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Deals and not War – The New Mantra for Automakers and Tech Companies

Deals and not War – The New Mantra for Automakers and Tech Companies
The playbook in the contest to control the future of personal transportation is being rewritten by a flurry of deals between big automakers and ride hailing and transportation startups.
Ride-hailing services and car sharing companies can be turned into steady customers for all sorts of vehicles, recognize the automakers. However  hybrid and electric cars are best suited for this, say industry executives and analysts say.
Automakers are able to expose consumers to brands they might otherwise ignore through tie-ups with carpooling services or short-term rental companies. Access to troves of consumer data and sophisticated ways to analyze them is offered in turn by the technology companies.
Fresh capital, access to auto industry engineers who know how cars work and discounts on vehicles for their drivers are obtained by the Silicon Valley mobility companies from the automakers.
BMW iVentures venture capital arm has invested an undisclosed amount in California-based Scoop Technologies, which offers a smartphone-powered carpooling service called Scoop, German luxury car maker BMW AG said on Wednesday, in the latest tie-up between an automaker and a transportation technology startup.
It was investing an undisclosed amount of money in Uber, said Toyota Motor Corp, the world's No. 1 automaker by vehicle sales. O the same day German car maker Volkswagen announced its decision to invest $300 million in Gett, a smaller ride-hailing company.
General Motors Co is launching its own car-sharing and mobility ventures under the Maven brand and earlier this year the Detroit automaker acquired a stake in Uber rival Lyft. Efforts to embrace ride-hailing and car-sharing services have also been unveiled by Ford Motor Co, Daimler AG and other major automakers.
Mark Short, an Ernst and Young partner who advises automakers on transactions said that as more consumers use ride sharing or carpooling, automakers "want to make sure they are in the game."
"To be in the game, you have to make investments in these companies," Short said.
Both Uber and Toyota can benefit from their alliance in their case.
Jan Dawson, technology analyst with Jackdaw Research said: Uber "actually knows very little from its own experience about cars - how they're made, how they work." Uber and Toyota have indicated they will collaborate on research as Uber has said it wants to develop self-driving cars - as does Toyota.
Toyota said it could market Toyota and Lexus brand vehicles to Uber in bulk fleet sales and expects to offer new ways for Uber drivers to buy Toyota cars. However, a Toyota spokesman said on Wednesday that the details of these programs have yet to be decided.
Discounts to drivers for Uber and its ride-hailing rival, Lyft are currently offered by Toyota and some rival automakers. An Uber driver could receive a $750 discount if he wants to buy a Toyota Prius, for example. According to information on Uber's website, the Uber discount for a Ford Focus is $2,100.
For automakers trying to sell more electric vehicles, or hybrid cars, ride hailing and car sharing companies could become outlets to earn credits under U.S. federal and state environmental rules. Ferrying passengers around a city all day could offset the high costs of an electric car battery more rapidly than by a routine round-trip commute.
Lyft will be an important customer for the automaker's Chevrolet Bolt electric car, say GM executives. It is due to be launched late this year.
Ulrich Quay, managing director of BMW iVentures said that BMW's investment in Scoop is also aimed at selling vehicles. He said that the automaker can come to know customers who have never driven a BMW through ride sharing.

Christopher J. Mitchell

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