Baidu'S "New Car Making Species" Supported By Capital Market

After brewing for nearly a month, baidu finally landed its boots.

On January 11, baidu announced that it had officially established a smart car company to enter the automotive industry as a vehicle manufacturer. The newly established Baidu automobile company will face the passenger car market and focus on the whole industrial chain of intelligent vehicle design and development, production and manufacturing, sales and service. After the announcement, baidu shares rose more than 4%.

It should be noted that Geely Holding Group will contribute to become the strategic partner of the new company. In the future, the two sides will cooperate closely in the field of intelligent automobile manufacturing based on the vast sea intelligent evolution experience architecture newly developed by Geely.

Baidu didn't give any further information on the specific investment ratio of both sides, only disclosed to the reporter of 21st century economic report that it had "absolute control right" in the new company. At the same time, the new company will operate independently from the parent company system, which means that it will not rule out independent financing in the future.

"China has become the largest electric vehicle market in the world, and the requirements of electric vehicle consumers for the intelligence of the next generation of vehicles will be improved. Under the electric vehicle production plan, we believe that there will be stronger synergy between Baidu and Geely. " Guotai Junan Securities research team said in this regard, due to the positive views on the future development of intelligent electric vehicles, it will raise the profit forecast and target price of Baidu company.

Baidu Geely strong synergy effect

As early as December last year, baidu car building news has begun to ferment.

On December 15, 2020, it was reported that Baidu was considering the production of its own electric vehicles, or would form a joint venture company with a majority stake. It was reported that Baidu had conducted preliminary negotiations with automobile manufacturers including Zhejiang Geely, Guangzhou Automobile Group and FAW on possible joint venture projects, but no agreement was reached.

At that time, some people in the industry judged to the reporter of the 21st century economic report that Baidu's focus would stay at the software level of new cars, "the possibility of technology becoming a shareholder is relatively large."

However, judging from the car making news on the 11th, baidu is not just a "technology investment", but a real investment in real money and occupies a dominant position. According to reports, different from the way other Internet giants cooperate with car companies, Baidu will have majority equity and absolute voting rights in the new company.

This not only reflects Baidu's greatest confidence and determination to invest in car making, but also reflects Baidu's willingness to participate in car building more deeply. In fact, there have been cooperation combinations between Huawei and Chang'an, SAIC and Ali, but in these cooperation, technology enterprises have not become the leading Party.

For example, in the automobile projects jointly built by SAIC Group, Pudong New Area and Alibaba group, SAIC's equity accounts for 54%, Pudong investment accounts for 18%, Ali accounts for 18%, and others account for 10%. Huawei, Chang'an and Ningde times did not disclose the shareholding proportion of the three parties in the new smart car brand. However, combined with Huawei's statement that "no car building" has been explicitly decided in 2020, it is very difficult for Huawei to become the controlling party in the new automobile brands.

This means that in the smart car project, the vehicle manufacturers that directly face consumers and have a larger share of equity have more say, while technology enterprises tend to stay in the role of technology suppliers. In the events under the double-click button of Baidu and Geely, at least two levels of signals have been revealed:

On the one hand, baidu announced its determination and confidence in making cars through practical actions. On the other hand, baidu also found Geely holdings as a strategic partner. According to the data, Geely Holding Group is a global and open enterprise with 35 years of entrepreneurship. Geely Automobile is China's top independent brand automobile enterprise. It has been the champion of Chinese brand passenger cars for four consecutive years. By the end of 2020, the global auto sales volume has exceeded 10 million.

Previously, Baidu and Geely holdings have established a deep cooperative relationship in the field of automobile and travel. At the AI developers' conference in July 2019, Baidu and Geely announced that they would launch comprehensive strategic cooperation on the application of AI technologies such as intelligent Internet connection, intelligent driving, smart home and e-commerce in automobile and travel fields.

It should be noted that although the strategic partner of Baidu intelligent automobile company is Geely Automobile, baidu told the 21st century economic reporter that it would not rule out cooperation opportunities with other car companies. This also means that Baidu and Geely's cooperation is likely to be just two strong joint "play a sample", after the future model runs through, "team" may be more and more rich.

"Intelligent car is the development trend of the automobile industry. Baidu takes the lead in layout and has a strategic vision. Geely has been deeply engaged in the automotive field for many years and has its own core technology," an investor commented to the 21st century economic report. "Baidu's advantages in the field of intelligent driving are superimposed on the technologies of Geely's traditional automobile enterprises, and the two are expected to achieve the effect of strong alliance."

Support of capital market

Although everything has not been settled before today, the capital market has taken the lead.

Baidu's shares rose 13.83% to $185.5 on the morning of December 16, just after the news of car building. Since then, its share price has gone up all the way. After the news of cooperation with Geely on January 8, Baidu's share price soared 15.57% to $240.25, a new high since August 2018, and its market value also soared to $81.94 billion.

Not only is the stock price and market value rising in the rumors of car making, but also the institutions have begun to be optimistic about Baidu. On December 11, the ark fund of Katherine wood, the female version of Warren Buffett, began to build a position in Baidu, and increased its position to 500000 shares for two consecutive days. Subsequently, in several rumors about Baidu's car making, ark fund increased its position by a large amount. To December 30, ark fund again sold us $40.53 million and increased the position of Baidu 184600 shares.

In fact, in the context of the sharp rise in smart electric vehicles in 2020, research institutions including UBS, Goldman Sachs, and Barclays have revised Baidu's valuation model. According to statistics, since the middle of November 2020, the number of investment banks that separately give valuations to Baidu Apollo has increased from 1 to 11.

In its latest research report, UBS split Baidu's businesses into three cards for revaluation. Among them, UBS has given a valuation of $10 billion for Apollo, the leading industry's leading business. The U.S. investment bank loop capital gave Baidu Apollo a valuation of up to $15 billion, marking the capital market's interest in Baidu's exploration of autonomous driving.

This time, Baidu's newly established intelligent car company does not affect the existence of Baidu's intelligent driving business group, but jointly constitutes the strategic layout of Baidu in terms of transportation. Both sides have a deep cooperation relationship. Baidu said that in the future, it will fully empower the automobile company with core technologies such as artificial intelligence, Apollo automatic driving, small car carrying and Baidu map.

According to the data, baidu began to deploy automatic driving in 2013, and launched Apollo, the world's first open platform for automatic driving, in 2017. At present, baidu Apollo has formed three open platforms of automatic driving, intelligent transportation and intelligent vehicle Union, with 210 global ecological partners.

"The changes in the form of automobile products can strengthen the scientific and technological attributes, provide more room for technology companies, and increase the imaginable profit margin," an automotive industry observer told the 21st century economic report. "Baidu has entered the vehicle industry, and can show its technical strength in automatic driving, Internet of vehicles, artificial intelligence, etc., in the direction and strength of technology Try and set an example. "

New species of car making

Capital's pursuit of Baidu's car making is not unexpected.

In 2020, both Tesla and the new automobile manufacturing forces represented by Weilai, Xiaopeng and ideal have been recognized by the capital market. Within a short week of the beginning of 2021, Tesla continued its upward trend and closed at $880.02 on January 8. After 11 consecutive days of soaring, its market value has reached $834.1 billion. Last week, Weilai, idealized and Xiaopeng motor also increased by 20.89%, 18.97% and 6.12% respectively.

It should be noted that, in addition to Tesla and the new forces of car building, Apple has recently begun to get involved in this field.

In late December 2020, it was reported that Apple recently asked some auto parts manufacturers to stock up and will launch a new smart car in 2024. Apple's share price also rose after the news of car building. As of December 31, Apple shares closed at $132.69, up 5.96% from the opening price of $125.23 on December 21.

On January 11, sources further revealed that Hyundai and apple plan to sign a cooperation agreement on electric autonomous vehicles in March this year, and it is expected to start production in the United States as early as 2024, and the test version may be released in 2022.

Why is the "car making" once talked about in the industry turning pale, but now technology companies are flocking to it? This is related to the new wave of smart cars.

In the era of automobile intelligence, on the one hand, the threshold of car building is significantly reduced, which is the reason why new forces such as Weilai, ideality and Tesla stand out. On the other hand, the importance of chips and software is greatly enhanced. Therefore, Baidu, as the representative of enterprises with software technology ability, will make cars, which has become the most optimistic and interesting story in the capital market.

However, compared with the last batch of new forces such as Tesla, Weilai and ideality, the difference of Baidu's car making is reflected in its software strength and intelligent technology ability, which also confirms the trend of the current automobile industry.

Some people in the industry pointed out that the last batch of new forces of car building have laid a good hardware foundation for intelligent electric vehicles, but how to internalize the data generated on hardware into the automatic driving ability of cars is the core competitiveness of Baidu. To a certain extent, different from the new forces of car making, baidu car making is a "new species of car making".

"For example, the industry claims that Tesla has several billion kilometers of test data, but this has not completely transformed into its automatic driving ability," the person said. "Baidu's ability to accumulate for many years is an overall data pipeline, and this" alchemy "ability is very important."

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