China’s tech giant Baidu (BIDU) and battery maker CATL are joining forces to revolutionize the burgeoning driverless automobile sector in the country. The two companies announced the signing of a strategic agreement through their WeChat accounts today. The agreement focuses on two areas, namely, autonomous driving and digitalization. BIDU stock is trending up by 1.3% in pre-market trading on the news.
Baidu and CATL Combine Their Strengths
Baidu and CATL’s partnership seeks to accelerate the growth of the driverless automobile services market in China, while developing “competitive” autonomous vehicles and battery-swapping technology.
Baidu is a technology leader with exceptional AI (artificial intelligence) capabilities. Plus, Baidu’s Apollo Go unit is already one of the leading players in China’s autonomous taxi market. Baidu faces fierce competition from domestic rivals Pony.ai (PONY) and WeRide (WRD). Apollo Go has a fleet of about 400 fully autonomous robotaxis up and running in Wuhan. The partnership could also help bolster Baidu’s own autonomous taxi services in mainland China.
Meanwhile, CATL is one of the largest EV (electric vehicle) battery makers in the world. The company also has expertise in the EV charging infrastructure, and energy solutions related to autonomous vehicles.
Baidu’s AI capabilities, coupled with CATL’s battery manufacturing and charging operations, have the potential to revolutionize China’s self-driving market amid the heated competition. China’s auto giant BYD Co. Ltd. (BYDDF) also announced plans to launch an affordable driver-assistance technology for commercial vehicles recently. Research firm Daiwa’s analysts have projected China’s robotaxi-related auto manufacturing and auto components market to reach 160 billion yuan, close to $22 billion, by 2026.
Is Baidu a Good Stock to Buy?
Analysts remain divided on Baidu’s stock trajectory. On TipRanks, BIDU stock has a Moderate Buy consensus rating based on nine Buys and six Hold ratings. Also, the average Baidu price target of $111.16 implies 24.7% upside potential from current levels. In the past year, BIDU stock has lost 20.7%.
