BMW, Intel, Mobileye and FCA have announced that FCA has signed a memorandum of understanding to join the alliance the three have formed for developing a self-driving car platform.
IHS Markit perspective:
- Significance: FCA has signed a memorandum of understanding regarding its intent to join an alliance between BMW Group, Intel and Mobileye in developing an autonomous driving platform.
- Implications: FCA is the first automaker to join the group – aside from co-founder BMW Group – which also includes Delphi and Continental. The group's goal is to develop a self-driving car platform that can be scalable for Level 3 to Level 4/5 automated driving.
- Outlook: The move is important for all parties. FCA could contribute to gaining the scale the group is looking for. As the first new automaker to join the group, securing FCA is a win for the alliance as a member who can contribute scale and a proof point that more than one automaker can contribute and participate. For FCA, this enables access to technology that it may not have resources or expertise to develop alone.
BMW Group, Intel and Mobileye have announced that they have signed a memorandum of understanding (MoU) with Fiat Chrysler Automobiles (FCA) to join their alliance for developing a "world leading, state-of-the-art autonomous driving platform for global deployment," according to a joint statement. The statement says that FCA will bring engineering and "other technical resources and expertise to the cooperation, as well as its significant sales volumes, geographic reach and long-time experience in North America."
The alliance was first formed in July 2016, and intends to have vehicles with highly automated Level 3 and fully automated Level 4/5 driving systems in production by 2021; the statement reiterates that the group is on track for having 40 cars in real-world testing by the end of 2017. As a collaborative effort, the group also noted that it expects to "benefit from leveraging data and learnings from the recently announced 100 Level 4 test vehicle fleet of Mobileye" to demonstrate the scalability of the approach.
Quotes from related executives include this comment from FCA CEO Sergio Marchionne. "In order to advance autonomous driving technology, it is vital to form partnerships among automakers, technology providers and suppliers. 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."
BMW Group Chairman of the board of management, Harald Kruger, said, "The two factors that remain key to the success of the cooperation are uncompromising excellence in development, and the scalability of our autonomous driving platform. With FCA as our new partner, we reinforce our path to successfully create the most relevant state-of-the-art, cross-OEM Level 3-5 solution on a global scale."
Intel CEO Brian Krzanich noted, "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. We're thrilled to welcome FCA's contribution, bringing us a step closer to delivering the world's safest autonomous vehicles." Amnon Shashua, CEO of Mobileye – a company that is now part of Intel – said, "We welcome FCA's contributions and use of the cooperation's platform, which has made substantial progress over the last year and is rapidly entering the testing and execution phase. The combination of vision-intense perception and mapping, differentiated sensor fusion, and driving policy solutions offers the highest levels of safety and versatility, in a cost-efficient package that will scale across all geographies and road settings."
Outlook and implications
The move is important for all parties. FCA could contribute to gaining the scale the group is looking for, while taking a significant step forward along this technology path. As the first new automaker to join the group, co-founded by the BMW Group, securing FCA is a win for the alliance as a member that can contribute scale and a proof point that more than one automaker can contribute and participate. For FCA, this enables access to technology that it may not have the resources or expertise to develop alone.
To date, BMW's development in commercialised vehicles is more advanced than FCA's. The partnership with BMW, Intel and Mobileye can enable FCA to deploy the technology faster and at less cost than otherwise possible. FCA can contribute engineering resources and experience in integration into production learned from its Waymo collaboration.
The autonomous technology landscape is evolving through a combination of partnerships and internal development, and this agreement is another example. For FCA, it is another signal that the company's future for autonomous vehicle technology will be through partnerships and industry alliances, like the Waymo alliance. Although FCA has developed an autonomous concept, the vehicle demonstrated its thinking behind an approach to autonomous more than a demonstration of technical development progress. It will be through partnerships that FCA ensures its vehicles remain relevant and competitive. For BMW, Intel and Mobileye, it is a proof point that their concept of working together to achieve scale has merit. It is not expected that this agreement is exclusive outside the platform they are developing, nor does it apply to how the companies deploy the technology in their businesses.
Relative to the ability to bring FCA's sales volumes into the group's potential reach, FCA does notably outsell BMW on a global basis. However, it is unlikely that self-driving vehicles will make up a dominant portion of vehicle sales in the next 15 years – although sales of vehicles equipped with this technology are expected to grow rapidly. Perhaps more important than FCA's overall sales volume is that it is more deeply embedded in the North American market than BMW, with brands that are more accessible from a pricing perspective. It is unclear when this technology will be sold to private consumers, but FCA has access to a broader consumer set than BMW. This could matter for later-stage deployment. FCA is also a much stronger player in Brazil and South America. While autonomous car deployment in Brazil may lag Europe and the US, with this technology at hand, FCA could be in a strong position to lead its deployment in that region as well.
This consortium, which expanded to include Delphi and Continental along with BMW Group, Intel and Mobileye, is not the only one working on a self-driving vehicle platform. Others include Waymo and Uber, as well as development work at General Motors (GM), Renault-Nissan and Toyota. Waymo and Uber are not looking to build vehicles, although those two seem to be looking to develop systems that would be deployed on vehicles that support their mobility businesses. Waymo is more likely to offer to license its platform to automakers for deployment as well as contract for vehicles that Waymo deploys, however. In any case, this alliance is not alone in looking to develop the technology, nor is it alone in looking for the 2021 production target.
In some ways, this is a new and unique structure for the auto industry. The partnership is non-exclusive; others may join and there do not seem to be restrictions as to how each member might deploy the platform for its own specific business case. Each of the partners is working on technology independently and together, with companies inside and outside the group. As the group is looking to develop a platform intended for use by any automaker, with the ability to customise and maintain brand identity, when it comes to deployment, exclusivity is the opposite of how the group would like to see its eventual production-ready technology to be deployed. One area that is not yet clear – and likely too early to define – is the structure by which the platform will be made available to automakers not part of the alliance and after the basic platform has been tested and is ready for production. The group is looking to develop an agnostic platform that can be used by others, and expects scale from wider deployment. At this point, however, the specifics of how the supply relationship might work are unclear.
We do not expect that alliance will have closed its doors to other members, although we are not aware of any specific pending announcements. Should more companies jump on board, IHS Markit would expect them to bring a mix of expertise and engineering capabilities to complement what the others bring to the table; no specific financial contributions have been disclosed, so there is no basis for evaluating cost, or of participation level of current members in relation to each other. What element the alliance determines provides a strong strategic assist could be determined by business opportunity or by technical expertise, as exemplified by the alliance citing FCA's North American footprint as a strength that automaker brings. IHS Markit analyst Jeremy Carlson notes, "Another capable [OEM or supplier] partner could bring useful perspective, capability and expertise, while another relatively less capable partner, in terms of autonomous technology, could at least provide added scale and investment. In both circumstances though, I think the added scale of a new partner could be a very interesting proposition for the alliance."
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