Auto-Parts Makers Unite to Make Self-Driving System
August 23 2016 - 12:40AM
Dow Jones News
Top auto-parts suppliers Delphi Automotive PLC and Mobileye NV
are joining forces to develop a fully autonomous driving system
that car makers could begin placing in their vehicles beginning in
2019.
The two hope the development partnership will produce
off-the-shelf systems for everything from small cars to sport
utilities and pickup trucks—and help them carve out a central role
in the race to supply technology for driverless vehicles. The
tie-up, to be disclosed on Tuesday, comes as big auto makers and
tech companies are moving independently on autonomous-vehicle
developments.
Delphi, a former General Motors Co. spinoff, and Mobileye, of
Jerusalem, now supply auto makers with the sensors and software
that are the building blocks of autonomous-vehicle development
programs. Shares of both have struggled recently as car sales
plateau and customers put pieces in place to eventually develop
their own gear.
Delphi shares are off 6% and Mobileye's are down 11%, both in
the last 52 weeks. The S&P 500 index is up 15% during the same
period.
While auto makers generally have turned over more of the work of
making components to suppliers, autonomous-vehicle technology is
one area they aim to maintain control through in-house expertise.
GM earlier this year acquired autonomous-vehicle developer Cruise
Automation Inc. to help accelerate its research, and Ford Motor Co.
last week said it is investing in or teaming with several tech
companies to launch a car without steering wheels or pedals by
2021.
Delphi Chief Executive Kevin Clark said in an interview the two
aim to shoulder much of the development burden for auto makers that
have grown comfortable with outsourcing critical technology
development.
"We're able to pool the investment as well as the technology and
execution risk in one place so it doesn't have to be duplicated by
multiple [auto makers] over and over again," Mr. Clark said.
The pair will jointly invest "several hundred million dollars"
in the effort, but a spokesman declined to provide other
details.
In January, Delphi and Mobileye expect to demonstrate a system
that can navigate tough road conditions, such as entering a
roundabout, merging into highway traffic, or making left turns
across multiple traffic lanes.
Both companies have deep relationships with car makers, but
their system won't be ready until 2019.
Integrating their tech in future vehicles could take as much as
two years, the companies concede, making it unlikely to hit the
market until 2021 or 2022.
Mobileye Chairman and Chief Technology Officer Amnon Shashua
said the pair hope to overcome any timing hurdles by offering "a
new level of driving intelligence," mimicking a driver's decision
making behind the wheel in complex situations. "If we don't want to
clog a city with robotic systems that get stuck in busy traffic,
you must endow these systems with intelligence."
The time it will take to get into production models might put
the pair at a disadvantage. Google parent Alphabet Inc., GM and
others have hinted at earlier releases of their gear. Volvo Car
Corp. is launching a public test of autonomous vehicles in Sweden
next year—Nissan Motor Co. and Tesla Motors Inc. also aim to launch
rival systems by decade's end.
Still, the joint project by Mobileye and Delphi could appeal to
smaller and midsize car companies that don't have the deep pockets
of a GM to fund the big capital outlays needed to develop
driverless technology in-house. Mobileye already has partnerships
with some auto makers, including BMW AG.
Other large auto-parts makers have used acquisitions to bolster
their autonomous-driving offerings. Germany's Continental AG last
year paid about $680 million for Elektrobit Automotive Group, a
Finnish software developer.
Mobileye is a leader in supplying components for semiautonomous
systems, including core technology for Tesla's Autopilot
driver-assist system. It also is a leader in providing mapping
systems providing images that help a car's cameras and sensors
negotiate roadways in real time.
The Israeli supplier split with Tesla over the way the electric
car maker deployed its technology following a high-profile fatality
in May involving one of Tesla's cars. The abrupt cancellation of
the agreement underscored the sometimes uneasy relationship between
technology suppliers and auto makers.
"At this early stage, I think there is an interest by auto
makers to be able to do as much as they can themselves," said
Jeremy Carlson, an analyst with consultants IHS Automotive. "The
auto makers ultimately are going to be liable for all these
systems. The need to know what the systems are doing."
Write to Mike Colias at mike.colias@wsj.com
(END) Dow Jones Newswires
August 23, 2016 00:25 ET (04:25 GMT)
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