Competition for market share is fierce in the global auto industry, but that doesn’t mean there’s no room to cooperate. Especially in the past two years, as the pace of change has picked up, there’s been a marked increase in the number of strategic jont ventures the world’s carmakers have embarked on.
The most high-profile one was, undoubtedly, the decision by premium-segment competitors Audi, BMW and Mercedes-Benz to jointly acquire Nokia’s mapping business, now called Here, for 2.8 billion dollars in late 2015. The three carmakers are now contributing data to the shared platform. They are open to new partners, but so far none have appeared.
In the final months of this year, there was more news on strategic cooperation. The three German premium brands announced that they would jointly promote 5G connectivity in the car. And on October 10, BMW and Toyota said they were teaming up to speed up the development of artificial intelligence research, a key area for autonomous driving.
This week, the same three brands, joined by Porsche and Ford Motor, said they are going to work together on a high-power European infrastructure for electric vehicles. It’s a move that’s long overdue, as the absence of a solid network of EV charging stations is one of the biggest reasons people aren’t buying the cars.
Car companies have always cooperated, of course. PSA/Peugeot-Citroen and Toyota jointly build cars in the Czech Republic, Fiat and Ford share a small-car model, Mitsubishi manufactures for Peugeot, and Daimler and Renault share cars and engines. Those are just some examples of cooperation between competing automakers.
Now the car world has changed. For a long time, cars merely needed to look good, be affordable and safe. Today, automotive brands are forcedÂ to enter completely new fields to be competitive. These include navigation and maps, electric charging stations, fuel cells, connectivity, artificial intelligence, over-the-air updates, cyber security, just to name a few. As recently as 10 years ago, none of these mattered much.
In this environment, we’ve already seen the auto industry reach out to consumer electronics companies, IT service providers and internet startups. And there will be more of that.
But we’ll also see more cooperation between the world’s biggest car brands as they realize that traditional differentiators are no longer what they used to be. Price no longer matters if you don’t buy the car. Safety is almost a given across all brands.
What’s important to drivers today is how easily they can connect. That their cars or their connected smartphones don’t get hacked. That they can easily access information that’s somewhere far away in the cloud. And that the car helps them avoid traffic jams and get to their destination on time.
The auto industry needs help in most of these areas. They’ll be getting more of this from their suppliers old and new. But they’ll also look to competitors to jointly address their technology deficits.
By Arjen Bongard