BY DEREK KAUFMAN
Do you know anyone who actually uses an old-school scorecard to record the inning-by-inning results of a baseball game? The phrase and the scorecard activity come from the days when a ball stadium would list all of the players in that day’s game and provide fans a scoring format to track their favorite players on a pitch-by-pitch basis. Today, you need a similar scorecard to understand how the players in the automotive industry are partnering with each other in ways you never previously imagined. Here are just a few examples:
What do the Chevrolet Camaro ZL1, Tahoe, Yukon Denali, Cadillac Escalade, Ford F-150, Mustang, Expedition and Lincoln Navigator have in common? They all use variants of the same 10-speed transmission that was jointly developed by Ford and GM several years ago. Ford and GM originally partnered to design a 10-speed longitudinal transmission and a 9-speed transverse unit but Ford opted not to use the 9-speed. Instead, the two companies focused on the 10-speed and have since expanded its availability with both Honda and Toyota now running versions of the same design.
We’re not sure if there is a more pointed rivalry than that of Daimler and BMW. Their luxury vehicles compete for a narrow sector of the world’s automotive market and they regularly introduce new models specifically designed to block the other company’s market advances. In the world of autonomous vehicles, however, both companies realize that the challenge is bigger than either of them and they need to combine forces to speed development and enhance the scope of their technological development.
This is big money. Daimler and BMW have already pledged over $1 billion to collaborate on the various ride-hailing, parking and EV charging services owned or invested in by both companies. In a press release, the companies said they will jointly form a “new global player in sustainable urban mobility.” Five joint venture companies will be formed — Charge Now for charging stations, Park Now for parking solutions, Share Now for car sharing, Free Now for taxi and ride-hailing alternatives to Uber and Lyft, and Reach Now for multi-modal services that can combine individual vehicles and mass transit in urban centers. It will be interesting to see if these two competitors can work cooperatively to build this new approach to transportation.
In 2018 Ford and VW announced an agreement to collaborate on the design and development of commercial vehicles and mid-range pickup trucks. Ford will build a new Ranger pickup that will be rebranded as a VW Amarok for European and other markets outside the USA. Ford will also make the full-size Transit van available to VW to rebrand as part of VW’s Transporter series.
Less than a year after that announcement, the two brands have upped the ante by forming a partnership to co-develop electric drive cars and autonomous vehicles. Ford will gain access to VW’s MEB took kit (the Modularer E-Antriebs-Baukasten or “Modular Electric Drive Construction Kit) to introduce battery electric vehicles (no internal combustion engine) for the European market in 2023. The MEB concept was formed way back in late 2015, shortly after VW was embroiled in “Dieselgate” and had at its core the ability to share technology with other automakers.
VW has very ambitious EV plans. The company has promised to roll out two dozen different BEV models by 2025 representing about 10% of its total 10 million vehicles sold. Ford’s investment in MEB content will help fund that development.
In February 2017, Ford announced their $1 billion investment in Argo AI, a developer of autonomous vehicle artificial intelligence. In their new partnership, VW will invest $1 billion in Argo AI and also roll in the autonomous vehicle technology developed in Audi’s AV program valued at $1.6 billion.
Really? Why would the leading tire producer in the world invest in a Dutch navigation company that most folks in the USA think has been largely displaced by Google Maps and Waze? The answer lies in the emergence of Intelligent Transportation and Transportation as a Service (TaaS). Bridgestone recognized that TomTom has 860,000 telematics customers each producing daily data on global use of automobiles. As advances in Vehicle-to-Vehicle and Vehicle-to-Infrastructure connectivity move forward, the role of the tire moves from one of vehicle ride and performance to one of connected devices yielding information on weather conditions, road surface conditions, predictive tire wear rates and forecasts of tire disposal requirements. The TomTom acquisition makes Bridgestone a smarter supplier of tires for fleet customers around the world.
Strap your helmet on, this will be a wild ride. Here are just a few of the automotive partnerships of vehicle OEMs and big tech firms:
Uber has investment from Suzuki, Toyota, Volvo and Baidu (Baidu is China’s Google)
Lyft has investment from Magna, Aptiv, Honda, GM, Ford and Waymo
Waymo has investment from Jaguar, Land Rover, FCA, Renault, Nissan and Mitsubishi
Mobileye (Now owned by Intel) has investment from BMW and Hyundai
Here (a mapping company) has investment from BMW, Daimler, Audi, Bosch and Nvidia
Aurora has investment from VW and Hyundai
Agro AI has investment from Ford and VW
The Fiat Chrysler company has been looking for a merger opportunity for several years. In May of this year they made an overture to Renault Nissan for a merger of the firms but subsequently pulled the concept due to political resistance from the French government, which owns 15% of Renault, and the abstention by Nissan during the vote on the terms. The French government has previously urged the full merger of Nissan and Renault and has even offered to reduce its ownership percentage to see a stronger merged company formed to protect French auto jobs, but they apparently did not like the complication of adding FCA to that picture.
Chrysler has connected with Waymo on AV development but the company is behind the curve on both EV and AV development compared to GM and Ford. Its strength comes from the Ram and Jeep brands in the USA but it is challenged to grow its Fiat business in Europe and its position in China. FCA could be a candidate for a Chinese merger in the future to open its sales in China while developing channels for Chinese products in the USA and Europe.
Derek Kaufman is a Managing Partner at Schwartz Advisors (SA). SA is a team of highly experienced auto aftermarket experts working with clients in corporate growth projects and both buy-side and sell-side merger and acquisition activities. As part of its growth consulting work, SA keeps current with the emerging technologies and business models that will drive the future supply of automotive parts and service. The reference to any specific commercial products, processes, or services by trade name, trademark, manufacturer or otherwise, does not necessarily constitute or imply its endorsement, recommendation, or favoring by ICA or Schwartz Advisors. The views and opinions of the author do not necessarily state or reflect those of the ICA staff.