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Self-Driving Cars are Changing Automotive Supplier Alliances

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【Summary】The race to develop and deploy autonomous vehicle technology is reshaping the hierarchy of the automotive industry. Recently Bosch and Mercedes Benz said they will collaborate on development of self-driving vehicles. Bosch also expects to sell the systems it is developing with Mercedes to other automotive companies.

Eric Walz    Apr 21, 2017 11:02 AM PT
Self-Driving Cars are Changing Automotive Supplier Alliances

The race to develop and deploy autonomous vehicle technology is reshaping the hierarchy of the automotive industry, replacing traditional manufacturing partnerships with complex webs of alliances and acquisitions.

Dealmaking in the automotive and technology industry is driven by the rapid transition of self-driving vehicles from research projects to production at several of the world's biggest automakers.

Recently Bosch and Mercedes Benz said they will collaborate on development of self-driving vehicles, with Bosch in a broad role as a systems integrator. Mercedes hopes that Bosch will help to speed up deployment of self-driving vehicles. Bosch also expects to sell the systems it is developing with Mercedes to other automotive companies.

Silicon Valley chipmaker Intel Corp. recently purchased automotive vision technology company Mobileye NV, and has a deal to help German luxury car maker BMW develop autonomous vehicles using Intel and Mobileye systems.

The first fully self-driving cars are expected to go into production by 2020-21

"Everybody is trying to understand what skill sets are required to be first in the game (and) if they don't have it, they're going to partner, invest or purchase," said Xavier Mosquet, a senior partner at Boston Consulting Group and an authority on autonomous vehicles.

Major auto companies traditionally employed engineers specializing in the physics of combustion, collisions, materials science, and mechanical systems. The development of self-driving cars demands new experts in artificial intelligence, robotics, computer programming, and digital networks. Currently, many of these computer science engineers are working outside the automotive industry.

Automakers are following different paths to acquire engineering talent. Some are relying on partnerships like the Bosch-Mercedes deal. Others such as General Motors are going it alone, buying self-driving vehicle startups, such as its $1 billion dollar purchase of San Francisco start-up Cruise Automation, to advance its self-driving car efforts.

Alphabet's Waymo and Delphi Automotive are offering turn-key systems to other automotive companies such as Fiat Chrysler, that are choosing not to invest in their own autonomous driving systems.

Some of the car companies and large suppliers could wind up as competitors. BMW has said it wants to sell its self-driving systems to other manufacturers, as does Delphi, which is developing a system of its own. Intel and Mobileye are partners in both ventures.

The Dutch provider of high-definition maps, HERE, has taken a position at the center for several supplier webs. HERE is jointly owned by Daimler, BMW, and Volkswagen AG's Audi. Intel also owns a minority stake in HERE, and rival chipmaker Nvidia Corp. has a partnership deal.

Silicon Valley based Nvidia itself wants to be a provider of powerful computer chips and "deep learning" software for self-driving cars, including rivals such as Mercedes and Tesla, competing mega-suppliers such as Bosch and ZF Friedrichshafen AG, and Chinese tech companies Baidu and Tencent.

Today, automotive manufacturers are divided on how much self-driving development and integration to outsource to other companies, or whether to keep most of that in-house, as they have previously done for decades with much of their core engine technology.

resource from: Reuters

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