Baidu Inc. (NASDAQ:BIDU) is teaming up with Geely Automobile Holdings Ltd. to manufacturer electric cars for the Chinese market according to a source familiar with the matter. The move deepens the internet behemoth’s foray into the car manufacturing industry as its main business slows.
Geely Automobile to leverage Baidu’s Apollo platform
Following the revelation, Baidu’s shares jumped 2% in New York while Geely’s shares were up around 10% in Hong Kong. According to a source that sought anonymity since this is a private deal, the pair could announce the joint venture as early as next week. The Chinese internet giant has picked the rapidly growing automobile maker following discussions with other potential partners that included FAW Group, Guangzhou Automobile Group Co., and privately WM Motor. Reuter had first reported about the deal and the source indicated that Baidu will control the majority stake in the new venture.
This tie-up will mark Baidu’s significant expansion into the automobile sector having touted its Apollo open-sourced platform for years to help manufacturers in creating connectivity and autonomous driving to their products. Also, this move precedes the Hong Kong share sale which is on track to raise around $3.5 billion to facilitate the search giant’s goal of going beyond advertising. the venture with Geely will push the adoption of Baidu’s Apollo in more cars. Interestingly it will start by creating electric vehicles for the world’s biggest vehicle arena at Geely facilities but it is still unclear whether the partners will finally produce autonomous cars. There has been no comment from either of the companies.
Baidu considering $3.5 billion listings in Hong Kong
According to Bloomberg, the plan to make smart EVs with Geely will boost Baidu’s appeal to investors as the company seeks a $3.5 billion listing in Hong Kong in 1H 2021. Although the details of the EV project are scant and sales may not cover costs for long this is a major milestone towards monetization of the company’s self-driving platform Apollo that the company has invested in heavily since 2015.