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Supplier Alliances Getting Complicated with Self Driving ‘Arms Race’

Supplier Alliances Getting Complicated with Self Driving ‘Arms Race’
By replacing traditional top-down manufacturing relationships with complex webs of alliances and acquisitions, the race to develop and exploit autonomous vehicle technology is reshaping the hierarchy of the automotive industry.
The rapid transition of self-driving vehicles from research projects to major elements of near-term product plans at several of the world's biggest automakers is driving dealmaking in the automotive and technology industry.
Like the one announced last week between Robert Bosch and Daimler AG's Mercedes, that shift is behind deals.
Bosch will play a broad role as a systems integrator — sort of a copilot with the automaker in speeding up deployment of self-driving vehicles in the deal as the companies said they will collaborate on development of self-driving vehicles.
Separately, Silicon Valley chipmaker Intel Corp has a deal to help German luxury car maker BMW AG develop autonomous vehicles around Intel and Mobileye systems and has acquired automotive vision technology leader Mobileye NV.
While analysts have said self-driving cars will not be in wide use before 2030, the first fully self-driving cars are expected to go into production by 2020-2021.
"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.
Engineers schooled in the physics of combustion and collisions, materials science and mechanical systems abound the major auto companies. Working mainly outside the auto industry, experts in artificial intelligence, robotics, computer programing and digital networks are the main requirement for the development of self-driving cars.
Different paths to acquire engineering talent are being followed by automakers. While some such as General Motors Co are going it alone, buying self-driving vehicle startups and building technology in-house, some companies are relying on partnerships like the Bosch-Mercedes pact.
Turn-key systems to companies such as Fiat Chrysler Automobiles that are choosing not to invest in their own autonomous driving systems are being offered by Alphabet Inc’s Waymo and auto supplier Delphi Automotive Plc.
And there is a possibility that some of the car companies and large suppliers might end up becoming competitors. While Delphi, which is developing a system of its own. Intel and Mobileye are partners in both ventures, BMW has said it wants to sell its self-driving systems to other manufacturers.
A position at the center for several supplier webs has bene taken by the Dutch provider of high-definition maps, HERE. Daimler, BMW, and Volkswagen AG’s Audi joiontly owns HERE. Chipmaker Nvidia Corp has a partnership deal with HERE while Intel owns a minority stake in HERE.
Including rivals such as Mercedes and Tesla Inc, competing mega-suppliers such as Bosch and ZF Friedrichshafen AG and Chinese tech companies Baidu Inc) and Tencent Holdings Ltd, Nvidia itself wants to be a provider of powerful computer chips and “deep learning” software for self-driving cars to a broad array of customers.
whether to keep most of that in-house - as they have done for decades with much of their core engine technology or how much self-driving development and integration to farm out to the parts makers has divided the vehicle manufacturers.
“At the moment, the carmaker is at an advantage since it knows how the components all fit together," said Mercedes executive Christoph von Hugo.

Christopher J. Mitchell

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