Fiat Chrysler Automobiles NV is throwing itself into the autonomous vehicle race after years of watching its two Detroit rivals vie for leadership — and it’s doing it with formidable partners: BMW Group and Intel Corp.
The Italian-American FCA is joining a team of companies that has worked to create a turnkey autonomous driving system. Along with the premium German automaker and the Silicon Valley chipmaker, the partnership also includes Mobileye NV, the Israeli camera and sensor company Intel acquired earlier this year for $15.4 billion.
“In order to advance autonomous driving technology, it is vital to form partnerships among automakers, technology providers and suppliers,” FCA CEO Sergio Marchionne said in a statement issued Wednesday morning. “Joining this cooperation will enable FCA to directly benefit from the synergies and economies of scale that are possible when companies come together with a common vision and objective.”
The tie-up is the latest piece of evidence showing that few, if any, companies in the global auto industry or Silicon Valley possess the engineering prowess, software expertise or manufacturing heft to develop self-driving vehicles alone. The biggest high-tech names are seeking partners, and the biggest automakers are acquiring technical capability they need but don’t have.
FCA has been among the “have-nots” in the driverless vehicle race dominated by heavily capitalized players from Detroit, Germany and Japan. Marchionne’s most prominent foray came in a deal to provide Waymo — the autonomous driving program by Google parent Alphabet Inc. — with 600 hybrid Pacifica minivans.
This new partnership, several experts said, brings FCA to a whole new level. It allies Detroit’s No. 3 automaker with a German rival known for technical precision and execution, and a Silicon Valley heavyweight hungry to collect reams of data from vehicles.
“There are companies out there like Volkswagen, General Motors and Toyota that can play in this field on their own because they have all of their own resources,” said Karl Brauer, senior director of content and executive publisher at Cox Automotive.
“Others can’t because they don’t have their own turnkey autonomous system.” BMW, Intel and Mobileye “pull as much horsepower as a Google or certainly an Uber. There are big players out there, but these are some of the biggest.”
BMW, Intel and Mobileye joined forces a year ago with the goal of creating Level 3 to Level 5, or fully autonomous, driving systems by 2021. The group plans to deploy 40 test vehicles for its system by the end of this year.
Waymo’s relationship with FCA obligates the automaker to supply vehicles equipped with self-driving technology, but the memorandum calls on the carmaker to do considerably more with its new partners.
“FCA will bring engineering and other technical resources and expertise to the cooperation,” according to a statement, “as well as its significant sales volumes, geographic reach and longtime experience in North America.” And that may require shuffling of some personnel, including “co-location of engineers in Germany as well as other locations.”
“The future of transportation relies on auto and tech industry leaders working together to develop a scalable architecture that automakers around the globe can adopt and customize,” said Intel CEO Brian Krzanich. “We’re thrilled to welcome FCA’s contribution, bringing us a step closer to delivering the world’s safest autonomous vehicles.”
FCA will benefit from being involved in the development of the autonomous technology, but there are other payoffs. The new partnership puts the company in position to reap the benefits of Big Data — the collection of information from autonomous and connected vehicle sensors.
It’s a new frontier with vast potential to generate new profits. Last October, research firm McKinsey & Co. estimated “the global revenue pool from car data monetization could be as high as $750 billion by 2030.”
“This gives them an opportunity to really participate in this ecosystem and find ways to leverage the data and get some new revenues,” said Sam Abuelsamid, a senior analyst with Navigant Research.
Before Wednesday’s announcement, the big news linked with FCA this week was the reported interest of Chinese automakers in acquiring the automaker. Partnering with BMW and Intel may change how the company is viewed by potential suitors.
“I think it makes them a more attractive acquisition target,” Abuelsamid said. “FCA has some interesting vehicle platforms that could play a part in autonomous driving.”
The Pacifica is already a featured vehicle with Waymo’s autonomous program. But Abuelsamid said he could see FCA’s new partnership prompt the company to push ahead with its Portal concept. The all-electric, self-driving car was featured by the Chrysler brand at January’s North American International Auto Show, and company officials indicated at the time they might proceed with production after 2018.
With the new partnerships, Brauer said he sees Marchionne putting FCA in the best possible position — to negotiate the dual worlds of mobility and traditional cars and trucks, or pretty the company up for would-be suitors.
“He’s doing exactly what he should — making (FCA) look very appealing,” he said. “All this does is make a potential Chinese suitor say, ‘He’s already building a network of partners that can help us be serious players.’”