Fiat Chrysler Automobiles will cooperate with BMW to develop self-driving cars, the companies said Wednesday, as traditional automakers look to defend their turf against cash-rich Silicon Valley giants eager to upend the industry.
Autonomous vehicles are expected to transform the auto industry within the next decade. The new technology pits established car makers, with their decades of experience and global supply chains, against the likes of Google and Apple, which have much greater financial resources as well as greater expertise in the software that will be crucial to the development of driver less vehicles.
Fiat Chrysler has struggled more than most car makers to compete in this new world because of meager profits. The company has largely stayed on the sidelines while rivals like Volkswagen or General Motors moved into technology-oriented businesses like car sharing or digital mapping.
The long-term risk for Fiat Chrysler was that, absent a major shift, it would be relegated to producing cars for Silicon Valley companies that would supply the software and take most of the profit. Waymo, a unit of Google’s parent, Alphabet, has been using Fiat Chrysler minivans to test self-driving technology. In June, Apple confirmed longtime speculation that it is working on autonomous systems, while giving few details.
But on Wednesday, Fiat Chrysler said that it would join BMW’s existing alliance with Intel and the chip maker’s newly acquired self-driving technology unit, Mobileye. Fiat Chrysler and BMW said they were open to additional partners.
“There was an expectation Fiat Chrysler was resigned to being a hardware manufacturer for Apple or Google,” said James Hodgson, a senior analyst at ABI Research. “This is a sign that they are going to take a more active role.”
Since last year, BMW has been working with Intel and Mobileye, an Israeli company that makes cameras, sensors and software used in self-driving vehicles. Intel acquired Mobileye in a deal that closed last week, in what was seen as an attempt by the chip maker to catch up with its rival Nvidia in self-driving technology.
Fiat Chrysler is not likely to bring much self-driving know-how to the alliance, Mr. Hodgson said. But, he noted, its experience producing less expensive, mass market vehicles will complement BMW’s strong position in the high end of the car market.
“In order to advance autonomous driving technology,” Sergio Marchionne, the chief executive of Fiat Chrysler said in a statement, “it is vital to form partnerships among automakers, technology providers and suppliers.”
Still, it will be a huge challenge for established carmakers to remain relevant. They are experts in manufacturing vehicles that run on internal combustion engines in large numbers for affordable prices. But that skill will become less relevant if, as expected, battery-powered cars become ubiquitous. Electric vehicles have fewer parts than their conventional counterparts and are easier to manufacture.
In addition, the financial resources of the Silicon Valley companies dwarf those of the automakers. Apple is worth 40 times as much on the stock market as Fiat Chrysler. Indeed, if they chose to, Apple or Google could acquire a car maker for sums that, by their standards, would amount to pocket change.
Mr. Hodgson said it was possible for established car makers to be able to defend their positions, but, he added, “You should not underestimate the challenge facing them.”