Ford and Google are reportedly set to announce a partnership to build self-driving cars in a nonexclusive deal that addresses the weak spots in each company’s present efforts.
“By pairing with Google, Ford gets a massive boost in self-driving software development; while the automaker has been experimenting with its own systems for years, it only revealed plans this month to begin testing on public streets in California,” write Yahoo Autos’ Justin Hyde and Sharon Carty, who broke the story yesterday based on information from three sources.
“By pairing with Ford, the search-engine giant avoids spending billions of dollars and several years that building its own automotive manufacturing expertise would require,” they write.
Ford is scheduled to announce the deal at the Consumer Electronics Show in January, they write. Neither company confirmed the report, but Automotive News’ Richard Truett and Gabe Nelson have their own source who says that “both parties have been negotiating on a contract manufacturing deal ‘for a long time.’” Analysts and other journalists on the auto beat see the sense of it all.
“Ford has been referring to itself as a ‘mobility company’ recently, with their future plans clearly focused on alternative-fuel powerplants and autonomy. This deal with Google helps them skip a few steps and catch up with the likes of Volvo, Mercedes-Benz, BMW, and Nissan,” observesJalopnik’s Justin Westbrook.
“Car companies will struggle to keep up with the pace of autonomous technology, while tech companies will face a daunting task in setting up the full production and distribution of an automobile line,” Karl Brauer, senior analyst at Kelley Blue Book, says in a statement cited by Michael Martinez in the Detroit News. “An alliance between the two industries could make everything happen much quicker, giving the advantage to tech and car companies that align first.”
Chris Urmson, director of self-driving cars for Google, “said earlier this year he had already met with Ford and other automakers, including General Motors, Toyota, Volkswagen and Daimler because Google was interested in working with conventional automakers who have expertise in engineering and building cars,” points out the Detroit Free Press’ Alisa Priddle in USA Today. “‘For us to jump in and say we can do this better, that’s arrogant,’ Urmson said.”
In addition, “Google has added two veteran Ford executives to its leadership team. Former Ford CEO Alan Mulally joined Google’s board of directors eight days after he retired from the automaker on July 1, 2014,” point outAutomotive News’ Truett and Nelson. “Then in September, Google hired John Krafcik as CEO of the company’s self-driving car project. Krafcik, who most recently was president of TrueCar Inc., was CEO of Hyundai Motor America” after a 14-year stint at Ford.
“We have been and will continue working with many companies and discussing a variety of subjects related to our Ford Smart Mobility plan,” Alan Hall, communications manager for technology, research and innovation, told all comers in a statement. “We keep these discussions private for obvious competitive reasons, and we do not comment on speculation.”
“Google began testing tiny, bubble-shaped self-driving prototype vehicles of its own design on public roads around Mountain View,” in June, Reuters’ Sneha Teresa Johny reminds us, and is also testing self-driving prototypes in Austin, Tex. It is “expected to make its self-driving cars unit, which will offer rides for hire, a stand-alone business under its parent company, Alphabet Inc., next year,” as Bloomberg’s John Lippert and Jack Clark reported last week.
“The race to develop a self-driving vehicle fleet has intensified since February when Bloomberg reported that Google was developing a rival to Uber Technologies Inc., most likely in conjunction with its driverless-car project,” they wrote. “Uber is pursuing its own autonomous capabilities, while automakers are deploying semi-autonomous technologies while experimenting with so-called shared mobility.”
Forbes contributor Neil Winton says that yesterday’s speculative news should be welcomed by all automakers.
“The nightmare scenario for the traditional automotive industry is that it would wake up one morning to find Google or Apple or some other well-financed technology company had blindsided it with new computer driven cars, leaving it only with low-margin, out-dated products,” he writes. And he points out that “investment researcher Evercore ISI said if the story is confirmed, Ford should get much credit for being the first big vehicle manufacturer to reach an agreement with a major technology player and potential market disrupter.”
It is, in fact, becoming more and more apparent that it’s not a question of whether the market will be disrupted but rather who will be aligning with whom in creating what? See Gabe Nelson’s “In Krafcik, Google gains a visionary,” from September for more on the subject.