For years automakers have formed strategic partnerships with competitors in a bid to cut costs and ramp up efficiency. Be it to share the burden of R&D expenses or to skip the lengthy in-house design process, such partnerships have long highlighted the challenge of producing what are highly capital-intensive products at scale and quality.
Despite its recent setbacks, the Renault-Nissan-Mitsubishi Alliance has proven the benefits of scalability. The late Sergio Marchionne had also lobbied for the automotive industry to embrace partnerships, and under John Elkann, FCA very nearly fulfilled that vision through a tie-up with Renault that collapsed at the last minute.
While full-scale mergers may not be the answer moving forward, savings do need to be made when developing specific product areas, namely electric vehicle (EV) batteries, autonomous driving hardware and software, and shared mobility services.
The most unlikely of partnerships was recently formed between BMW and Daimler, as once-dire enemies consolidated their mobility businesses
The most unlikely of partnerships was recently formed between BMW and Daimler, as once-dire enemies consolidated their mobility businesses. A further deal to jointly develop autonomous driving technology followed in July this year, along with an awkward Twitter exchange.
Others have also cozied up. Toyota recently announced it would work with Chinese manufacturer BYD to develop battery electric vehicles (BEVs). The agreement will see the pair develop what Toyota terms ‘low floor SUVs’ (read: ‘crossovers’) as well as sedans. China will be the first market to benefit from such a partnership, with the first batch of cars scheduled to launch in 2020.
Arguably more significant is the collaboration between Ford and Volkswagen. As new research from Automotive World details, Ford will use VW’s electric vehicle architecture and Modular Electric Toolkit (MEB) to design and build at least one high-volume fully electric vehicle for European customers from 2023, “more efficiently advancing its promise to deliver expressive passenger cars while taking advantage of VW’s scale,” according to Jonathan Storey, author of ‘The Automaker Data Book—Q2 2019’.
Setting aside decades of fierce rivalry, most automakers appear to have accepted that AVs and EVs will require cross-party talks
As part of a global alliance, both parties will also jointly develop self-driving vehicle technology, along with a joint venture for commercial vans and medium-sized pickups that was revealed at the Detroit Auto Show in January.
The trend can be aptly described by the expression ‘frenemies’: manufacturers could chance it on their own, but may be better served to swallow their pride and join someone with complementary qualities. It is becoming clear that in the pursuit of CASE mobility—at scale and with the necessary return on investment to appease shareholders—traditional corporate politics goes out of the window.
Setting aside decades of fierce rivalry, most automakers appear to have accepted that rolling out AVs and EVs will require cross-party talks.