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Baidu Confirms Plans to Join the Smoking Hot EV Market

By Danny Vena - Jan 11, 2021 at 1:31PM

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Rumors have been swirling for weeks.

In a press release on Monday, Baidu ( BIDU -0.67% ) confirmed that it was entering the red-hot electric-vehicle (EV) market. The company plans to set up an independent subsidiary company to make smart EVs, partnering with privately held Chinese auto maker Zhejiang Geely Holding Group, which will also be a strategic investor in the new venture. 

This confirms rumors circulating since mid-December that Baidu had held talks with numerous Chinese automakers regarding a collaboration, including Zhejiang Geely Holding Group, Guangzhou Automobile, and China FAW Group.

An Apollo self-driving car driving down the road.

Image source: Baidu.

Baidu is widely considered to be the leader in self-driving car technology and artificial intelligence in China, and the new company will leverage Baidu's expertise to develop intelligent driving systems, while relying on Zhejiang Geely Holding Group for its manufacturing capabilities. Baidu also said it will support the venture "with its full portfolio of core technologies, including Apollo autonomous driving, [its voice recognition system] DuerOS for Apollo, and Baidu Maps."

As China's search leader, Baidu has taken cues from Alphabet ( GOOGL -0.60% ) ( GOOG -0.58% ), which leveraged its own artificial intelligence and autonomous driving capabilities to form the self-driving car company Waymo. Baidu's Apollo is one of the leading self-driving systems in China, so this collaboration seems like a next logical step.

The success of innovators like Tesla ( TSLA -4.35% ) and NIO ( NIO -2.10% ) in the EV market over the past several years has attracted a large and growing cadre of competitors from both well-established automakers and start-ups joining the fray.

The global EV market, which was estimated at roughly $162 billion in 2019, is expected to top $802 billion by 2027, according to Allied Market Research. This would result in nearly 27 million electric vehicles, an eightfold increase from 2019, according to research company Markets and Markets. 

Shares of Baidu have soared 38% in the four weeks since these rumors first surfaced.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Baidu, Inc. Stock Quote
Baidu, Inc.
BIDU
$148.83 (-0.67%) $-1.01
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$2,821.03 (-0.60%) $-16.92
Tesla, Inc. Stock Quote
Tesla, Inc.
TSLA
$1,095.00 (-4.35%) $-49.76
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOG
$2,832.36 (-0.58%) $-16.68
NIO Inc. Stock Quote
NIO Inc.
NIO
$38.31 (-2.10%) $0.82

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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