Crowded car-making track Jidu "replenishment" 400 million US dollars to raise and compete for mass production

Baidu, which has been building cars for a year, announced new progress in car financing.

On January 26, Baidu's smart car brand Jidu announced that it has completed nearly $400 million in Series A financing, which was jointly increased by Baidu and Geely. Baidu later confirmed the news to a reporter from The China Times.

The progress of Jidu is not only related to the valuation given to Baidu by the capital market, whether it can break the inherent impression of "search engine", but also related to the success of Baidu's own business transformation. On January 26, as of the china times reporter's press release, Baidu Group-SW (9888.HK) rose 2.06% at hk$148.7 in Hong Kong stocks.

Mass production in 2023

10 months after its establishment, Jidu received new financing.

According to the "China Times" reporter, in January 2021, Baidu announced that it would build a car and begin to form a smart car company. In March of that year, Jidu was founded and announced that it had received more than $300 million in start-up capital.

On January 26, a reporter from China Times inspected in Tianyan that the registered capital of Jidu Automobile was 2 billion yuan, of which Baidu indirectly held 55% of the shares, and the other 45% of the shares, Geely Holdings and Geely Technology Group held a shareholding ratio of 9:1. As for the reporter's question about whether the shareholding ratio of Baidu and Geely has changed after the A round of financing, Baidu has not yet responded.

Jidu also announced its own car-making progress: at present, Jidu's self-developed electronic and electrical architecture JET1.0, as well as SOA, automatic driving system, core computing power platform, and related sensors are further iterating towards mass production. In addition, the interior and exterior trim of Jidu's first automotive robot mass production vehicle, as well as the design of all parts, have gradually entered the stage of mass production mold development.

In fact, Baidu Chairman and CEO Robin Li mentioned at the AI Developer Conference at the end of December last year that in the 207 days after its establishment, Jidu has entered the intelligent driving and intelligent cockpit development stage of simu car (software integration simulation model car). He revealed at the time that Jidu's first concept car will be unveiled at the Beijing Auto Show in April this year, and the first automotive robot will be delivered in mass production in 2023.

In April last year, Xia Yiping, CEO of Jidu Automobile, also said that after the mass production of the first car in Jidu, it is planned to launch a car in 1 to 1 and a half years, and the initial budget will invest about 50 billion yuan in the next five years.

It should be mentioned that in addition to building his own car, Robin Li also proposed two other business models of Baidu in the field of automatic driving in the letter after the release of the first quarter of last year, that is, to provide Apollo autonomous driving technology solutions for host manufacturers and share unmanned vehicles.

Regarding the goals of these two businesses, he has said that in the next 3-5 years, the front-loading mass production capacity of Apollo systems is expected to reach 1 million units. In addition, Baidu's self-driving travel service platform "Radish Run" will expand its business to 65 cities by 2025 and 100 cities by 2030.

Behind the car

The progress of Baidu's car manufacturing affects the nerves of the capital market.

Just before and after Baidu announced the next car, Baidu rose all the way after the US stock market rushed to the $200 mark since the closing price of late 2020, until it reached an all-time high of $354.82 in the intraday on February 22 last year, up more than 60%. Baidu also took advantage of the trend to land on Hong Kong stocks in March last year and reached a 52-week high of HK$256.6 on the opening day of March 23.

But with internal and external factors intertwined, this peak did not last long. Baidu's U.S. stocks closed below $200 in early May, and it also posted a 52-week low of $132.14 in intraday in early December. Roughly calculated by the closing price of U.S. stocks at $150.97 on January 25, this figure has shrunk by 57% from its all-time high. In Hong Kong stocks, based on the closing price of HK$145.7 on January 25, Baidu has shrunk by about 40% from the highest point of its stock price.

In terms of horizontal comparison, Baidu also needs to boost the valuation of the capital market. At present, Baidu's price-to-earnings ratio (TTM) in Hong Kong stocks is only 7.91 times. The same in Hong Kong stocks, the same indicator, Alibaba is 16.5 times, Tencent is 19.41 times, jd.com is 27.55 times.

Not only the capital market, Baidu car manufacturing is also related to its own transformation.

Baidu has been blamed for the bidding ranking of medical ads, and behind this. In the first quarter of 2018, Baidu's online marketing business revenue accounted for 82% of its total revenue.

However, in the three quarterly reports released in November last year, Baidu's online marketing revenue of 19.5 billion yuan in the current period still accounted for more than 60%. At the same time, the year-on-year growth rate of this business in the current period was only 6%, compared with 18% in the previous quarter. In fact, Baidu's entire market also had a 13% year-on-year increase in the third quarter of last year. Robin Li also expected in a conference call after the third quarter of last year that Baidu's advertising business may remain weak in the next few quarters due to factors such as the epidemic and regulation.

But on the other hand, as the earliest company in China to invest in the field of automatic driving, Baidu's revenue expectations for autonomous driving-related businesses are ranked three years later. Robin Li said on a conference call after Baidu's second-quarter earnings report in August last year that the total cost of Robotaxi is expected to be lower than that of online ride-hailing by 2025 and achieve large-scale growth. He expects that in 2025, Baidu may also list Robotaxi as a separate revenue line.

Speaking of car building, the name of the car robot shows Baidu's expectations for it. However, some insiders in the "China Times" reporter believed that with the decline in the price of key components such as lidar, the cost of autonomous driving bicycles has declined, but the cost has always been one of the important factors hindering the popularity of automatic driving. In addition, he also believes that as technology companies continue to make cars, Baidu not only needs to compete with the "bicycle intelligence" technology route represented by Tesla, but also compete with Internet companies such as Alibaba in car companies and ecology.

According to the "China Times" reporter, Huawei's cooperation with Xiaokang has been unveiled in December last year, and Xiaomi Automobile is expected to be mass-produced in the first half of 2024. In addition, it has been reported recently that Luoke Automobile, the car-making project of Chang Jing, founder and CEO of Stone Technology, has completed a $100 million financing led by Tencent at the end of 2021.

Baidu is facing an increasingly crowded car-making track.

Responsible Editor: Huang Xingli Editor-in-Chief: Han Feng