Baidu is reportedly in funding talks with venture capital firms that would give it a majority stake in an artificial intelligence chipmaker, marking another step into the world of electric vehicles.
The Chinese search company's US-listed shares spiked about 7% in pre-market trading on Wednesday, after CNBC reported the talks.
The move would be the latest step taken by Baidu as it seeks to gain a foothold in the world of electric vehicles. News leaked in December that the company was considering making its own EVs. The leak came before the company announced in January that it had partnered with Geely Holding Group to build "intelligent and connected" vehicles, according to The Associated Press.
Baidu had previously created a unit, Apollo, which was focused on building software for electric and autonomous vehicles, wrote Morningstar Analyst Dan Baker in a January research note.
Baker said the electric vehicle deal with Greely could "catalyze the monetization roadmap" for the company's electric vehicles, giving it a new source of revenue. As China's biggest search engine, the company's sales have been driven by advertising for the last two decades.
The new chip-making company could supply chips for electric vehicles made by Baidu and others, according to CNBC. The company is in talks with venture capital firms GGV and IDG Capital, though none of the parties has confirmed the talks, according to CNBC.
Baidu is one of many companies, both tech and automotive, investing heavily in electric vehicles.
Last year, the local electric vehicle market rebounded from a slump, benefiting local manufacturers, BYD and NIO. Baidu would compete with those companies, along with Tesla China, which this week said it planned to design a $25,000 electric vehicle in China this year.