Baidu Inc. logo will be shown at the company’s headquarters on July 3, 2019 in Beijing, China.
Wang Xiaojun | Visual China Group via Getty Images
GUANGZHOU, China – Chinese search giant Baidu will set up a stand-alone electric vehicle company, a person familiar with the matter told CNBC.
The Beijing-based company will be a majority shareholder, while Chinese carmaker Geely will take a minority stake, the person said. Geely will be in charge of car production, while Baidu will focus on the software behind the car.
Baidu and Geely declined to comment when they contacted CNBC.
Shares of Geely, registered in Hong Kong, rose more than 1
Baidu relies heavily on advertising revenue, but seeks to diversify its business in other areas such as cloud computing and autonomous management software, areas that analysts consider promising for the company.
The company has already tested its driverless car software, called Apollo, in a public robotics test in Beijing. Baidu also has its own card application and voice assistant technology called DuerOS, which can be equipped in the car.
The Chinese electric car market continues to grow, aided by state support in the form of subsidies and charging infrastructure.
Sales of pure electric vehicles from January to November increased by 4.4% year-on-year, compared to a 7.6% drop in total car sales at the same time, according to the Chinese Ministry of Industry and Information Technology.
Baidu will jump into an increasingly competitive market, competing with similar ones to Tesla, as well as with local electric vehicle companies such as Nio, Li Auto and Xpeng Motors.
The last three companies recently announced an increase in car deliveries in December.
All Chinese technology giants are investing in electric vehicles or automatic technology. Alibaba is an investor in Zhiji, an electric vehicle business set up by Chinese state-owned carmaker SAIC Motor.
Meanwhile, the welcome company Didi has launched its own electric vehicle with carmaker BYD, which is backed by billionaire Warren Buffett.
Elsewhere, Hyundai Motor said it was at an early stage of discussions about a relationship with Apple to create a car.