Baidu and BMW will work together to develop driverless cars in China in an effort to bring the autonomous vehicles to market within three years.
The Chinese search giant will compete directly with Google, which has been working on self-driving cars for several years, and Tesla. Fellow tech giant Apple is also widely rumoured to be plotting its move into the automated motor industry in the next few years.
Wang Jing, a senior vice president at the company, told the Wall Street Journal he would head up a new unit dedicated to developing automated cars as public transport.
Baidu's two prototype BMW 3 Series Gran Turismo driverless vehicles are currently being tested on roads north of Beijing, he said, with plans to develop and build more models in the future. It has alreayd been able to change lanes and overtake other vehicles, despite being far less developed than Google's cars.
"We will cooperate with some governments to provide shared vehicles like a shuttle service; it could be a car or van, but for public use,” he added, before refusing to confirm a concrete date when the cars will become commercially available.
The UK is among the world leaders in the development of automated driving, after the government invested £20m into testing the cars across the country earlier this year.
It is widely hoped the money will make Britain the best place to test the autonomous vehicles, in a market estimated to be worth £900bn by 2025. The Department for Transport announced the world's first code of practice for driverless cars in June, allowing road testing to begin in Greenwich, in south-east London; Bristol; Coventry and Milton Keynes.
Baidu recently decided to invest in Uber's planned expansion into China in separately-formed company Uber China, and is also set to make inroads into online banking following the launch of its new banking service in partnership with Chinese bank Citec – the country's seventh-largest lender. It has also created a mobile heathcare division.