Baidu, China’s biggest search company entered into an agreement with Geely, an automaker to produce electric cars. Geely is one of the biggest automotive companies in China, also being the owner of Volvo, another auto firm.
The search giant will provide self-driving expertise, whereas Geely will provide its car design and manufacturing knowledge to the new venture. Baidu has experience in smart transportation, connected vehicles and autonomous driving. Its map application and voice assistant technology called DuerOS will be utilized in the vehicle. The venture will use Geely’s scalable electric vehicle platform called Sustainable Experience Architecture (SEA). The platform is the first open-sourced electric vehicle architecture.
The technology company is the majority stakeholder in the new company which will act as its independent subsidiary. Baidu has selected the founder of the bike-sharing company Mobike, Xia Yiping as the chief executive of the project.
Baidu has been in the autonomous cars industry since 2017. It has established an Apollo ecosystem, declared as the ‘Android for smart driving’. The ecosystem has over a hundred manufacturing and supplier partners, including, car companies such as Toyota Motor, Honda Motor, Volkswagen, Byton, NIO, Chery, Changan , Great Wall Motors, tech companies such as Nvidia, Microsoft Cloud, Velodyne, TomTom, and companies belonging to other industries such as Grab Taxi , Bosch, Continental. The platform provides developers with tools such as data, APIs, open source code and reference hardware to help them bring autonomous vehicles to market.
The partnership with Geely will test Baidu’s resolve for continuing the Apollo program. As the players in the Apollo framework are competing for the same products and customers, there could be a conflict of interest for the search giant as it enters the autonomous vehicle business itself.
Baidu operates autonomous taxi service Go Robotaxi in Beijing, Changsha, Cangzhou and other Chinese cities. This has enhanced the company’s autonomous driving know-how.
The entry into the autonomous electric vehicles market by Baidu is an effort to diversify its revenue source from search advertising. It has suffered with the shift of internet usage from desktop to mobile phones. ByteDance’s news platform Toutiao and short-video app Douyin have added search feature to their portals, reducing Baidu’s advertising scope. Of the total time users spent on apps in December 2020, 16% was spent on Bytedance’s apps compared to 8% on Baidu’s. This affects the company’s revenues, as online marketing accounts for 70% of its business.
There is intense competition in the Chinese electric and autonomous vehicles market as market leader Tesla and a group of local manufacturers jostle for a share of the flourishing Chinese ev market.
Tesla has delivered 184,000 electric cars in the first quarter of 2021. The company produces Model 3 and Model Y from its Shanghai ‘gigafactory’.
Alibaba and Chinese state-owned SAIC Motor have a joint venture for producing EVs. The JV called Zhiji has plans to build an electric sedan and an SUV. Didi and EV maker BYD have come together to make electric ride-hailing vehicles. Their first car, D1 has a 100kW electric motor and a charge range of 418 kms. Byton, Foxconn and Nanjing Development Zone signed a strategic cooperation framework to produce Byton’s M-Byte SUV by the first quarter of 2022.
Apart from the big automotive companies, a group of US-listed Chinese electric car manufacturers, XPeng, Li Auto and NIO are challenging Tesla in the ev market. Tancent, a tech behemoth, has invested in Nio, the biggest ev startup in China. Nio has grown twelve-fold in 2020 and already has 3 SUVs in the market.
Internationally, manufacturers from VW to GM have invested in their electric capabilities to diversify their auto business. Their aim is to comply with environmental regulations, as well as to keep up with the changing trends in the mobility business.
According to the International Energy Agency, out of the 7.2 million electric cars running worldwide, 47% were in service in China, making it an undisputed leader of the electric vehicles market. Covid-19 dampened the Chinese automotive sales by about 10%, but ev sales was not affected as much. S&P Platts, a data provider, states that by 2025, about 20% of total new cars sales in China will be ‘new electric vehicles’. This has made the Chinese market for evs the most lucrative as well as the most competitive worldwide.
As China moves towards gaining its carbon targets, the production for electric cars has kept increasing. The support of the Chinese government to the ev market has helped the market mature quickly. The increasing footprint of Tesla in China, along with the partnerships between various tech and automotive companies has given great momentum to the electric and autonomous vehicles market in China. The high amount of competition is expected to secure China’s position as the leader of electric mobility. The performance of the projects will unfold in a few years.
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