Chinese search company Baidu plans to make electric cars

The company is the latest tech giant to jump into the rapidly growing market.

Baidu sign outside its Beijing headquarters.
Barcroft Media/Barcroft Media/Getty Images

Baidu plans to enter the electric car market, according to Reuters. The Chinese search company will develop the vehicles in partnership with Geely, the owner of Volvo as well as the country's largest private automaker. It's just the latest tech giant to enter the rapidly growing market for electric cars.

Software expertise — Tech companies have expanded their vision to include the automotive sector at a time when the industry is rapidly moving towards electrification and autonomous vehicles. That transition creates an opportunity for Baidu and others to use their skills in software development to design new connected experiences for consumers.

Hardware is hard, software isn't much better — Automakers know how to slap together metal, but anyone who's tried to use one of their infotainment systems knows that making intuitive software isn't something they're usually good at. Tesla is a rare exception to the rule, but the company is led by CEO Elon Musk, after all, a CEO who's as objectionable as he is visionary.

Major tech entrants into the automotive sector include Google, Amazon, and (if the rumors are to be believed) Apple. Because the automotive industry is so huge, jumping in early during a major paradigm shift (combustion to electric, and human-driven to autonomous) offers the opportunity to capture a sizable chunk of future car purchases.

According to Reuters, it's expected that Baidu will majority own the joint venture and will develop the software while Geely focuses on the hardware. It's unclear whether or not the vehicles will also be autonomous, but Baidu has been working on self-driving technology for years and is considered China's leading company in the space. Autonomy is one area in particular where tech companies are well suited to supply the automotive industry, as the technology takes advantage of machine learning and algorithmic capabilities that already power search engines and other products.

Green race — China has invested heavily in electric cars, providing large subsidies to consumers in order to drive adoption. Late last year the country announced plans to gradually eliminate non-hybrid gas-powered vehicles in the next 15 years. By promoting green technology more aggressively than the United States has under the Trump administration, China hopes to become a leading player in the space. The country has been pushing into new advanced industries as its growth from manufacturing and industrialization slows.

Unlike his predecessor, President-Elect Joe Biden is a proponent of green energy, and is expected to renew efforts like subsidies that promote the adoption of electric vehicles. California, the biggest market for cars in the U.S. and the fifth-largest economy in the world, has announced its own aggressive plans to eliminate gas-powered cars over the next decade, a move that's forcing legacy automakers to fall in line.

Other tech giants in China developing electric cars include ridesharing giant Didi Chuxing (which is making them in partnership with BYD), and Alibaba (which has partnered with SAIC).