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Volkswagen Expresses Interest in Forming Alliance for Driverless Cars

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【Summary】Volkswagen did not reveal exactly how it plans to form alliances in the self-driving arena. As a leading car and truck manufacturer, the company is expected to collaborate with other large, well-established auto brands.

Michael Cheng    Apr 21, 2018 9:30 AM PT
Volkswagen Expresses Interest in Forming Alliance for Driverless Cars

Volkswagen is keen on developing autonomous driving technology for its wide range of automotive products and brands. In order to streamline the process, the company expressed interest in collaborating with other businesses and startups in the rapidly proliferating sector.

This idea was highlighted by Herbert Diess, CEO of Volkswagen, during a news conference in a Volkswagen plant at Wolfsburg, Germany.

"I would not rule out further partnerships. Autonomous driving requires immense investments," said Diess.

Strategic Partnerships in Asia

Volkswagen did not reveal exactly how it plans to form alliances in the self-driving arena. Based on the company's recently formed partnerships, it is possible to gauge the type of agreements the automaker is actively seeking out. As a leading car and truck manufacturer, Volkswagen is expected to collaborate with other large, well-established auto brands.

An example of this is the company's strategic partnership with Hino Motors – a subsidiary under Toyota Motor Corporation. The two groups formed an alliance (Joint Alliance Board), which allows Volkswagen to tap into Hino's highly valuable Asia network. Moreover, the duo will share various technologies, in relation to electric powertrains and autonomous driving platforms.

Last month, Hino launched a self-driving pilot program for commercial trucks. It is unclear whether Volkswagen will participate in or contribute to the program at this time.

"This agreement was made possible because Hino Motors and Volkswagen Truck & Bus respect each other and share the same aspiration to offer customers the highest value," said Yoshio Shimo, President and CEO of Hino Motors.

It is important to point out that Volkswagen is directly competing with Toyota, which owns a 50.1 percent stake in Hino. Based on the details of the alliance between Volkswagen and Hino, the focus of the collaboration will be commercial trucks. This would then allow both parties to take on Daimler, which currently dominates the space.

Commercial Trucking and Autonomous Driving

Volkswagen's approach in developing driverless technology partnerships for commercial trucks might be key to getting a head start in the industry. Large-scale trucking operations are predictable and monotonous, making such activities easier to automate, compared to routes in crowded cities and neighborhoods.

"Experts argue that the VW-Hino alliance could move ahead of Toyota in the development of autonomous driving technology, saying that such technology applies better to commercial vehicles operating along fixed routes than to regular passenger cars," highlighted Yuki Hanai from Nikkei Asian Review.

Another development that backs Volkswagen's strategy involving driverless alliances in the commercial trucking sector is its potential takeover of Navistar. The German automaker currently has a 16.6 percent stake in the company (after an investment of $256 million, valued at $15.76 per share), as well as an ongoing partnership.

So far, the collaboration has been rewarding for both sides. The alliance includes the development of an all-electric truck, to be released by 2020. Navistar is doing fairly well, after reporting a net profit of $37 million in Q3 of 2017. Volkswagen could leverage its alliance with the Springfield-based business to gain a foothold in the North America market.

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