Collaborations between Silicon Valley tech companies and automakers are all the rage. Now there’s a new entry in the collaboration sweepstakes: Fiat Chrysler and Google, which have teamed up to create
a fleet of 100 self-driving minivans. FCA isn’t flush with cash like their rivals Volkswagen and Daimler, so they decided to work with Google to complete the expensive and time consuming work of building autonomous cars.
FCA is more than $7.6 billion in debt. As a result, Chief Executive Sergio Marchionne has been looking for a buyer or merger to offset the expense of research and development. Google’s role will be to use their own autonomous driving technology in the Chrysler Pacifica minivan. The work will take place at one of FCA’s facility’s. The partnership makes sense because Google is not interested inn making self-driving cars on its own. Google has explored partnerships with several companies, but working with FCA now helps the company take important steps in its R & D process.
The deal is not exclusive, and Google explicitly stated it is not giving FCA proprietary autonomous driving technology it has developed for a different prototype vehicle. However, working with FCA 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,” said John Krafcik, chief executive of the Google Self-Driving Car Project.
The FCA vans will more than double Google’s testing fleet, which now consists of around 70 SUVs acquired from Toyota’s (7203.T) Lexus, plus smaller prototypes designed by Google. The company is already testing self-driving vehicles in four U.S. cities.
Although other automakers are interested in lobbying for fewer self-driving regulations, Ford, GM, Daimler and BMW are concerned that in the long run, the tech companies will wind up being the tail that wags the dog. That means they are not pursuing agreements with companies like Apple or Google, instead opting to spend hundreds of millions in developing artificial intelligence software and similar concepts.
GM acquired a San Francisco self-driving car startup called Cruise Automation back in March in order to speed up their process. Meanwhile, Daimler, BMW and Volkswagen purchased digital mapping company HERE to jumpstart their self-driving development. FCA is trying to compete by sharing with Google. Major automakers cannot afford to miss out on the prospect of autonomous vehicles, which are expected to make up 13 percent of cars on the road by 20205.
Marchionne hopes to avoid a mistake Fiat made in the 1990s, when they strayed from the business of making cars and got involved in related areas of auto-making, like car repair shops and communication services. FCA chairman John Elkann commented in April that “[b]oring 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.” FCA hopes to balance its interest in self-driving cars with its continued obligation to make cars that do not have sophisticated self-driving technologies, since even in 2030, the vast majority of cars sold will not have the technology.