Electric-vehicle investors are about to get used to hearing about competition from companies other than traditional auto manufacturers. On Sunday, the Chinese Internet search company
Announced that it is working closely with the Chinese auto maker
To build a smart EV.
This news is not a shock to EV and auto investors. Baidu (ticker: BIDU) has been rumored to be in cars for some time. It is now official. More reports are circulating
(AAPL) is building a smart EV. Apple has twice declined to comment on its car plans.
Baidu will provide technology such as software and self-driving hardware for the smart car and Geely (175.Hong Kong) will make the car. “At Baidu, we have long believed in the future of intelligent driving and have invested heavily over the past decade [artificial intelligence] In the company’s news release, Baidu CEO Robin Li said that to create a portfolio of world-class self-driving services. “By combining smart transport, connected vehicles and Baidu’s expertise with autonomous driving with Jelly’s expertise as a leading automobile and EV manufacturer, the new partnership will pave the way for future passenger vehicles.”
Investors may see more participation in the upcoming year, like the Baidu-Geely tie. Google parents
(GOOGL) has its own self-driving technology company Waymo. This can advance an equal partnership. And Apple speculation will no longer die that Baidu EV is in the game.
One reason that tech companies are jumping into the car industry is to monetize their investment in self-driving technology. But another reason is the spread of Chinese EV incentives. City analyst Alicia Yap wrote on Monday that strong government support for EVs is helping drive interest and investment. She said that Baidu would likely be the majority owner of a Smart-EV venture set up with Geely. City Rates buys Baidu’s shares and targets a price of $ 183 for the stock.
(TSLA) has the highest stock-market valuation of any global EV or auto company. It has its own driving software, and is planned to make money with it in Robotaxis and by selling software upgrades to its existing car customers. News of more competition may dent their shares on Monday morning. Tesla stock is down about 2.3% in premarket trading.
Dow Jones Industrial Average
Futures are down 1% and 0.9% respectively.
Baidu stock is responding, but some news was already in stock. Baidu’s shares rose more than 15% on Friday and pre-market rose 3.6% on Monday’s market. The stock is around $ 250 per share, well above Citi’s target price.
The average analyst target price for Baidu stock is about $ 190, even buying 75% of the analyst stock, above the Dow’s average buy-rating ratio of 57%. But Baidu stock has risen nearly 90% in the last three months, making it difficult for analysts to sustain.
Write Al root at [email protected]