Weekly Brief: More Mega Partnerships Pump Up Auto Tech

Commentary By Andrew Tolve

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8th July 2019

The longer the road one has to travel, the nicer it is to have some company.

This is true for human beings and for businesses as well, especially those that operate in an environment that is riddled with uncertainty and slow to provide a return on investment. Hence the raft of partnerships that have cropped up in the self-driving car space over the past 12 months. Waymo has teamed with Renault and Nissan, Honda with General Motors’ Cruise, Hyundai with Aurora, Audi with Huawei and China’s GAC Group. After last week, we can add two more to the list: BMW with Mercedes and Ford with Volkswagen.

Let’s start with the German rivals. Last week BMW and Mercedes-Benz’s parent company Daimler revealed that they have signed a long-term agreement to jointly develop Level 4 self-driving technology. The collaboration will draw considerable engineering talent from both sides. More than 1,200 specialists from BMW and Daimler will work together, often in mixed teams, at various BMW and Mercedes-Benz testing and technology centers throughout Germany. Their goal will be to launch a joint technology that the two carmakers can implement into their respective series products independently.

The target for this launch is ambitious. BMW and Mercedes say that by 2024, each will have passenger cars on the market that are capable of Level 4 self-driving. That means that drivers will still need to be at the wheel but the vehicles will be able to fully drive themselves in specific settings, including on highways like the Autobahn. They’ll also be able to self park.

If Mercedes and BMW sharing the same technology under the hood sounds strange, get used to the thought of VW and Ford doing the same. A couple days after news of the Daimler BMW partnership broke, word leaked that Ford and VW have reached a preliminary agreement to share autonomous and electric vehicle technology. Both companies remain mum on the deal until it gets approved by VW’s supervisory board (that should happen this week) but what we do know is that the companies have hashed out an agreement that will see VW share its EV technology with Ford in exchange for which Ford will share autonomous tech from Argo AI with VW.

Ford has pledged to invest $11Bn in EVs and to offer 40 hybrid and fully electric vehicles across its lineup by 2022. That’s a big promise for a company that hasn’t developed much EV infrastructure to date. If it can simply plug in VW’s modular MEB platform, the 2022 target becomes more achievable. It’s a win for Ford and it’s a win for VW, which is seeking to make electrification a defining component of its brand in Europe, the US and Asia as well. Last week the carmaker announced that it plans to offer 14 EVs in the Chinese market by 2028. Our Phil Oakley has more on that story.

Where VW has been quick to invest in electrification since Dieselgate, it has been slow to invest in autonomous technology. Earlier this year it struck up a partnership with self-driving start-up Aurora to try and make up the deficit. Last month it then cut ties with Aurora, presumably to open up the possibility of a quid pro quo partnership with Ford and Argo AI. We’ll see how the final agreement between Ford and VW shakes out, if it comes to fruition at all. One thing is for sure: partnerships will keep on coming in the self-driving car space, until self-driving cars are on the road and making money.