Baidu is partnering with Geely to make smart electric cars, the tech group’s latest effort to diversify away from a stagnating core business and a milestone for the carmaker’s efforts to sell its vehicle technology to third parties.

China’s largest search engine provider said on Monday that it would set up a subsidiary to make battery powered cars. The vehicles will be sold under a new brand, and loaded with Baidu’s autonomous driving, voice assistance and mapping technology.

Geely, China’s largest private automaker by sales, will invest in the venture and provide its newly launched system for building electric vehicles, making Baidu the first confirmed customer for the platform. The companies did not disclose any financial details.

As its core search business has languished, Baidu has followed rivals into crowded new businesses including short video, live streaming, gaming and food delivery, but has struggled to gain traction. Its shares have risen about 46 per cent since news reports in mid-December suggested it planned to make its own EVs.

Geely’s launch in September of its global system for building battery powered cars made the carmaker one of a handful of global brands selling third parties the expensive technology that would underpin a shift from fuel-burning to electric vehicles.

Yale Zhang, founder of consultancy Automotive Foresight in Shanghai, said the tie-up was a win for both Baidu and Geely: “One is an internet company, the other is a carmaker; they complement each other”.

Geely, which has ambitions to become China’s first truly global automaker, has done a string of high-profile international deals in recent years. Since acquiring Sweden’s Volvo in 2010, it has become the controlling shareholder of brands Proton and Lotus and has taken a 9.69 per cent stake in Mercedes-Benz parent Daimler.

Investor interest in China’s EV market, the world’s largest, has soared in recent months, rebounding after a year-long downturn and fuelled by the runaway success of industry leader Tesla.

Carmakers and tech groups have been pouring billions into developing self-driving cars. With the venture, Baidu is doubling down on its Apollo platform for AI and autonomous driving, open-source software similar to Android’s approach to building operating systems for smartphones.

Robin Li, Baidu chief executive, said the company had “invested heavily” in developing self-driving technologies. “We are seeing EV consumers demanding next generation vehicles to be more intelligent,” he said.

Baidu’s initiative has amassed one of the largest stores of road-testing data globally, although it remains behind Waymo, a sister company of Google and the industry leader. It has also signed up a number of global car brands as partners.

Yet industry hopes of cities soon filled with cars largely driving themselves have faded in recent years. Timelines for rollout have been repeatedly extended as crossing technical, testing and legal hurdles have proved, in the words of Waymo chief executive John Krafcik, an “extraordinary grind.”