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INDUSTRY ANALYSIS: Why Baidu's Plans to Build Electric Vehicles with Automaker Geely is the Right Choice

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【Summary】As the biggest internet technology company in China, Baidu Inc. has been actively working on autonomous driving technology with over a 100 industry partners via its open Apollo platform. But as modern vehicles are becoming more like computers on wheels, the next logical step is to integrate all of Baidu's Apollo autonomous driving technology into a custom-built electric vehicle with the help of a major Chinese automaker. Now Baidu has officially confirmed those plans.

Eric Walz    Jan 22, 2021 3:30 PM PT
INDUSTRY ANALYSIS: Why Baidu's Plans to Build Electric Vehicles with Automaker Geely is the Right Choice
Baidu's self-driving vehicles in China.

As the biggest internet technology company in China, Baidu Inc. is often referred to as the "Google of China". In addition to its core internet related businesses, Baidu has been working on autonomous driving technology with over a 100 industry partners via its open Apollo platform. Among the global automakers contributing to Apollo are Geely, BMW, Ford Motor Co, Toyota, Volkswagen and Honda. 

Baidu launched its Apollo autonomous driving platform in 2017. It's designed to be a comprehensive, secure, all-in-one autonomous driving ecosystem designed to support all of the major functions of a self-driving car. Over the past several years, the collective contributions from Baidu's Apollo partners have helped to accelerate the development of autonomous driving and related technology across China.

Since its launch, the open Apollo platform has come to be regarded as the "Android of the Automotive Industry" and has grown to become the largest open-source autonomous driving platform in the world, according to Baidu. 

This collaborative environment of Apollo is designed to foster innovation and push the entire auto industry forward. Using the vast resources of the open Apollo platform combined with the necessary hardware to support autonomous driving, a developer has access to all of the source code needed to build and test a fully-functional self-driving vehicle. 

As modern vehicles are becoming more like computers on wheels and come packed with electronics and computer-controlled electric powertrains replacing internal combustion engines, traditional vehicle manufacturing is changing. 

The next logical step is to integrate all of the advanced Apollo autonomous driving technology into a custom-built electric vehicle with the help of a major Chinese automaker. Now Baidu has officially confirmed those plans. 

Baidu's New Strategic Partnership with Geely to Build Electric Vehicles

Earlier this month, Baidu announced it entered into a strategic partnership with Chinese automaker Zhejiang Geely Holding Group ("Geely") to establish a new company to produce "intelligent" electric vehicles (EVs). 

Founded in 1997, Geely is one of China's biggest automakers and is the parent company of Swedish automaker Volvo Cars. The automaker also owns a stake in Mercedes Benz parent company Daimler.

As part of the partnership, Baidu will provide the intelligent technology that will power the passenger vehicles in the new venture, including autonomous driving, AI and connectivity. As one of China's best-selling automotive brands, Geely will contribute its expertise in vehicle design and manufacturing at scale.

Baidu's partnership with Geely represents the latest example of a tech company partnering with an established automaker to jumpstart the development of advanced automotive technology that is poised to transform the global auto industry.

The partnership with automaker Geely makes sense for Baidu, which as a tech company has no prior experience building passenger vehicles at scale. However, Baidu does have extensive experience in building the technology to support autonomous driving. The partnership will combine the core strengths of both companies.

With Tesla rising to become the world's most valuable automaker, building fully-electric cars has proved to be a viable business model and its just a matter of time before EV startups begin building vehicles alongside the world's legacy automakers. 

Two examples of this are EV startups NIO Inc. and Xpeng, which are both emerging as strong competitors to Tesla in China. Both companies are now public after launching U.S. IPOs. Xpeng and NIO shares trade on the New York Stock Exchange (NYSE).

Working with an established automaker will ensure that all of the necessary hardware and software for autonomous driving can be seamlessly integrated into the vehicle during assembly.

This approach better guarantees consistency and safety, while reducing costs. It also ensures that the production missteps that faced Tesla in the U.S. with the launch of the Model X SUV and Model 3 sedan can be avoided.

Baidu even built a powerful in-vehicle computing platform from the ground up that's capable of processing the massive amount of data generated for autonomous driving. 

In August 2020, Baidu announced a powerful new processor called the "Apollo Computing Unit" (APU), which is the world's first production-ready compute platform made specifically for autonomous vehicles.

All of the ACU's components meet automotive-grade production requirements. Baidu said the production capacity of the ACU is 200,000 units a year, which is plenty to match Geely's manufacturing capacity. 

So the next step for Baidu is to integrate the Apollo technology and the ACU in vehicles during the assembly phase. Producing autonomous vehicles at scale will also help to commercialize the technology more rapidly in China.

"In the course of its development, Apollo has begun to gradually lean towards commercialization. In the past two years, it has become obvious that vehicle-to-everything technology, especially in China, has the greatest potential to create business opportunities, while also solving significant technical problems," said Zhenyu Li, Corporate Vice President of Baidu and General Manager of Intelligent Driving Group (IDG) at an Apollo press conference in June 2020. 

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Baidu's Apollo Platform Has Helped the Company Become a Global Leader in Autonomous Driving Technology

The comprehensive Apollo resources include a computer simulation engine, which provides developers a robust platform to test their autonomous driving algorithms before deploying their vehicles on public roads. 

The simulation engine offers embedded high-definition (HD) maps with centimeter level accuracy and is backed by vast amounts of real-world driving data collected by Baidu's fleet of mapping vehicles. 

The enormous amount of map data collected includes the location of traffic lights, road signs and lane markers so developers can fine tune their autonomous driving algorithms for eventual deployment on public roads in China. 

This vast trove of data is highly valuable for Baidu and can help the company to develop an entire mobility ecosystem centered around autonomous mobility, including the use of artificial intelligence, big data and 5G connectivity that supports it.

"The three core components of Apollo's fully automated driving technology are mass-produced vehicles, the 'experienced AI driver', and the 5G Remote Driving Service," said Li.

Now the company has all three.

Baidu's plans for Apollo also include the development of commercial robotaxis, autonomous buses and other hardware that will support level 3 and higher automated driving.

Baidu has already launched a commercial robotaxi service called "Apollo Go" and is picking up passengers in self-driving vehicles without safety drivers on board.

The Apollo Go robotaxis are equipped with a comprehensive suite of hardware and sensors, including lidar, GPS, surround-view cameras, ultrasound radar and millimeter wave radar. Baidu says the vehicles are capable of Level-4 autonomous driving, which requires no human oversight except in rare edge cases.

However, since the Apollo Go vehicles will eventually have no human drivers onboard, the vehicles are backed by Apollo's 5G Remote Driving Service, allowing a remote operator to safely take over control of the vehicle over a 5G cellular connection in the event the software encounters a situation it's not programmed to deal with.

The 5G Remote Driving Service acts as a backup until autonomous vehicles can be safety deployed at scale without human safety drivers.

"Baidu Apollo will continue pushing for the commercial application of autonomous driving. With our technology and platform advantages, we will contribute more to the development of autonomous driving and smart transportation in Beijing and support the city to become a world-leading AI innovation hub," said Li.

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The Rise of Green Energy and Electric Vehicles in China

China is the world's biggest auto market. Although passenger car sales fell by 6.8% in 2020 due to the global pandemic, automakers in China still sold 19.3 million vehicles last year, according to China's Passenger Car Association. The country is also emerging as one of the biggest adopters of EVs. 

As a result, China accounts for the largest share of global EV sales as it looks to reduce energy imports, clean up its air pollution, build up its domestic auto industry to attract manufacturing investment, according to BloombergNEF's Electric Vehicle Outlook

BloombergNEF predicts that EVs will account for 10% of all vehicles on the road by 2025. By 2040, that figure jumps to 58%. 

For Baidu, it presents a huge opportunity to extend its reach in the world's biggest auto market. Building EVs with Geely that will come packed with Baidu's advanced technology will help the company diversify its revenue streams in the future beyond its core internet business.

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Software-based Vehicles Will be the Norm in the Future

With more advanced electric vehicles appearing on the world's roads that are connected and capable of autonomous driving, future vehicles will likely be software-based, which as one of the world's leading technology companies gives Baidu another advantage.

In addition to Apollo, Baidu other groundbreaking work includes AI and deep-learning that will support the safe operation of autonomous vehicles.

Some of the world's biggest automakers have already started developing software-based vehicle architectures for their future production vehicles. 

In June 2020, Mercedes-Benz parent company Daimler announced that it's developing an entirely new software-based architecture that supports over-the-air updates for its next generation vehicle fleet using NVIDIA's AI-powered DRIVE platform

The advanced software-based vehicle architecture will be introduced beginning with 2024 model year vehicles, eventually rolling out to the entire Mercedes Benz fleet globally. 

Volkswagen AG is also ramping up its efforts to develop the software and operating system (OS) for its future vehicles. However, rather than relying on third parties to develop the majority of code that will underpin millions of future Volkswagen vehicles, the automaker is looking to develop a larger percentage of it in-house, just like Baidu is doing with its Apollo platform.

These new partnerships with the world's automakers are an indication that software-based vehicles will be the norm in the future and Baidu is well positioned to support these efforts in China.

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What does the electric vehicle partnership with Geely mean for Baidu?

For Baidu, partnering with a well-established automaker to build fully-electric and autonomous vehicles seems like a natural progression for the company. With the progress its already made with Apollo, bundling the technology into a production vehicle is the missing piece.

In addition, Baidu's years of research in autonomous driving and related technology ensure that any vehicle built in partnership with the company will be a high quality product. 

Baidu groundbreaking advances in AI will greatly improve road safety for all road users in the world's biggest auto market. But the EVs built with Geely will also be an environmentally friendly alternative to internal engine powered vehicles.

China's push to electrify its auto industry and reduce emissions could become a model for the rest of the world and Baidu is positioned to lead that effort.

"The transportation industry and automobile industry are undergoing a once-in-a-century transformation," said Zhenyu Li, during an Apollo ecosystem conference last December. "With its focus on 'intelligence', Apollo is helping automakers to build good cars and governments to build good roads through intelligent transformation."

"Apollo is committed to openness and hopes to work with partners to create a better future for autonomous driving," Li added.

That future starts with an Apollo-powered electric vehicle built from the ground up by Geely and Baidu.

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