iNext from BMW
More than 1,000 engineers are developing the new vehicle on a campus north of Munich.
(Photo: BMW Group / Enes Kucevic)
MunichThe rivalry between Daimler and BMW is considered legendary. Decades of competition ultimately made both brands global global market leaders for luxury sedans. But soon competition could be slowed down, at least in some areas: BMW-Boss Harald Kruger and DaimlerDevelopment chief Ola Källenius is currently examining the possibility of extensive alliances, the Handelsblatt learned from circles of both companies.
At the heart of the talks is a closer cooperation on the future topic of autonomous driving. A merger of the product development is examined, even patents could expose the companies to each other. The goal is to reduce the billions in development costs and establish a common industry standard. Both companies do not comment on the talks, but emphasize their fundamental openness.
Stagnating sales, shrinking profits and unlimited development costs: BMW-Boss Harald Kruger and Daimler’s Chief Development Officer Ola Källenius have no illusions about the future of their companies. The best years of the German noble manufacturers are over for now, the stock prices are already in permanent low.
Källenius, from May Dieter Zetsche as DaimlerBosses needs a plan for the future. And BMW CEO Harald Krüger has to explain to his major shareholders from the Quandt family how the group will technically remain at the top in the future and keep the yield. He also hopes to remain on board for a second term until 2025.
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But this will be difficult for any company – even for heavyweights like VW and Ford. Number one and four in the industry announced the start of extensive cooperation at the Detroit auto show. The focus is on the future fields of electromobility and autonomous driving, the development and marketing of which will cost every company tens of billions of euros.
If Ford and Volkswagen These expenses can not shoulder alone, then this also applies to BMW and Daimler. Although the manufacturers from Munich and Stuttgart earn more money per vehicle, compared to the market leaders in sales but rather niche manufacturers: Volkswagen sold with its twelve brands twice as many cars as BMW and Daimler together.
Kruger and Källenius know about this backlog. According to information from the Handelsblatt, they are therefore engaged in discussions about far-reaching cooperation. Even in the conventional car industry, the list of topics is long: Both need more added value in the US to meet the new political requirements of the North American Free Trade Area.
It talks about a joint procurement of components such as transmissions. The same goes for the subject of the battery cell: Daimler, like BMW, wants to obtain its energy storage from CATL; The Chinese are building a factory in Thuringia for a major order from BMW.
Cost reduction by billions
Part of the talks is also a cooperation with smaller car models. In the compact segment, the manufacturers could put their models of the 1 Series (BMW) and the A Class (Daimler) on a common platform. This alone could cut costs by billions, insiders say.
But the road is long, because both companies have just renewed their compact classes. Even if they now decide to plan and shop together, results will only be achievable after 2025.
Of course, there are also reservations on both sides, the years of cultivated rivalry continues. So the resistance of the self-confident developers of BMW and Daimler are still great. In addition, concerns remain with regard to antitrust law, as it is said in business circles.
No unjustified concern: The European Commission is currently investigating whether BMW and Mercedes have already illegally pacted in conjunction with other companies in the past. BMW is therefore reluctant to Daimler’s proposal to develop common filter systems for diesel engines in the future. According to industry circles, BMW has rejected this idea.
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In Munich, there is a deep-seated resentment: In 2016, Daimler had alerted the EU to possible illegal agreements between car manufacturers on exhaust systems. While Daimler hopes leniency after leniency, one fears a hefty penalty at BMW.
But the challenges in the coming decade are so great that both companies now want to jump over their shadows. One topic has particular relevance for Krüger and Källenius: the future of autonomous driving. Both companies are investing billions in technology, which will one day make the driver in the car superfluous.
For the first round of the race for the future, the Germans see themselves well equipped: BMW has been with Intel and its subsidiary Mobileye allies. On a campus north of Munich, more than 1,000 engineers develop the “iNext”. The planned for 2021 electric SUV should dominate the automated driving and at least on motorways for a long time without drivers get along. The technique is so good that Fiat Chrysler joined the consortium.
Attackers from Silicon Valley
Daimler, on the other hand, has a strong partner on board with Bosch. The Swabians want to dominate with the new S-Class 2021 at least the so-called “Level3” of autonomous driving. Bosch alone has more than 1,000 patents in this field, more than any other supplier.
But these prestige projects are not enough for the future, according to Munich and Stuttgart. The further evolution of this technology requires far more test kilometers, computing power and the development of algorithms that are able to handle complicated situations in city traffic. Here, the automakers compete with corporations such as the car dealer Over and the alphabetoffshoot Waymo,
The Silicon Valley invaders are investing at a fast pace in autonomous driving and relying on the use of artificial intelligence. While Over aims to replace the driver and to offer taxi rides in cities by up to 70 percent cheaper, is the claim of Waymo even more comprehensive. Like Android in the smartphone market, the Waymo software will one day become the global operating system of the auto industry.
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Waymo relies on automakers who have already abandoned the development race on their own. So Waymo also cooperates with his test fleets Fiat Chrysler, but also Jaguar and Honda are on board. Uber did for his test fleet Volvo as a partner.
“Whoever is the first to master autonomous driving, who is the first to offer a functioning autonomous taxi fleet, will occupy a huge market,” says Dietmar Voggenreiter from the consulting firm Horvarth und Partner. “In the US, Waymo and Uber are hard to beat as platform operators,” the former believes AudiManager, “but in Europe, the roles are not yet distributed.”
Horvarth and Partner estimates that by 2035, the market potential of these services could increase to between 150 and 200 billion euros per year. That is almost double the turnover of today’s BMW Group.
“Unlike in the classic car business, this is about platform logic,” says a participating manager. Who attracts as many providers on his side, can reduce costs and set an industry standard – a balance of security and costs. It’s about the question of how many sensors a car needs and which routines a computer decides the reaction of a car.
In the end, authorities and insurers decide which technique is allowed on the road on the basis of kilometers driven. It is clear that the premium manufacturers Mercedes and BMW are even too small with the best technology alone to enforce such a standard in Europe or the US.
In addition, such a standard would probably only apply in the Western world. China has its own ideas and favors a different model. Instead of finding their own way through the streets using satellite positioning, the vehicles in metropolitan areas should communicate directly with each other and with traffic lights.
This solution requires fewer sensors, radars, and computing power. Since no automaker can do without a business with China, the corporations have to develop two systems in parallel. “Cooperations could dramatically reduce costs,” says a manager of a major producer.
A powerful service provider
Even though Kruger and Källenius meet with resistance in their organizations, they are taking the first steps towards one alliance are already done. In 2015, Daimler and BMW bought together with the VW subsidiary Audi the map provider Here. The high-precision data of the former Nokia– daughter can do it with the GoogleRecord records.
At the end of 2018 Mercedes and BMW also merged their car-sharers “Car2go” and “DriveNow”. Under the common roof, they want to build a powerful mobility service provider that keeps Uber and Co. in check, at least in the European metropolises.
In the environment of these two units, the activities could be bundled for self-driving cars, as it was said. However – as senior managers curtailed – the talks were at the beginning. “It will take a while to reach a successful conclusion.” However, the creators of the autonomous automobile should not allow much time to pass. With each passing day, Waymo’s fleet lays back more kilometers of testing – and expands its lead.