GUANGZHOU, China — Chinese language search big Baidu will create a standalone electrical automobile firm, an individual aware of the matter instructed CNBC.

The Beijing-headquartered firm would be the majority shareholder whereas Chinese language automaker Geely will take a minority stake, the individual mentioned. Geely will probably be answerable for manufacturing the automobiles whereas Baidu will deal with the software program behind the automotive.

Baidu and Geely declined to remark when contacted by CNBC.

Hong Kong-listed shares of Geely have been up greater than 13% after Reuters first reported the information.

Baidu depends closely on promoting income but it surely has been trying to diversify its enterprise to different areas reminiscent of cloud computing and autonomous driving software program, areas that analysts see as promising for the company.

The corporate has already been testing its driverless automotive software program, named Apollo, in public robotaxi trials in Beijing. Baidu additionally has its personal map app and voice assistant expertise known as DuerOS, which might be geared up inside a automobile.

China’s electrical automotive market continues to develop, helped by government support within the type of subsidies and charging infrastructure.

Gross sales of pure electrical automobiles from January by means of November rose 4.4% from a yr in the past, versus a decline of seven.6% in total passenger automotive gross sales throughout the identical time, in line with China’s Ministry of Trade and Info Know-how.

Baidu will probably be leaping into an more and more aggressive market competing with the likes of Tesla in addition to home electrical automobile companies reminiscent of Nio, Li Auto and Xpeng Motors.

The latter three firms all recently reported a surge in car deliveries for December.

China’s tech giants have all been investing in electrical automobiles or auto-related expertise. Alibaba is an investor in Zhiji, an electrical automobile enterprise created by Chinese language state-owned carmaker SAIC Motor.

In the meantime, ride-hailing agency Didi launched its personal electrical automobile with automaker BYD, which is backed by billionaire Warren Buffett.

Elsewhere, Hyundai Motor mentioned it was in early-stage discussions over a tie-up with Apple to make a automotive.