FCA chooses BMW-Intel alliance to develop self-driving cars

7 years ago - Published in Finance, Technical Analysis

Fiat Chrysler Automobiles (FCA) 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.

The market for such self-driving cabs could be worth $2 trillion by 2030, according to consultants McKinsey, as younger customers abandon car ownership in favor of a pay-per-use mobility service.

Note that this mentions a platform, and not a specific vehicle. Waymo, Uber and Apple are all approaching autonomy from the same angle — by building a platform, instead of a specific vehicle, you can then sell that platform to an automaker that doesn't want to spend the money developing one itself. That gives FCA an extra cash flow stream, which wouldn't hurt.

“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.”

Automakers are seeking alliances to share the high costs of developing autonomous cars, which according to consulting firm Frost & Sullivan will make up about 10 to 15 percent of vehicles in Europe by 2030.

It's believed that the group will bring these technologies to production by 2021. Before then, they will put about 40 test vehicles on the road by the end of this year, growing to approximately 100 thereafter. 

FCA is also part of a separate alliance with Alphabet Inc's self-driving unit Waymo to develop self-driving cars based on Chrysler Pacifica hybrid minivans.