Sergio’s autonomous spelling bee

By Christopher A. Sawyer
The Virtual Driver

(May 12, 2016) One area where FCA (Fiat Chrysler Automobiles) chairman Sergio Marchionne may have outwitted everyone is in his tie-up with Google’s parent Alphabet to produce Chrysler Pacifica-based autonomous vehicles. Though the initial agreement has the two companies working together to produce 100 self-driving Pacifica minivans in order to develop Google’s autonomous driving (AD) software and hardware, it’s very likely that this is only the first step in this partnership.

Fiat and Chrysler have neither the money nor the technical depth necessary to develop AD vehicles on their own. Tying up with a leader like Google makes sense, especially if they can leapfrog the competition by licensing the technology it is helping Google develop, and use the Google brand name. (They could call it “Autonomy by Google.”)

It also opens the door for FCA to extend this deal to include the design and development of electric vehicle drive systems, and a scalable EV platform that can be used to build Google branded driverless cars alongside Fiat and Chrysler EVs.

However, Google may view FCA as it saw Motorola, as a means to an end. Google bought Motorola for its patents as a way to blunt Apple’s attack on Android licensees. The phone maker (it basically invented the cell phone) had a massive patent library that it could deploy against Apple, slowing its attack. But by buying a cell phone company, it forced some major phone makers to hedge their bets and create operating systems of their own.

Unlike Apple, which has always sought to control the software and hardware and, therefore, their integration, Google only wanted to sell its operating system to cell phone makers.

In the case of its agreement with FCA, it may see the car maker as a means to an end, a way to learn the ins and outs of seamlessly integrating the components and systems necessary to develop self-driving vehicles. Though GM pulled out of negotiations to develop AD systems with Google because it would not own the information created, there are many automakers eager to buy an off-the-shelf system that can be tailored to their needs, and integrated into their products. Owning FCA would prevent this from happening.

This leaves one viable option. Google continues its work with Fiat Chrysler Automobiles, develops unique and integrated architectures, electric drive and AD systems, and gives FCA exclusive use of the technologies and any updates for a limited amount of time. FCA, for its part, gets the cash infusion it needs, technology it desires but can’t develop on its own, and an agreement to exclusively provide Google-branded autonomous vehicles, should Alphabet decide to produce them.

Alphabet is thus free to innovate without having to carry the added cost and complexity of being an automaker.

The Virtual Driver