Fiat Chrysler Automobiles (NYSE: FCAU) will join BMW-Intel’s alliance to develop self driving cars in the competition against many other auto makes.
It is shown by statistics that many millennials are choosing taxi-hailing services over purchasing their own vehicle, and with many companies, such as Uber, in the midst of developing self driving taxi services, autonomous cars could be a huge market in the future.
Fiat plans to launch production for autonomous cars by 2021 in order to keep up with other competitors who have been or will soon develop self driving vehicles.
BMW and its partners Intel and Mobileye said FCA would bring engineering and other expertise to the deal, paving the way to creating an industry-wide autonomous car platform which other carmakers could adopt, according to Reuters.
Alliances, like the one BMW is leading, are teaming up together in order to efficiently create autonomous cars due to the high production price. This will effectively combat the rising costs and as well as combine different types of technology and expertise from different companies.
FCA Chief Executive Sergio Marchionne cited the "synergies and economies of scale" possible in joining the alliance. Marchionne has been saying that car manufacturers need to merge in order to survive the prohibitively high costs of making more technologically advanced vehicles.
FCA is already part of Alphabet’s self driving unit, Waymo, to develop self-driving cars for its Chrysler Pacifica hybrid minivans. Previously, FCA was looking for other manufacturers to merge with, but said, "banking all of our solutions on one possible outcome is going to be disastrous.”
Autonomous cars will allow carmakers, like the BMW-Intel alliance, to disrupt the taxi market which is run by fleet operators and ride-hailing firms. Without having to pay drivers, ride-hailing could become more cost effective and compete against other forms of transport including buses, according to Reuters.
Ride-hailing services, which make up around 33 percent of the global taxi market, could grow eightfold to $285 billion by 2030, once autonomous robotaxis are in operation, according to Goldman Sachs.
As of now, it seems to be a giant race between many companies from car manufacturers to ride-hailing services to effectively create and launch self driving units as the demand and anticipation for them grow.