Baidu Inc BIDU shares were on fire Tuesday following reports of the Chinese search giant's interest in the lucrative field of electric vehicle manufacturing.
What Happened: Baidu is in talks with automakers regarding manufacturing of its own electric vehicle, Reuters reported, citing three people with knowledge of the matter.
The company is exploring the possibility of either contract manufacturing or forging a majority-owned joint venture with automakers such as Zhejiang Geely Holding Group Co Ltd, Guangzhou Automobile Group Co Ltd and China FAW Group Corp Ltd's Hongqi, the report said.
Related Link: Baidu Analysts Shrug Off Soft Growth Guidance, iQIYI SEC Probe As Short-Term Headwinds
Why It's Important: The auto industry is moving away from the traditional hardware-heavy approach to a software-centric one.
Baidu has already ventured into autonomous driving systems.
Its Apollo project, launched in April 2017, is an open-source software platform designed to encourage collaboration across the auto industry to accelerate the development of self-driving cars.
EV manufacturing seems only a logical extension.
The company's reported interest in EVs could stem from its intention to capitalize on the vast potential offered by the Chinese EV market, and to build an additional income stream amid plateauing revenues at its core search business.
BIDU Price Action: At last check, Baidu shares were surging 9.8% to $178.94.
Related Link: Why This Analyst Recommends Buying Amazon, Baidu, Facebook And Uber Following COVID-19 Battering
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