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China’s Baidu plans a spin-off of robot cars

LiveMint logoLiveMint 10-03-2017 David Ramli

Beijing/ Shanghai: Baidu Inc.’s billionaire founder Robin Li has shed more light on the Chinese search giant’s plans to sell robot cars around the world, revealing his intention to spin off its driver-less car division once it reaches maturity to attract funding and partners.

Baidu is among Chinese corporations that’ve joined a race with Alphabet Inc. and Uber Technologies Inc. to develop autonomous driving, aiming for mass car production by 2021. The company remains on track to hit that target despite some technology kinks that needed to be worked out, chief executive officer Robin Li said in an interview with Bloomberg Television on Friday.

China’s sixth-richest man is steering his company toward research in artificial intelligence (AI) and next-generation technologies.

He’s tasked former Microsoft Corp. executive Qi Lu to delve into new areas as its search and online ads business comes under pressure from rivals such as Alibaba Group Holding Ltd. and Sogou.

One promising field is autonomous cars, now consolidated into a separate unit helmed by Lu.

“When we think business is promising enough and it has reached a stage that running it independently or introducing more strategic investors would make sense, we will do that,” said Li, who’s attending an annual meeting of legislators in Beijing in his capacity as a member of an advisory body.

Like Google, Baidu believes its search and mapping data grants it advantages in AI that can be used to develop driver-less technology. It formed a self-driving car team in Silicon Valley in April that employs more than 100 researchers and engineers, partnered with chipmaker Nvidia Corp., and has been testing its autonomous vehicles in China and California.

Baidu has said it will get autonomous vehicles into service by 2018. The company is likely to partner with traditional automakers in future rather than go it alone, Li said.

The search giant hasn’t worked out a business plan for the technology because it’s first committed to actually getting robot cars on the road, he added.

“We will do whatever it takes to achieve that goal,” he said. “Revenue and profits go next. We’re not really after profits for this kind of thing.”

Baidu’s efforts dovetail with central policy directives. Home to the world’s biggest auto market, China has set a goal for 10% to 20% of vehicles to be highly autonomous by 2025, and for 10% of cars to be fully self-driving in 2030.

Didi Chuxing, the ride-sharing app that beat Uber in China, is working on its own product, as are several local automakers. It’s too early to tell which will ultimately succeed though Baidu’s partnership approach is sound, said Marie Sun, an analyst with Morningstar Investment Service.

“This type of technology needs cooperation between software and hardware from auto-manufacturers so it’s not just Baidu that can lead this,” she said.

If Baidu spins off the car unit, “in the longer term, Baidu should maintain a major shareholder position so they can lead the growth of the business.”

Baidu’s research team in Silicon Valley will be pivotal to Li’s goals. The entrepreneur said US President Donald Trump was perceived as “anti-immigrant” and hoped that would help Chinese firms attract global talent—a stance he’s expressed publicly several times.

Addressing concerns that Trump may start a tit-for-tat trade war between the world’s two largest economies, he said such conflict would be harmful for all parties.

Li’s already got enough to worry about back home. Baidu’s annual revenue climbed at its slowest ever pace in 2016, due partly to government regulations that restricted the ad market.

Attempts to expand into competitive new areas like food deliveries have burned cash while gaining limited traction. But the company says it’s finished adjusting its advertising base and 2017 should be a year of renewal.

The search provider has gone on an investment spree of late, buying Raven Tech, a company developing smart home digital assistants, and putting money into virtual reality company 8i in just the past month. Asked about future acquisitions, Li said he had no concrete targets but added its current pace of deals will continue.

In the long run, building a pool of customers remains vital as Baidu attempts to create world-leading artificial intelligence services.

AI systems learn faster when given more real-world material, such as photos and search terms submitted by users.

The company is banking on new AI-driven products beyond autonomous cars, such as voice-controlled smart speakers and personal assistants, to grow profits and revenue. “Size matters in AI,” he said.

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