China’s Baidu to partner with Geely to manufacture electric cars

The new deal is expected to boost Baidu’s investor appeal as it seeks a $3.5bn secondary listing in Hong Kong

Baidu's headquarters building in Beijing. Reuters

Baidu and Geely Automobile will team up to make electric vehicles for the Chinese market, a person familiar with the matter said, deepening the internet giant’s foray into automobiles as its core business slows.

Geely’s shares soared as much as 10 per cent in Hong Kong, while Baidu gained 2 per cent in New York. The pair may announce their new venture as early as next week, the person said, asking not to be identified talking about a private deal. China’s internet search leader picked the fast-growing carmaker after discussions with potential partners including closely held WM Motor, Guangzhou Automobile and FAW Group, the person said. It will control the venture with a majority stake, the person added. Reuters first reported on the deal.

The tie-up marks a significant expansion into auto-making for Baidu, which has for years touted its Apollo open-sourced platform to help manufacturers build autonomous driving and connectivity into their products. The move precedes a Hong Kong share sale that’s said to be on track to raise $3.5 billion to fuel the search giant’s ambitions beyond advertising.

Baidu’s venture with Geely is intended to push Apollo’s adoption in more vehicles, the person said. It will start by building EVs for the world’s largest vehicle arena at Geely plants, though it’s unclear if the partners intend to eventually also produce self-driving cars. Representatives for the two companies declined to comment.

Baidu’s plan to make smart electric vehicles with Geely, as reported by Reuters, may boost the company’s investor appeal as it seeks a $3.5bn secondary listing in Hong Kong during first half. While details of the electric-vehicle project are scarce and sales may not cover costs for years, it may be a step towards monetisation of Baidu’s autonomous-driving platform Apollo, which it has heavily invested in since 2015.

The platform, which has been described as an Android for automobiles, has about 130 members including Volkswagen, Ford Motor, BYD, Microsoft and Geely’s own Volvo Cars.

Baidu aims to monetise Apollo, which the company has sunk billions of dollars since 2015. While advertising remains its bread-and-butter, the company has made bets to commercialise its AI technology through self-driving cars and smart speakers. Carmakers like WM Motor and Geely already employ Baidu’s autonomous techniques, and it has won government deals to develop transport networks and test robo-taxis in cities like Guangzhou and Chongqing.

Baidu’s move underscores how global internet giants are firming up plans to get their technology in front of car buyers who increasingly prize connectivity and smart features over traditional driving mechanics. Apple is said to have created a team of engineers developing drive systems, vehicle interior and external car body designs with the goal of eventually shipping a vehicle. Alibaba Group has formed a venture with Chinese giant SAIC to explore smart vehicles.