Baidu has a Google-like grip on China’s internet industry, bringing in billions each year through search advertising, cloud computing, and other online services. But its ambitions extend even further than Alphabet’s—and include shaking up the car industry.

Today in Beijing, Jidu, an automotive company recently created by Baidu and the Chinese automaker Geely, unveiled a prototype of its first vehicle, a futuristic-looking, largely autonomous hatchback called Robo-1. The company says it will cost at least the equivalent of $30,000, and is expected to go on sale next year.

The Robo-1 is sleek and angular, with doors that swing upwards at the front and open backwards at the rear. A spare interior includes racing-style seats, a yoke steering wheel, and a widescreen display that covers the entire dash. The vehicle is festooned with sensors, including a lidar, for mapping the road ahead in 3D, that pops up from the hood when activated. Jidu says the final model of the Robo-1 will be 90 percent the same as the one shown off in Beijing, but it does not specify what elements could change.

Beyond the brushed interior, Baidu is essentially betting that the growing importance of software in vehicles—especially artificial intelligence, in which Baidu has invested heavily over the past decade—gives it an opportunity to stake a claim in a fiercely competitive, fast-changing industry.

Baidu hopes to ride an industry-wide shift to electric batteries and electric powertrains. This January Jidu announced that it had received $400 million in series A funding from Baidu and Geely, on top of a previous investment of $300 million. Geely has a successful track record of manufacturing electric cars with Polestar, a subsidiary of Volvo, as well as several Chinese brands.

In an exclusive interview with WIRED ahead of the launch, Jidu CEO Xia Yiping, who goes by Joe Xia, explained the rationale behind the leap. “For quite a long time, the computing power of the car is way smaller than our smartphone, but things are changing,” Xia said over Zoom from the company’s headquarters in the Chinese city of Shanghai.

A veteran of the car industry, Xia previously worked on connected car technology at Fiat Chrysler and Ford before cofounding Mobike, a Chinese bike-sharing company acquired by the food-delivery firm Meituan in 2018. He remembers teaching himself to drive as a graduate student in the UK by watching YouTube videos and zooming around parking lots—a far cry from building cars that learn how to drive for themselves.

The autonomous driving technology for Jidu’s car will be a custom version of Apollo, an open platform developed by Baidu and several partners that dozens of carmakers use in China. Jidu says its car will be capable of driving autonomously on most roads under a driver’s supervision. Baidu says it has accumulated over 16.7 million miles of supervised autonomous driving through Apollo as of April. Xia compares the computing power that Baidu puts behind training the algorithms for autonomous driving to the custom supercomputer that Tesla developed to hone its software, Autopilot.

Xia says that Jidu decided it had to design and build cars, rather than just sell the software to other carmakers, because of the importance of integrating software and hardware, which has been proven out for years in the smartphone space. This includes designing a powerful system-on-a-chip to power the vehicle’s software. Jidu will also make extensive use of voice control, another AI technology that Baidu has spent years developing and perfecting in products like smart speakers. And Jidu will seek to constantly improve the car’s features with regular software updates via a mobile connection. “The technology industry can get into the car industry and really drive the evolution of the car over the next five to 10 years,” Xia says.

It’s fair to say that the auto industry is going through an upgrade. The success of Tesla has coincided with an increasing emphasis on computer power, software, and connectivity along with electric power. Consumer tech brands have also demonstrated a growing appetite to carve out auto niches in recent years. The chipmaker Nvidia now sells chips for increasingly sophisticated infotainment and instrument displays as well as autonomous systems. Google created Waymo, a company focused on making autonomous driving software for automakers. And Apple is widely rumored to be exploring the possibility of making its own car. But Baidu would be the first big tech firm to actually build and sell vehicles, albeit through a spin-off company.

The collaboration with Geely could give Jidu a big boost when it comes to the notoriously tricky business of making cars at high volume and with high reliability, says Tu Le, managing director of Sino Auto Insights, an analyst firm focused on China’s automotive sector. He adds that China’s auto industry is electrifying at a faster pace than either Europe or the US because of government policies, a less entrenched gasoline-powered industry, and because such a large population allows new technologies to catch on more quickly.

The Robo-1 shows how big, innovative, and fast-moving China’s auto industry is, says Mingyu Guan, a partner at consulting firm McKinsey & Company, who focuses on the sector. Guan says that most of China’s big internet companies are developing automotive technology, in one way or another, and consumers expect an app-like experience in their vehicles. “China is like a leading beacon for the industry,” Guan says.

Baidu’s leap into automaking with Jidu is also a sign of China’s tech industry evolution. Over the past couple of years, large internet, social media, and popular app companies have faced increased regulatory scrutiny and pressure, with strict new rules around data privacy and algorithmic transparency, for instance.

The Chinese government also has signaled an intent to more tightly regulate the internet while also encouraging the development of technologies with long-term economic importance. Baidu and other firms are apparently keen to reinvent themselves by focusing on “deep tech” viewed as more valuable by the state, including technologies for electric vehicles and autonomous driving. Baidu’s most recent quarterly results, issued in May, also show that revenue from Baidu AI Cloud increased 45 percent year over year in the first quarter of 2022, while online marketing revenue shrank by 4 percent. Net losses for the period were $133 million.

Baidu has made significant investments, and received government encouragement, for autonomous driving. In November 2017, the Chinese government named Baidu one of a handful of AI “national champions” and gave the company responsibility for building an autonomous driving platform that could be used across the industry. The government’s backing also gave Baidu a leg up in working with existing automotive companies. In March the company published over 3,700 patent applications related to the technology in China. And this April, Apollo Go, Baidu’s autonomous taxi service, which operates in 10 cities in China already, received the country’s first permit for testing autonomous vehicles without a driver behind the wheel in Beijing.

Apollo also integrates with a smart-city platform that Baidu sells, and which has been adopted by 41 cities in China. This platform promises to help local authorities predict and manage congestion, road safety, and pollution using AI. Baidu CEO Robin Li touted the potential for autonomous driving to reduce road accidents, congestion, and carbon emissions in China at Baidu’s annual developer conference held in December 2021.

Jidu will no doubt be encouraged by the wider progress that China’s auto industry has made, driven in large part by the rise of electric vehicles. Chinese sales of electric vehicles jumped 169 percent in 2021 compared to a year earlier, according to data from the China Passenger Car Association, an industry organization. For 2021, electric cars accounted for 14.8 percent of Chinese car sales, compared to 4.1 percent in the US. Chinese car firms are also now exporting a growing number of EVs to Europe.

The Chinese government has provided cheap capital and other incentives to battery manufacturers and makers of electric vehicles. The government has also offered generous subsidies for consumers buying electric models, which are due to expire in 2022, although there have reportedly been discussions about extending them. Beijing has also set manufacturers the goal of having 40 percent of all car sales be EVs by 2030.

Besides entering an increasingly competitive marketplace, Le of Sino Auto Insights says companies like Baidu will have to convince car buyers that they can master manufacturing—and make vehicles that are safe and reliable.“There's this emotional connection with buying an automobile,” he says. “It'll be more challenging for these tech companies to convince consumers to trust them with their child's life.”