9 reasons why Fiat Chrysler-Google partnership makes sense – Detroit Free Press
FCA CEO Sergio Marchionne says repeatedly automakers must consider partnerships with other automakers and tech giants like Apple and Google. For those paying close attention over past year, reports that Fiat Chrysler Automobiles is in advanced discussions with Alphabet Inc.’s self-driving car division about a technology partnership is not a complete surprise.
Marchionne, who also has courted General Motors for a mega-merger, has also met with Apple, Google and Tesla over the past year.
FCA and Google declined to comment, but the Associated Press and the Wall Street Journal reported Thursday that the two companies are in advanced talks to form a technical partnership. The partnership would be the first to match an automaker with Google’s 7-year-old autonomous car project, which is now part of the so-called X lab at Alphabet, Google’s parent company.
There remains a good bit of skepticism that a deal will actually emerge. To make it work, FCA might need to take a back seat to Google on the technology and design, even as it takes on the manufacturing and sales duties. Nevertheless, here are nine reasons why a deal makes sense:
1. We know Marchionne has courted Apple, Google and Tesla:
Marchionne met with both Apple CEO Tim Cook and Tesla CEO and founder Elon Musk during a three-day trip to Silicon Valley last year. During that trip, he rode in Google’s self-driving car, according to a Reuters report. He said at the time he was impressed with Musk and was open to exploring partnerships with Apple and Google.
2. Marchionne confirmed discussions in January:
“There are continuing conversations going on in Silicon Valley with all of the people you just mentioned,” Marchionne said when asked about Apple, Google and others in January at the North American International Auto Show in Detroit. “At least from an FCA standpoint, we should avoid making grandstanding statements about the fact that we are going to take Silicon Valley into Detroit and turn Detroit into Silicon Valley. … We’re not going to do that.”
3. Google is also seeking partners:
John Krafcik, CEO of Google’s self-driving car project, said in January that the company wants to form new partnerships this year to accelerate adoption of its self-driving cars.
“It takes many parts and partners to make a self-driving car,” Krafcik said when he spoke at the Automotive News World Congress, an industry conference. “You can’t do it alone.”
4. Google is already working with many auto suppliers:
Google is already working with some of the biggest automotive suppliers and electronics suppliers in the world, and many of them have a large presence in southeast Michigan. To build its prototype autonomous car, Google worked with Roush, Bosch, Continental, FRIMO, LG Electronics, Prefix, RCO, ZF Lenksysteme and many others.
5. Google’s presence in Michigan continues to grow:
Google has had a presence in Ann Arbor since 2006. Google plans to relocate later this year from its original office in downtown Ann Arbor to a new 140,000 square foot office space near the north campus of the University of Michigan.
Google will lease a current office on Traverwood Drive and construct an adjacent new facility. The new operation will continue to serve primarily as a sales office. As of last year, Google employed more than 400 at its Ann Arbor and Birmingham operations.
6. FCA is behind competitors on self-driving technology: The race to develop semi-autonomous vehicles and the technology to support them is accelerating faster than most predicted just a year or two ago. FCA has been slower than other automakers, including General Motors and Ford, to develop autonomous vehicles. It also remains behind other automakers on product development in general and must devote much of the resources to standard product development.
“For FCA, they don’t have the deep pockets, and time is not exactly on their side,” said Dave Sullivan, an auto analyst for Auto Pacific. “I don’t think it’s too farfetched for FCA to bring in the best of Silicon Valley and combine it with Fiat’s global presence and manufacturing.”
7. FCA will have the production capacity: Fiat Chrysler is phasing out production of its Chrysler 200 and Dodge Dart passenger cars to free up space to produce more Jeep SUVs and Ram pickups in the U.S. The automaker also has said it will build the replacement for the Jeep Compass and Patriot SUVs in Mexico.
While the automaker is also adding some nameplates in the U.S., its massive plan to shuffle its North American production footprint appears to leave plants in Belvidere, Ill. and Warren with untapped production capacity. That open space could be used for low-volume production of a vehicle jointly developed by FCA and Google.
8. A deal between Google and Ford apparently fizzled:
In December, several media outlets reported that Ford and Google would announce a partnership at the Consumer Electronics Show in Las Vegas. That event came and went without any such news. Ford and Google executives were noncommittal when asked about the potential for a deal in January during the Detroit auto show.
9. Other partnerships between automakers and Silicon Valley companies have recently emerged:
FCA needs to make a move to keep up with other automakers who are cutting deals. General Motors said in January it would invest $500 million in the ride-sharing company Lyft in a venture that gives the automaker direct access to the growing market for ride-sharing and a potential channel for offering self-driving cars for on-demand use. GM also is in the process of acquiring Cruise Automation, a 3-year-old start-up that has developed a “highway autopilot” product that could accelerate GM’s quest for a fully autonomous car.
Contact Brent Snavely: 313-222-6512 or firstname.lastname@example.org. Follow him on Twitter @BrentSnavely. USA Today reporter Marco della Cava contributed to this report.