Experts: Fiat Chrysler, Google deal makes sense

Michael Wayland
The Detroit News

A partnership between Fiat Chrysler Automobiles NV and Google could give both parties needed resources to accelerate the development and production of next-generation car technologies and autonomous vehicles, according to industry experts.

Fiat Chrysler has been slower than most automakers, including its crosstown rivals General Motors Co. and Ford Motor Co., in investing in and supporting the development of autonomous vehicles.

Google, reported to be in talks with Fiat Chrysler, doesn’t have the experience or infrastructure to mass-produce vehicles, as it continues to refine and test its fleet of self-driving cars that have driven about 1.5 million miles in autonomous mode.

“If Fiat Chrysler is the smallest volume of the Big Three, but suddenly is paired with someone like a Google and their resources, it kind of immediately changes the playing field,” said Kelley Blue Book senior analyst Karl Brauer. “Both of those companies jump to the front of the line.”

Fiat Chrysler, Brauer said, would be more flexible on topics such as who owns certain data that likely stonewalled a reported potential partnership with Ford and the tech giant that was expected to be announced at the prominent CES electronics show in January.

“It’s Fiat Chrysler’s current position that makes them more willing to partner with someone like Google and give in some areas that Google would want to negotiate hard on,” he said. “It will be interesting to see what (Fiat Chrysler CEO Sergio Marchionne) had to give away to get in close with Google.”

Brauer’s comments follow Thursday reports that Fiat Chrysler and Google parent company Alphabet Inc. are in the late stages of negotiating a technology partnership. The talks, first reported by industry blog citing an unnamed source, reportedly started between John Krafcik, CEO of Google’s Self-Driving Cars, and Marchionne in January.

Officials with Google and Fiat Chrysler declined to comment on the reported negotiations. “We don’t comment on rumor or speculation,” Google said in a company statement. An FCA spokeswoman would not confirm or deny the partnership.

Partnering with Google also could give Fiat Chrysler additional credibility in the auto tech sector, while potentially allowing Google access to hundreds of thousands of slow-selling cars such as the Fiat 500, Chrysler 200 and Dodge Dart to use to test its technologies.

Google executives also have stated that they do not want to build their own cars. Fiat Chrysler could potentially be a contract manufacturer for Google’s autonomous cars, a move the company has made with other products.

“It’s what you would call a buyer’s market for them,” said AutoPacific Inc. Manager of Product Analysis Dave Sullivan. “It could be a real opportunity for Google to come in and take a fully modern and federalized vehicle and turn it into something of their own, which actually follows the logic of what Google does with a lot of their other products.”

Sullivan cited Google Nexus phones from LG as an example of the company having something built for them as a platform for its Android system. It’s also partnered with companies for tech-savvy watches, TV devices and other technologies.

“They’re always pretty open with having a manufacturer’s name giving credibility to something they want to do,” Sullivan said. “If anything, that would be a knight in shining armor for FCA.”

Krafcik and Marchionne both have touted the need to partner with other companies on next-generation technologies and autonomous vehicles.

“Automakers have the talent and the track record of producing cars at scale,” Krafcik said at the Automotive News World Congress. “As our technology progresses, we hope to work with many of you guys ... for are all sorts of partnerships we’re going to have to form in order to deliver this technology to users around the world.”

For more than a year, Marchionne has been saying that the auto industry needs to consolidate efforts to save billions of dollars annually, and has said that Fiat Chrysler is in talks with many players outside the car sector about possible collaborations.

“There are continuous conversations going on with Silicon Valley ... and they will continue,” Marchionne said on the sidelines of the North American International Auto Show in January. “I think that interface is inevitable ... they will play a significant role in the way in which the auto industry develops.”

This year has been a testament to Marchionne’s comments, with several large-scale partnerships or acquisitions between the Motor City and Silicon Valley.

GM started the year by investing $500 million in San Francisco-based mobility company Lyft to form a partnership that includes a rental car network and developing a fleet of autonomous vehicles that city dwellers could summon via a Lyft app.

The Detroit-based automaker followed the partnership up by launching its own Zipcar-like car-sharing service in Ann Arbor called Maven, purchasing the assets of defunct ride-hailing company Sidecar Technologies Inc. and acquiring California-based Cruise Automation to help it develop autonomous vehicle software and test driverless vehicles in city environments.

Not to be outdone, Ford in January said it would team with a number of tech startups to offer FordPass, a customer experience app that lets users find parking, share vehicles or learn about a city’s mobility services. The Dearborn-based automaker also is part of a coalition to urge lawmakers to take action on regulations surrounding self-driving vehicles with Google, Volvo Cars, Uber and Lyft.

“Silicon Valley needs Detroit; Detroit needs Silicon Valley,” said senior analyst Michelle Krebs. “It’s very interesting.”

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Detroit News Staff Writer Michael Martinez contributed.