By Yifan Wang

Baidu Inc. will partner with auto maker Zhejiang Geely Holding Group to produce electric cars, as part of the Chinese internet giant's continued expansion into the auto industry.

Baidu said Monday that it would provide intelligent driving technology for electric vehicles in the venture with Zhejiang Geely, which will contribute expertise in automobile design and manufacturing.

"China has become the world's largest market for EVs, and we are seeing EV consumers demanding next generation vehicles to be more intelligent," said Robin Li, co-founder and chief executive of Baidu. He said the partnership with Zhejiang Geely would pave the way for future passenger vehicles. Hangzhou-based Zhejiang Geely owns Volvo Cars and is one of China's largest automobile firms with a growing international footprint.

The news confirmed media reports last week of a potential partnership between the two companies, which helped drive Baidu's American depositary shares 16% higher on Friday. The Hong Kong-listed shares of Geely Automobile Holdings Ltd., a subsidiary of Zhejiang Geely, soared 20% to a record high on Friday.

Baidu's core search-engine business is profitable but the firm has struggled to achieve levels of growth in line with China's rapidly expanding technology industry.

The company in recent years has staked its future in new initiatives including automotive technology, with the government calling it China's national champion in self-driving development in 2017.

Baidu in the same year established its autonomous driving unit Apollo, which works with automakers including Geely, Volkswagen AG, and Ford Motor Co.

Write to Yifan Wang at yifan.wang@wsj.com

(END) Dow Jones Newswires

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