October 16, 2018

October 16, 2018

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October 15, 2018

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Ford, Baidu LOI Further Evidences Continued International Automotive Collaboration

In June, Baidu, Inc., China’s largest search and internet-related service provider, and Ford Motor (China) Ltd. signed a Letter of Intent to expand their strategic partnership.

Aimed at “mobility ecosystem” development for the next generation of automobiles, the announcement highlights promising areas where the companies plan to collaborate alongside one another in China, as well as in the fast-growing, competitive, and global mobility technology space. The areas of cooperation announced by the two companies: in-vehicle infotainment development, transportation cloud computing, vehicle connectivity, artificial intelligence, and digital marketing are critical for both companies as they seek to keep up with rivals, both old and new.

For Baidu, the continued partnership supports their aggressive move into the automotive realm and ambitions to keep up with Western tech and mobility companies. Their Apollo self-driving car platform, which Ford joined last year as a founding member, is a technology both companies hope will become the “Android” platform for autonomous vehicles. The goal is to create an open source software platform that will allow any hardware maker to quickly deploy and customize an autonomous driving system.

With Baidu’s direct competition with companies like Alphabet’s Waymo, cooperating with Fiat Chrysler, and ridesharing service Uber, Ford’s decision to double down on the collaboration signals an important milestone for the venture. Additionally, while it seems unlikely that Baidu will get into the business of manufacturing vehicles itself, there is speculation that the company  might be trying to develop its own ride hailing service – similar to Lyft and Uber- tailored especially for Asian markets. Ford may logically be looking to win the fleet business from such an upstart service.

For Ford, the stakes are perhaps even higher.

Sales of Ford automobiles in China, the fastest-moving major auto market in the word, slid precipitously in the last year. The collaboration with Baidu will enable Ford to use Baidu’s industry-leading conversational AI platform, Duer-OS, to develop advanced in car systems specifically for the Chinese market. The two companies also announced plans to explore targeted digital marketing initiatives which may prove vital for Ford to maintain a firm footing in the Chinese market.

Ken Johnson contributed to this piece.

© 2018 Foley & Lardner LLP

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About this Author

Omar Lucia, Foley Lardner Law Firm, Business Law Attorney
Partner

Omar A. Lucia is a partner and business lawyer with Foley & Lardner LLP, practicing general corporate and business law, with a focus on mergers and acquisitions across numerous industries. He is a member of the firm’s Transactional & Securities, Private Equity & Venture Capital and International Practices.

Mr. Lucia regularly represents a broad range of clients on domestic and international mergers, acquisitions and divestitures, private equity transactions (including strategic transactions for portfolio companies), financing...

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