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 Google and Fiat said the deal announced on Tuesday was the first
time Google has worked directly with an automaker "to integrate its
self-driving system, including its sensors and software, into a
passenger vehicle."
The growing use of computing power in vehicles is paving the way for
intelligent, self-driving cars, creating new rivalries and business
opportunities for both technology companies and automakers.
Unlike its rival premium carmakers Daimler, BMW and Volkswagen unit
Audi, cash-strapped Fiat Chrysler has decided to turn to an industry
outsider to develop intelligent, self-driving cars, not having the
resources to do the work alone.
Fiat Chrysler has a net debt pile of 6.6 billion euros ($7.6
billion) and Chief Executive Sergio Marchionne has been trying
unsuccessfully for more than a year to persuade rivals, including
GM, to consider a merger to help spread the rising costs of research
and development.
On Tuesday Google and Fiat Chrysler engineers said they will work
together to fit Google's autonomous driving technology into the
Chrysler Pacifica minivans, working together at a facility in
Southeast Michigan, where Fiat Chrysler has its major North American
engineering center, the companies said.
Google has said that it does not want to build self-driving vehicles
on its own and has explored alliances with auto companies, but none
has been finalized. Working more closely with Fiat Chrysler could
help Google refine its systems as a step towards offering them in
regular production cars.
The deal does not preclude either FCA or Google from cooperating
with others, and Google said it is not sharing with Fiat proprietary
self-driving technology developed for another prototype vehicle.
Nonetheless Google said teaming up with Fiat Chrysler helps advance
their expertise in the market for self driving cars.
“The opportunity to work closely with FCA engineers will accelerate
our efforts to develop a fully self-driving car that will make our
roads safer and bring everyday destinations within reach for those
who cannot drive,” John Krafcik, chief executive of the Google
Self-Driving Car Project, said in a statement.
Collaborating with Google provides an opportunity for Fiat Chrysler
"to partner with one of the world’s leading technology companies to
accelerate the pace of innovation in the automotive industry,"
Marchionne said in a separate statement.
The Fiat Chrysler vehicles will more than double Google's testing
fleet, which currently includes about 70 SUVs acquired from Toyota's
Lexus and small prototype cars designed by Google. Google is now
testing self-driving vehicles in four U.S. cities.
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GOING IT ALONE
Executives at other automakers, including GM, Ford Motor, BMW and
Daimler, have expressed a wariness about alliances with Alphabet or
other technology companies on fears that such a pact would relegate
them to being mere low-value 'hardware' suppliers in the long run.
Rather than allowing aspiring carmakers like Apple or Google access
to their know-how these companies have opted to invest hundreds of
millions in building up their own expertise in the area of software,
artificial intelligence, machine learning and sensors.
In March General Motors Co agreed to acquire San Francisco
self-driving car startup Cruise Automation . Daimler, BMW and
Volkswagen AG last year bought digital mapping company HERE to
accelerate their autonomous driving development. Boston Consulting
estimates that the proportion of vehicles with autonomous features
is expected to reach 13 percent by 2025, amounting to a market value
of roughly $42 billion.
However, Fiat has made clear that it sees developing autonomous
vehicles and digital businesses on its own as too risky in trying to
compete.
The mistake of neglecting the basic business of car manufacturing to
venture into new related areas of business, such as car repair shops
and communication services, was one Fiat made in the 1990s and
should not be repeated, Fiat Chrysler's chairman, John Elkann, said
in April.
By 2030 fully self-driving cars will likely account for just 15
percent of global car sales, meaning non-autonomous vehicles will
remain the larger opportunity for Fiat.
"Boring old carmakers need to figure out how to make this profitable
and guard against falling into the 1990 trap of ignoring that
business while chasing profits in other parts of the value chain,"
Elkann said.
(Additional reporting by Agnieszka Flak in Milan; Editing by Tom
Brown, Greg Mahlich)
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