.

It's a long road

Boston Consulting Group estimates that by 2035, 12 million fully autonomous and 18 million partially vehicles will be sold globally every year, and the market will grow from $42 billion in 2025 to $77 billion by 2035.

As fully autonomous vehicles move from the realm of science fiction to reality, there is no one-size-fits-all solution, at least not at this point. The market will probably be large enough to accommodate multiple players. Still, each company hopes that its technology will be crowned the industry standard and benefit from the data that will the crown jewel of those efforts. Baidu believes that by open-sourcing its technology, it will get the jump on the competition. Only time will tell.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Danny Vena owns shares of Alphabet (A shares), Baidu, and Tesla. Danny Vena has the following options: long January 2018 $640 calls on Alphabet (C shares) and short January 2018 $650 calls on Alphabet (C shares). The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Baidu, Nvidia, and Tesla. The Motley Fool has a disclosure policy.

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