Rivals team up for autonomous cars

In a race to the finish line, the world's biggest carmakers are forging unlikely alliances to become the first to offer safe and reliable autonomous cars.

Once familiar lines between rivals have become blurred after German automaker Volkswagen teamed up with US' Ford Motor Co while Germany's BMW AG and Daimler AG struck a deal.

Automakers are also enlisting the help of technology companies like Cruise, Argo and Aurora (which is backed by Amazon), who license their know-how to them.

Arun Kumar, director in the automotive and industrial practice at AlixPartners LLP, a consulting firm, told China Daily that cost is driving the newly formed alliances.

"On electric and autonomous (vehicles) we're talking about $300 billion worth of investments that have been announced so far," Kumar said. "These are announcements by major OEMs (original equipment manufacturers), suppliers, which are probably a bit more understated. So, we are talking about an initial down payment of $300 billion.

"Then, if you add in things like EV (electric vehicle) infrastructure that you need to put in place to enable the adoption and acceleration of electric vehicles we're talking another $30 to $40 billion of investments that somebody in the industry needs to make."

Ford and Volkswagen announced on July 11 they are expanding their global alliance to include electric vehicles and to introduce autonomous vehicle technology in the US and Europe. VW will invest $2.6 billion in Ford's autonomous-car partner Argo AI in a deal that values the Pittsburgh startup at more than $7 billion,

Ford CEO Jim Hackett stressed that the two automakers would remain "independent and fiercely competitive in the marketplace".

Despite these, and other billion-dollar investments, the road ahead still isn't clear for companies that want to make autonomous vehicles.

"In the next five years there is no clear-cut business model to sell the products," Ferdinand Dudenhoffer, an automotive economics professor at the University of Duisburg-Essen in Germany told China Daily by e-mail. "Thus, you have to invest with very long payback periods. …A world without cooperation or mergers will not be viable."

Sam Abuelsamid, principal research analyst at Navigant Research, focuses on mobility. He believes autonomous vehicles have had to apply the brakes because of development issues.

"Reliably detecting and classifying other vehicles, pedestrians, cyclists in the real world with a constantly changing environment is very challenging and predicting what they will do next is even more so," he told China Daily.

Carmakers are also working with technology companies to bring driverless cars to market. GM purchased Cruise Animation for $1 billion in 2017. Audi is using its decadelong partnership with Nvidia, a specialist in artificial intelligence, to create a self-driving car by 2020. Nvidia also supplies chips to Tesla and signed a deal with Toyota in 2016.