The Baidu Inc. logo will be displayed at the company’s headquarters on July 3, 2019 in Beijing, China.
Wan Xiaojun | Visual China Group through Getty Images
GUANGZHOU, China – Chinese search giant Baidu will create an autonomous electric vehicle company, a person familiar with the matter told CNBC.
The Beijing-based company will be the majority shareholder, while Chinese automaker Geely will have a minority stake, the source said. Geely will be responsible for manufacturing the vehicles, while Baidu will focus on the software behind the car.
Baidu and Geely declined to comment when contacted by CNBC.
Hong Kong’s listed Geely shares rose more than 13% after Reuters first reported the news.
Baidu relies heavily on advertising revenue, but has sought to diversify its business into other areas, such as cloud computing and self-driving software, areas that analysts see as promising for the company.
The company has already tested its driverless car software, called Apollo, in public robot taxi tests in Beijing. Baidu also has its own map and voice assistant technology application, called DuerOS, which can be equipped inside a vehicle.
China’s electric car market continues to grow, helped by government support in the form of subsidies and charging infrastructure.
Sales of pure electric vehicles from January to November increased by 4.4% over the previous year, against a 7.6% drop in overall passenger car sales during the same period, according to the Ministry of Industry and Technology of China Information.
Baidu will be entering an increasingly competitive market competing with companies like Tesla and also with domestic electric vehicle companies like Nio, Li Auto and Xpeng Motors.
The last three companies recently reported an increase in car deliveries in December.
All of China’s technology giants have invested in electric vehicles or automotive technology. Alibaba is an investor in Zhiji, an electric vehicle company created by Chinese state-owned automaker SAIC Motor.
Meanwhile, Didi launched its own electric vehicle with BYD, supported by billionaire Warren Buffett.
Elsewhere, Hyundai Motor said it was in initial discussions about an agreement with Apple to make a car.