(Bloomberg) --Mercedes-Benz parent Daimler AG and automotive technology giant Robert Bosch GmbH are teaming up to bring driverless taxis to city streets by early in the next decade in an intensifying global race to be first to offer the technology commercially.
The world’s biggest luxury-car maker and the largest component producer are starting a six-year partnership to put robo-taxis on the road in at least four locations, including Silicon Valley and their hometown of Stuttgart, Germany, said Bernhard Weidemann, a Daimler spokesman. The effort, which will let customers order the automated cars via smartphone, will compete with projects at BMW AG, Alphabet Inc.’s Waymo and Uber Technologies Inc.
“The idea behind it is that the vehicle should come to the driver rather than the other way round,” Daimler and Bosch said Tuesday in a joint statement. The venture will have a workforce in the “mid-three figures,” Weidemann said.
Carmakers and new competitors like ride-hailing startup Uber are pouring billions into making vehicles smart enough to navigate streets on their own. At stake are new business opportunities estimated by Boston Consulting Group at $42 billion by 2025. The strategy is also a way for manufacturers like Mercedes and BMW to keep access to customers and avoid becoming lower-margin hardware suppliers to service providers.
Daimler’s move highlights the limits to the company’s willingness to share know-how to save costs. In 2015, BMW, Daimler and Volkswagen AG’s Audi division took the unprecedented step of jointly buying Nokia Oyj’s HERE real-time maps unit for 2.8 billion euros ($3 billion). Since then, Daimler has snubbed BMW Chief Executive Officer Harald Krueger’s invitation to join an autonomous-cars alliance with chipmaker Intel Corp. and camera-software company Mobileye NV.
Beating RivalsDaimler needs to master “ fundamental changes” to adjust to autos running on electric motors and capable of driving themselves, Chairman Manfred Bischoff said at the annual shareholders meeting last week. The manufacturer is also the world’s biggest maker of commercial vehicles and the owner of the Smart city-car brand, giving it a wider range of vehicles to work with, and it’s been experimenting with autonomous technology for years.
Research and development costs jumped 15 percent in 2016 to 7.6 billion euros, and the outlays will rise to 8.1 billion euros on average this year and next, contributing to Daimler’s tepid forecast for earnings to rise only “slightly” in 2017. Vehicle safety will be among issues it must focus on, after Uber suspended an automated-car trial because of a crash in Arizona last month and U.S. tests last year showed drivers of Mercedes cars often take back control when the vehicles are in autonomous mode.
Daimler has already branched into new services in response to shifts in how people use vehicles. As well as the Car2Go auto-sharing business, with 2.2 million global members, the company owns cab-hailing mobile application Mytaxi, which merged with its U.K. equivalent Hailo last year. Daimler bought U.S. ride-booking service RideScout LLC in 2014 and runs Moovel, an app that combines taxi, car and bicycle sharing services with public transport.
The German company hasn’t yet decided whether or how it might make self-driving technology available to other operators, Weidemann said.
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