Car companies look to each other for self-driving ventures
Alliances proliferate as automakers, tech firms see future in connected-vehicle services
Auto makers, looking to secure their futures in a transportation landscape that is rapidly changing, are increasingly partnering with each other and their wouldbe rivals in Silicon Valley to pursue new ventures in self-driving cars and other forms of personal mobility.
These new alliances have proliferated in recent years, with car makers such as General Motors Co., Toyota Motor Corp. and Daimler AG betting that future growth and profits will come less from building and selling cars and more from developing businesses centered on data, ridehailing and connected-car services.
GM said this month it would partner with Honda Motor Co. to develop a fully automated car. As part of the deal, Honda committed to investing $2.75 billion in GM’s self-driving-car unit GM Cruise LLC over the next 12 years.
The investment comes on top of a commitment to Cruise of more than $2 billion from SoftBank Group Corp.’s Vision Fund in May. GM bought Cruise in 2016 and also invested in ride-hailing company Lyft Inc. that year.
Toyota is investing $500 million in Uber Technologies Inc. as part of an agreement to collaborate on self-driving-car technology. German auto makers Daimler AG and BMW AG have announced plans to merge their car-sharing operations to boost their offerings for customers looking for on-demand transportation.
“It’s just too much for any one company to bite off,” said Mark Wakefield, a global co-leader of automotive and industrial practice
at consulting firm AlixPartners.
Car manufacturing is already a capital-intensive business, requiring auto makers to spend billions each year on developing new vehicles, and many of these new ventures remain unproven, making them risky bets, he said.
“The car makers don’t want to be Foxconn,” he said, referring to the contract electronics manufacturer. “They want to be Apple. But they also recognize they can’t do all of it.”
Last year, there were 271 partnerships involving self-driving cars, electric vehicles and other transportation solutions, up from 131 in 2016, according to an
analysis by AlixPartners.
Auto makers and technology companies have begun to collaborate on self-driving cars and other initiatives as a way to share costs and spread risk on business models that still lack a clear path to profitability.
Partnerships have also become necessary for some companies because the underlying technology is expensive and complicated to develop.
As tech giants from Alphabet Inc.’s Waymo LLC to Apple Inc. make inroads into the auto business, auto makers are trying to ensure that they capture the profits made possible by these new businesses—especially because
tech companies can target car owners and passengers with a vast array of data-driven services, turning a vehicle into a smartphone on wheels.
Many car companies are partnering with each other instead. Daimler has built a separate business called Daimler Mobility AG, to become fully operational next year, that it hopes will be the nucleus of a bigger effort by German auto makers to pool resources against Google and other Silicon Valley giants. Daimler has teamed up with rivals BMW and Volkswagen AG on some individual projects, such as a digital mapping service and installing electric-charging stations.
GM and rival Ford Motor Co. have carved out their self-driving-car programs into separate subsidiaries to make it easier to draw outside investment.
GM plans to launch a robotaxi service in major cities next year to compete against Uber and Lyft.
Toyota Chief Executive Akio Toyoda has said he aims to turn one of the world’s largest manufacturers of cars into a service company, offering everything from Uber-like ride-hailing services to mobile clinics. Mr. Toyoda said generating new income streams is a matter of survival for the Japanese car maker.
To accomplish this, Toyota is slimming down its core business to free up cash for investments. Along with the Uber deal, Toyota invested $1 billion in Singaporebased ride-hailing startup Grab Inc. and recently joined forces with SoftBank to build roboticvehicle services.
Honda, which long prided itself on using in-house research to match innovation from rivals, is now looking for partnerships to keep pace with competition. The investment in GM’s driverlesscar unit was a big step in that direction.
Tech giants, meanwhile, are forging deeper partnerships with car companies, aiming to tap their auto-manufacturing knowhow to advance their own efforts.
Alphabet’s self-driving car unit Waymo recently partnered with Fiat Chrysler Automobiles NV and Jaguar Land Rover to order cars that are built specifically for its needs.
In China, the country’s big tech companies—Baidu Inc., Alibaba Group Holding Ltd. and Tencent Holdings Ltd.—are working with auto makers on a range of initiatives, from self-driving cars to in-car operating systems. Mike Colias contributed to this article.