Here’s How Baidu Can Benefit From Its Partnership with nVidia In Self-Driving Cars

by Trefis Team
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Recently, at the annual Baidu World Conference, nVidia and Baidu (NASDAQ:BIDU) announced a partnership to develop a comprehensive autonomous driving platform. The two companies will be combining their technical expertise, especially in the areas of artificial intelligence (AI) and deep learning, to build an end-to-end solution for self-driving cars. This partnership will allow Baidu to combine its cloud platform and mapping technology with nVidia’s self-driving vehicles platform. Baidu is already testing its prototype self–driving cars and plans to begin mass production of these vehicles in China in the next few years. Both companies also plan to make their autonomous driving platform open, allowing other automakers to use it. We believe this partnership gives Baidu the dual advantage of using this technology for its own autonomous vehicles platform thus developing an early edge and tapping into the larger high potential autonomous vehicle market by becoming a technology vendor for other players.

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Unique Technological Advantage Can Give Baidu A Dominant Edge In China

In the past few years, Baidu has been focussed on its autonomous vehicles initiative and plans to introduce a commercially viable model in the market by 2018. China is ripe for the advent of self-driving cars. In a 2015 World Economic Forum Survey, 75% of Chinese said that they would like to ride in a self-driving car compared to 50% Americans. According to the Boston Consulting Group, in the next 20 years, China is likely to become the largest market for autonomous features, accounting for at least a quarter of the global demand. While several automakers such as Toyota, SAIC in China and Ford Motors are working towards launching their autonomous vehicles by 2020, Baidu is planning to use the platform developed in partnership with nVidia to roll out self-driving taxis in China. This platform, which combines NVidia’s architecture with Baidu’s cloud computing, mapping and artificial intelligence expertise, can provide the company with a competitive edge in the Chinese market, especially for mass scale production.

Open Platform Can Attract More Automakers

Both Baidu and nVidia are working to make their autonomous driving platform an open platform and let other automakers to use it for their own self-driving vehicles. This platform will be available for branded car OEM consumer vehicle offerings, as well as fleets of driverless commercial vehicles. We believe Baidu is well positioned to monetize this technology as it will extensively use Baidu’s mapping expertise and cloud services. The system will deliver 3D maps to a vehicle along with an AI capabilties that allow the car to navigate them. Recently nVidia unveiled an updated Drive PX architecture for self-driving cars with a new Tegra “Parker” processor, which will make cars smart enough to recognize and respond obstacles such as bikers and pedestrians. More than 80 automakers, including Volvo, are using the Drive PX2 system. The new platform being developed with Baidu will combine the expertise of both companies and should attract more automakers. This should give a boost to Baidu’s cloud computing business and better monetization opportunities for its mapping expertise.

We believe its partnership with nVidia gives Baidu a unique opportunity to provide technological expertise to the growing and high potential autonomous vehicles market. This will allow the company to tap into this market beyond China, although it might be challenging for Baidu to deliver its products outside of China. While automakers might prefer to develop their own technology for autonomous vehicles, we believe this platform presents strong growth potential for both companies and gives Baidu an advantage in the Chinese autonomous vehicles market.

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