Shares of Baidu (BIDU 2.13%) surged 14% on Friday after the Chinese technology titan reportedly chose a well-regarded CEO for its new electric vehicle joint venture.
Baidu announced in January its intention to create a new electric vehicle company. As part of that plan, Baidu entered into a strategic partnership with leading Chinese automaker Zhejiang Geely Holding Group. Baidu will contribute its autonomous driving technology to the venture, while Geely will share its design and manufacturing expertise.
"At Baidu, we have long believed in the future of intelligent driving and have over the past decade invested heavily in AI to build a portfolio of world-class self-driving services," Baidu CEO Robin Li said in a press release announcing the collaboration. "China has become the world's largest market for EVs, and we are seeing EV consumers demanding next-generation vehicles to be more intelligent."
On Thursday, Reuters and CNBC reported that Baidu will name Xia Yiping as CEO of its EV partnership with Geely. Yiping co-founded popular bike-sharing company Mobike. He also has auto industry experience from his time at Ford and Fiat Chrysler.
Although investors are understandably excited about the potential of Baidu's opportunity in the fast-growing electric vehicle market, they may want to temper their near-term expectations. Li said during a conference call with analysts that it will likely be at least three years before Baidu launches its first EV.
Still, the initiative could help diversify Baidu's revenue at a time when its core internet search business has come under pressure from rivals. If Baidu and Geely can begin to take share in the EV market in the coming decade, both companies will get a powerful long-term growth driver.