Why Baidu and NVIDIA are Teaming Up on Self-Driving Cars

At a conference in Beijing last week,NVIDIA CEO Jen-Hsun Huang discussed NVIDIA's and Baidu's new deal to develop a technology platform for self-driving cars. Image source: NVIDIA.

Adding their names to a fast-growing list of research efforts, chipmaker NVIDIA(NASDAQ: NVDA) and Chinese internet giant Baidu (NASDAQ: BIDU) say that they have formed a partnership to develop a technology platform for self-driving cars.

A self-driving system that uses cloud-based 3D maps

Speaking at the annual Baidu World Conference in Beijing, NVIDIA CEO Jen-Hsun Huang announced that his company will work with Baidu to create what he described as the world's first "map-to-car platform" for self-driving cars.

The idea, as Huang explained it, is that the car's artificially intelligent systems will use its own sensors along with a constantly updated 3D map in the cloud to navigate.

Baidu and Nvidia have a long history of working together on artificial intelligence (AI) systems, and Huang said that a self-driving car was a natural next step for the pair. The project will combine Baidu's cloud platform and mapping expertise with the self-driving processor platform introduced by NVIDIA earlier this year.

"We're going to bring together the technical capabilities, and the expertise in AI, and the scale of two world-class AI companies to build the self-driving car architecture from end to end, from top to bottom, from the cloud to the car," Huangsaid. "No company in the world today has demonstrated the ability to integrate this system and deploy it at scale for millions of cars to drive by themselves."

What it means: This is probably (mostly) about the Chinese market

This is the latest in a string of self-driving research efforts announced by high-profile companies in and out of the traditional auto industry.

It's probably best understood as a response to the announcement by heavyweight auto-industry supplier Delphi Automotive(NYSE: DLPH) and assisted-driving expert Mobileye (NYSE: MBLY) that they will have an affordable and fully capable self-driving system available in 2019 to any automaker that would like to buy it. That announcement has reshaped thinking about the "race" to perfect self-driving technology: It may be a commodity before long.

Still, the market opportunity for a great, affordable system will be huge, and there may be a substantial market for a Baidu-branded effort. The search-engine giant is already well along in its own self-driving research efforts, which probably already involve NVIDIA; Baidu recently received permission to begin testing its own prototype self-driving cars in California, and has said that it plans to begin mass-producing them in China within five years.

Long story short: While Mobileye already has relationships with most of the global auto giants, Baidu may be best positioned to become the self-driving technology supplier of choice to China's fast-rising domestic automakers. That may well be the play here.

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John Rosevear has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Baidu and Nvidia. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.