The Fuse

Fiat Chrysler Takes Shortcut on Path to Autonomy Through Deal With Google

by Matt Piotrowski | May 04, 2016

The advancement of self-driving cars hit another major milestone this week.

The Google-Fiat Chrysler deal announced Tuesday should go a long way in helping the deployment of the new technology that promises to improve vehicle safety and increase efficiency. In what is part of a trend of deals between tech companies and traditional automakers, Fiat Chrysler (FCA) will provide Google with 100 customized hybrid minivans for the technology giant to integrate autonomous technology.

The Google-Fiat Chrysler deal is “an affirmation that the future of transportation will be shaped by collaboration between the car industry and the tech world.”

“While the number of vehicles ordered is relatively small and will be used for testing purposes, it is an important milestone in the race towards autonomous vehicles,” said Amitai Bin-Nun, Director, Autonomous Vehicles Initiative at Securing America’s Future Energy (SAFE). “It’s an affirmation that the future of transportation will be shaped by collaboration between the car industry and the tech world. This is an early glimpse into that future.”

The partnership is a positive development for the two companies. “The deal is good for both parties, and certainly for FCA, particularly from an image standpoint,” Jack Nerad, executive market analyst with Kelley Blue Book, told The Fuse.

For FCA, the move fits in with the vision of CEO Sergio Marchionne, who has campaigned to merge with another automaker. While this deal is far from a takeover, it does provide synergy with a corporate giant, and the biggest tech company with regards to autonomy. Marchionne has also spoken openly about how the auto industry wastes money by duplicating research and development already being conducted by other car companies, as well as in the tech space. By relying on Google’s advanced technology, FCA may not need to dedicate resources in this space.

FCA has been behind other automakers in technology and electrification, and the deal helps it catch up with companies like GM and Ford, which have already taken major strides in developing autonomous vehicles.

FCA has been behind other automakers in technology and electrification, and the deal helps it catch up with companies like General Motors and Ford, which have already taken major strides in developing autonomous vehicles. “Fiat Chrysler has been lagging in these areas and it’s been spending money to revitalize its product line,” said Michelle Krebs, Senior Analyst with Autotrader. “They’ve done virtually nothing in autonomy. This is a fabulous opportunity to fill a void they have and they can learn a lot in a hurry about self-driving cars.”

So far, Google has driven roughly 1.5 million miles with autonomous vehicles, and this deal will more than double its fleet. If the partnership goes well, it can build trust between tech and auto companies, both of which have different organizational structures and corporate cultures.

“This provides an opportunity for the two to test out a relationship and see their compatibility, or lack thereof,” said Kelley Blue Book’s Nerad.

Given Marchionne’s willingness to have his company be taken over, there will likely be speculation that Google will want to buy FCA.

“Google can buy every automaker out of petty cash,” Marchionne said recently.

He added: “My approach is to be completely open to technology. I think the next paradigm of this business is a paradigm that involves the cooperation for technology with the disruptors. Google is one… The key is to find a way in which we can coexist with the disruptors, and bring our set of skills to the table. Speed is essential here.”

Buying a stake in an auto company would give Google the ability to quickly produce vehicles on a mass scale, something it has little interest in building up new capabilities for.

Experts are taking note of the fact that the deal is for minivans, which are much larger than the tiny vehicles Google has produced and generally boast high safety ratings. The two companies didn’t say why the vehicles FCA will design and engineer will be minivans, but the vehicle type highlights the momentum toward normalizing self-driving cars.

“So far, most discussions surrounding autonomous vehicles have dealt with taxis and replacing taxi drivers,” said Kelley Blue Book’s Nerad. “Minivans are ubiquitous vehicles that work well when you’re by yourself or traveling with others. They are also a good way of testing what will work with self-driving cars. What can work in a minivan can also work in sedans or SUVs.”

Google has used the Toyota Prius and Lexus SUVs for autonomous testing, but the difference is that they weren’t produced specifically for that purpose.

U.S. automakers are on board for autonomy

While the partnership is a reflection of Google’s motivation to bring about adoption of self-driving technology, it also shows the growing necessity on the part of automakers to grow in this space.

While the partnership is a reflection of Google’s motivation to bring about widespread adoption of self-driving technology, it also shows the growing willingness—and necessity—on the part of automakers to grow in this space. GM has bought Cruise Automation and a stake in ride-sharing service Lyft, while Ford recently set up a subsidiary to focus on development of autonomous technology. Outside the U.S., automakers and governments are also taking critical steps in autonomy deployment. FCA’s deal with Google is another important marker in this trend.

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