German carmakers and suppliers are exploring industry-wide collaboration on self-driving cars, to shrink costs and compete with wealthy American rivals.

I'm not driving, are you driving? Source: dpa

Within a few short years, a new wave of electric and self-driving vehicles will transform personal transportation as we know it. But for carmakers, these technologies will demand a staggering level of investment. They may not like the cost, but surviving through the radical new automotive era requires it.

With the global economy cooling, German carmakers and suppliers seem set to embark on unprecedented collaboration, in the hope of sharing some of these development and production costs. BMW, Volkswagen and Daimler, the maker of Mercedes-Benz cars, are in talks on a formal collaboration to work on key technologies and industry standards for autonomous driving. Major parts suppliers, including Bosch, Continental and ZF, are also known to be taking part.

On Monday, Handelsblatt reported that traditional rivals BMW and Daimler were now open to the possibility of wide-ranging cooperation. Company sources were keen to manage expectations, however, saying talks were still at an early stage.

Joint ventures

Transforming carmakers VW, Ford mull wide-ranging partnership in e-mobility, autonomous driving Longtime rivals Ford and VW are considering joining forces to stay on top of massive investments in future technologies.

Intensive talks between German partners marks a new stage in their collaboration. VW is thought to favor an open platform, to attract other users, but is some way from making a decision on partnerships. A BMW spokesperson said it also favored a “non-exclusive” platform.

In any case, different regulatory regimes around the world suggest the current patchwork of global collaborations and alliances may continue. Industry observers say a first joint effort may focus on developing accurate sensors, indispensable to all manufacturers.

There are other reasons why the logic of cooperation is so strong: safety has to be standardized across the industry, and all autonomous cars will have to communicate in an understandable language. There has already been substantial industry cooperation on mapping tools, primarily via Here, a Finnish mapping startup which German carmakers have jointly owned since 2015.

Meet Siri, your cabdriver

But the corporate lawyers will be extremely wary. Daimler, Volkswagen and BMW are all subject to an ongoing European Union investigation into collusion and cartel-like behavior, which could ultimately cost them billions in fines. Any new cooperation will be carefully watched by regulators, although defining autonomous driving standards is unlikely to cause problems.

All German companies are lagging behind the main player in self-driving technologies: Waymo, owned by Alphabet, the owner of Google. While Germany’s automakers are still planning real-world tests, the Google subsidiary has already conducted millions of kilometers of self-driving experiments, and has even launched a driverless taxi service in the city of Phoenix, Arizona.

Ominously, this week Waymo announced it would build a production facility intended to transform mass produced vehicles into autonomous driving technology. But the key advantage for Waymo remains financial. With Google sitting on a cash pile of billions in dollars, Waymo can afford the huge investment needed to stay relevant in an electric era.

Can German manufacturers cooperate their way into competing with that amount of investment? Time's a-wasting.