Baidu shares rise amid plans to add chatbot to its first EV

More and more companies are looking to capitalise on the market opportunity presented by ChatGPT, including Baidu and General Motors, who are hoping to add chatbot features to future electric vehicles (EVs). However, Rolls-Royce has closed its artificial intelligence (AI) venture after talks with buyers collapsed.

- Baidu’s EV venture with Geely, Jidu Auto, is to integrate ChatGPT technology into Robo-01.

- General Motors is also looking at chatbots to enhance the driving experience.

- Both stocks are held by the Global X Autonomous & Electric Vehicles ETF.

Jidu Auto, the EV arm of Baidu [BIDU], is to incorporate conversational AI technology into its cars. By contrast, Rolls-Royce [RR.L] is backing away from AI. 

Speaking at a corporate event in Beijing last month, Jidu Auto CEO Xia Yiping told reporters that the company was on target to deliver its first model, the Robo-01 sports SUV, in the third quarter (Q3) this year. Its price will be “very competitive”, said Xia.

In other automotive news, General Motors [GM] is reportedly developing an AI personal assistant that will run on Microsoft’s [MSFT] Azure cloud service, which has access to OpenAI’s ChatGPT large language model, as reported by Semafor on 10 March. 

The Baidu share price rose 6.4% last week; the stock is up 12.1% in the past month and 36.6% year-to-date. The GM share price is down 14% in the past month and flat year-to-date. 

Elsewhere, Rolls-Royce has bucked the trend of companies embracing AI by shuttering its AI venture, the R2 Factory, on 17 March. The Rolls-Royce share price is up 54% year-to-date, but down 1% in the past month.

Baidu and Geely to embed Ernie in Robo-01

Jidu Auto is a joint venture between Baidu and Volvo-owner Geely, who have stakes of 55% and 45% respectively. Their plans are to use Baidu’s chatbot Ernie (which stands for Enhanced Representation through Knowledge Integration) to enhance the EV experience.

Ernie’s launch earlier in March initially left investors disappointed, when its demo failed to impress. However, investor sentiment quickly rebounded after analysts at the Bank of America gave the chatbot their approval. 

“We tried testing Ernie bot for a few tasks like advice, analysis, paper writing, picture generation and we are satisfied with the results,” wrote analyst Miranda Zhuang alongside others in a note to clients seen by Bloomberg. 

Baidu CEO Robin Li said on the company’s Q4 2022 earnings call last month that “ChatGPT-types of features could potentially become a new traffic entry point for internet users and, therefore, expand the market size of search.”

While details as to how chatbot technology will be used are set to be clarified after the launch of the Robo-01, Xia told Yicai Global that the integration has potential to improve drivers’ interaction with their vehicles, and will enable an in-car voice that more accurately resembles a human one. 

GM is developing a new voice assistant 

GM’s vice president of software defined vehicle and operating system, Scott Miller, confirmed to Semafor that the automaker wants to introduce ChatGPT-style features for future models, including EVs.

This system will be more sophisticated than the current voice command functions, which allow drivers hands-free control of features such as temperature, Miller said. For example, if a light flashes on the dashboard, drivers could ask the chatbot what it means. Alternatively, they could request instructions on how to fix a flat tyre, or ask whether they have enough battery left to make it to their destination. 

Some may voice concerns over whether in-car chatbots could be distracting, and hence dangerous, but the technology could actually end up reducing the number of accidents on the road. 

Drivers who use technology—specifically, who interact manually with smartphones—increase the risk of accidents by 50%, research by Allianz published earlier this month has concluded.

Funds in focus: the Global X Autonomous & Electric Vehicles ETF 

Both Baidu and GM are held by the Global X Autonomous & Electric Vehicles ETF [DRIV], with weightings of 1.66% and 1.53% respectively as of 23 March. The fund is down 3.1% in the past month, though up 13.7% year-to-date. 

Baidu has been allocated 1.11% of the Global X Artificial Intelligence & Technology ETF [AIQ]. The fund is up 3.9% in the past month and 16.6% year-to-date. 

As of 24 March, the stock also makes up 0.43% of the First Trust Nasdaq Artificial Intelligence and Robotics ETF [ROBT]. The fund is down 0.8% in the past month and up 13.4% year-to-date. 

For investors looking for ways to play the AI and chatbot theme, Roundhill has filed for the Generative AI & Technology ETF, which would trade under the ticker CHAT. There’s also the AI Powered Equity ETF [AIEQ], which uses AI to manage its portfolio. The fund is down 5.8% in the past month and flat year-to-date.

Disclaimer Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

Continue reading for FREE

Latest articles