Beijing-headquartered Baidu will be the majority shareholder while Chinese automaker Geely will take a minority stake, the person told CNBC.
Hong Kong-listed shares of Geely were up slightly by 0.45% on Monday, after soaring nearly 20% on Friday. Baidu’s U.S.-listed shares were up over 15% at the close of trade on Friday.
Geely will be responsible for the actual manufacturing of the vehicles. Baidu will focus on the software and technology in the car. The search giant has already been testing its driverless car software, named Apollo, in public robotaxi trials in Beijing.
Baidu also has its own map app and voice assistant technology called DuerOS, which can be equipped inside a vehicle.
“China has become the world’s largest market for EVs (electric vehicles), and we are seeing EV consumers demanding next generation vehicles to be more intelligent,” Robin Li, CEO of Baidu, said in a statement.
The electric car market continues to become more competitive with companies ramping up production and release of new vehicles.