On most days, investors consider Baidu (NASDAQ:BIDU) an interesting equity for its role as a Chinese internet search giant. However, BIDU stock has been climbing higher this week on a different catalyst. According to reports, the company is now moving into the world of electric vehicles, and investors like what they are hearing. So what do you need to know?
To start, what is the big news? Well, Reuters reported yesterday that Baidu is in talks to make its own electric vehicles. It is no secret that anything to do with EVs has been red hot, making the move quite appealing for fans of BIDU stock.
With that in mind, here are 11 things to know about the Baidu news now:
- According to people familiar with Baidu, the company is in talks with three different automakers.
- Specifically, Baidu has held preliminary talks with Zhejiang Geely Holding Group, Guangzhou Automobile Group (GAC) and China FAW Group.
- GAC told Reuters that the two companies already have a strategic partnership.
- Right now, it is unclear if Baidu would pursue contract manufacturing or a majority-owned venture with one of these automakers.
- Importantly, many investors used to consider Baidu one of the hottest growth stocks in China.
- The company is still working to diversify its business beyond search.
- As a result, it also deals with internet connectivity infrastructure and autonomous vehicles.
- Investors will likely latch on to the fact that Baidu is not a stranger to the world of vehicles.
- It launched its first self-driving car project in 2013 and has been working through its Apollo unit since 2017.
- Baidu also already has a fleet of self-driving robotaxis that operate within China.
- This service is Go Robotaxi, and Baidu plans to have it operating in 30 cities in three years.
BIDU Stock and Electric Vehicle Plans
So why does this news really matter for Baidu and BIDU stock? Importantly, everything electric has been working in the stock market lately. More companies continue to come public, legacy automakers are switching over to the EV world and Tesla (NASDAQ:TSLA) continues to dominate. The sheer popularity of electric vehicle stocks alone makes this news intriguing for Baidu.
However, industry experts have been quick to point out that Baidu already operates a unique spot in this market. In terms of self-driving vehicles, many see Baidu as a rival to Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and its Waymo project. This is because both are operating fleets that have near full autonomy but also incorporate human safety drivers. Additionally, some critics have suggested that Baidu vehicles may operate better than their Waymo counterparts.
Essentially, Baidu has already made a name for itself in autonomous driving. It has vehicle partnerships, is ramping up its robotaxi fleet and is looking like a serious competitor in that hot market. As Rich Smith wrote for The Motley Fool, its size and reputation could help it do the same in the world of electric vehicles.
Keep an eye on BIDU stock here. After closing higher Tuesday by 13.8%, shares are up another 3.8% in pre-market trading.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.