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Technology and cars are coming together

Technology and cars are coming together

The line between the technology and automotive industries is blurring. The rise of rideshare companies such as Uber and Lyft means that transportation is being tied ever more closely to your cell phone, while autonomous driving technology is turning your car into a computer. But these developments are expensive: Carmakers’ R&D budgets jumped 61 percent, to $137 billion from 2010 to 2014.

Fiat Chrysler Chief Executive Officer Sergio Marchionne thinks it makes no sense for carmakers to spend billions of dollars developing competing, yet largely identical systems. To share some of the risk—and the cost—the incumbent automotive giants and their would-be disruptors are teaming up in an ever-growing, ever more complex series of alliances.

So Fiat Chrysler, for instance, has paired up with Google to develop 100 self-driving minivans, and is in discussions with Uber about a similar venture. Google has, in turn, invested in Uber, as have Toyota, Microsoft and Tata, owner of Jaguar Land Rover. Bill Ford, chairman of the eponymous carmaker, has meanwhile invested in Lyft, as has General Motors, and Lyft has partnered with China’s Didi, itself the subject of a $1 billion investment from Apple.

Apart from that, GM invested $500 million in Lyft and bought Cruise Automation for $1 billion. Then Uber hired Google’s VP of engineering. Uber hired Ford’s head of electronic systems engineering to become VP of global vehicle programmes. And the list goes on: Apple invested $1 billion in Chinese ride-hailing company, Didi, which partners with Lyft. DriveNow is a joint venture between BMW and Sixt Rent a Car. Daimler founded Car2Go and acquired MyTaxi and RideScout. VW, BMW and Daimler partnered to buy Nokia’s HERE maps. Daimler invested in Blacklane, an app for booking chauffeurs. VW hired the head of Apple’s car project, who previously worked at Daimler. And finally (?) VW invested $300 million in taxi-hailing company, Gett. VW owns a stake in the German Research Center for Artificial Intelligence (DFKI).

The prize is lucrative, and the carmakers want to ensure that software players don’t win the lion’s share of it. According to a McKinsey-estimate rideshare and onboard-data services could generate an additional $1.5 trillion of annual automotive revenue by 2030, adding to the $5.2 trillion from traditional car sales and services. And it’s attractive for consumers too: It costs an average of $8,558 per year to own a car in the U.S., but each vehicle is used just 4 percent of the time. Ridesharing in an autonomous vehicle could ensure that cars are always in use.

• Chasing the (additional) ride hailing and sharing market: VW and Gett. 

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