The 2016 North American International Auto Show started today at Cobo Center in Detroit so let talk about autonomous cars. Ford and Google are in talks to have the Dearborn,MI-based automaker build Google’s next-generation autonomous cars under contract, Automotive News has learned. A source with knowledge of the project says both parties have been negotiating on the deal “for a long time.” An announcement, if finalized, could come as early as the International Consumer Electronics Show in Las Vegas.
Neither firm would confirm the reports for the record. Google (GOOG) officials did confirm that the company is talking to automakers. Ford Motor Company (F) official Alan Hall did say, “We work with a lot of tech companies all over the world. We keep these discussions private for obvious competitive reasons and we do not comment on speculation.”
Google loading up auto executives
To fan the rumors, two veteran Ford executives have recently joined Google. Former CEO Alan Mulally joined Google’s board of directors eight days after he retired from the automaker on July 1, 2014. Then in September, Google hired John Krafcik as CEO of the company’s Self-Driving Car Project. Mr. Krafcik, who most recently was president of TrueCar Inc., was CEO of Hyundai Motor America. He spent 14 years at Ford, including a stint as chief engineer during the development of the Ford Expedition SUV.
Ford is scheduled to hold a press conference on Jan. 5 in Las Vegas. Ford CEO Mark Fields, product development chief Raj Nair, research and advanced engineering vice president Ken Washington, and Don Butler, executive director of connected vehicles and services, are scheduled to attend.
Yahoo Autos reported on the negotiations, quoting three sources familiar with the deal. The sources said the deal would create a joint venture legally separate from Ford. The venture would shield Ford from potential liability. The agreement, if completed, also would be non-exclusive, meaning Google could negotiate a similar deal with another automaker.
CEO Fields recently gave Auto News an update on Ford’s Smart Mobility efforts. The initiative would bolster the company’s expertise in car-sharing and other new business models for transportation. He said. “It’s not about just going from an old business to a new business. It’s about going to a bigger business.”
Auto News theorizes that a Ford deal with Google would fit within the strategy laid out by CEO Fields. He commented during an interview:
It’s not only about what are the things that are going to be core to us but who are we going to partner with. I don’t think we can just be so arrogant to think that we’re going to do everything on our own and we’re going to do something better than maybe a company that does that 24/7. For us, partnerships are really important.
New mobility models beyond cars
During a visit to Ford’s Silicon Valley research facility in Palo Alto, CA, Mr. Fields signaled that Ford sees new mobility models as a way to grow its business. When asked why Ford is developing its own software for self-driving cars, rather than striking a deal to use best-in-class software from an outside vendor. Ford’s Fields joked that Silicon Valley practically invented the concept of “frenemies.” In a corporate context, that means companies are willing to simultaneously collaborate on projects and compete against one another. Ford’s R&D center is working on self-driving software, Mr. Fields said, “that doesn’t mean we won’t work with others. I think that’s part of the beauty of being here.”
Such a partnership would mark another step toward the marketplace for Google. Bloomberg reported that Google is thinking of putting its technology into automated taxis as a rival for Uber and Lyft. Google may spin-off the unit into a standalone business within its new Alphabet Inc. corporate structure in 2016.
Ties between Ford and Google
It isn’t clear whether Ford would design a purpose-built vehicle for Google or supply a standard production car fitted with the sensors and computers that the car needs to guide itself down the road.
Having Ford build Google’s test fleet would save the Silicon Valley tech giant years and billions in development costs. The Ford-built vehicles would use the automaker’s production-ready powertrain as well as safety and emissions components.
There are already ties between Ford and Google. Google’s first generation of 100 self-driving vehicles were assembled in Detroit by Roush Industries, a company closely aligned with Ford. The bubble-shaped cars, as Crain’s Detroit Business reported used components from local Detroit area suppliers.
Thilo Koslowski, lead automotive analyst at Gartner (IT) in Santa Clara, CA said it makes sense automakers would want to work with Google, which could help them catch up to rivals that are pursuing automated driving to differentiate their products.
And at Google, “the focus has shifted to looking for OEM partners to deploy the technology, rather than considering building their own vehicles,” The Gartner analyst said. “That makes sense. If Google is interested in bringing the benefit of the technology to consumers, then they need as many partners as possible.”
Ford and Google are said to have been in talks since at least 2012 on autonomous cars. The two companies also teamed up in 2011 on technology that would help vehicles learn customers’ driving habits and get them to destinations more efficiently.
VP Washington said recently that he expects fully autonomous vehicles to be ready within four years. Ford has secured approval from California to test its own autonomous cars in California. Ford has been testing autonomous Hybrid Fusion’s at the University of Michigan’s 32-acre simulated city Mcity.
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Autonomous cars will increase the direct impact of the Internet of Things (IoT). With all of IoT’s inherent security and connectivity issues.
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Ralph Bach has been in IT long enough to know better and has blogged from his Bach Seat about IT, careers, and anything else that catches his attention since 2005. You can follow him on LinkedIn, Facebook, and Twitter. Email the Bach Seat here.
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