Automakers have traditionally fought it out over design, performance, features and fuel economy. But, increasingly, they’re battling for technological dominance. And that’s led three erstwhile German rivals to form an unusual alliance that could give them a leg up when autonomous vehicles start to roll into showrooms in the coming decade.
BMW, Audi and Mercedes have teamed up to deliver the winning $2.8 billion bid to buy Nokia’s next-generation mapping business. They beat out rivals in both Silicon Valley and in China who had hoped to purchase the Nokia subsidiary, known as HERE, which is capable of producing much more details maps than those currently used by automotive navigation systems.
“With the joint acquisition of HERE, we want to secure the independence of this central service for all vehicle manufacturers, suppliers and customers in other industries,” said Chief Executive Dieter Zetsche of Daimler AG.
The acquisition not only comes as a setback to various high-tech bidders, but also to rivals in the auto industry. The highly detailed maps HERE is producing could make it easier for future self-driving vehicles to accurately travel highways and byways without human intervention, providing far more detail than today’s maps. That could prove particularly useful in linking up to new vehicle-to-vehicle and vehicle-to-infrastructure, or V2V and V2I, networks.
Good mapping is, in fact, considered critical to making tomorrow’s smarter cars work, whether fully autonomous vehicles or those that will still require a motorist to remain in control. Automakers are looking at a variety of features that will be triggered by mapping information, such as transmissions that will know the best gear to be in while on hilly roads, and headlights that will know to turn automatically to follow the curves on a highway.
The three German luxury makers were clearly worried about the possibility of having HERE fall into the hands of rivals, perhaps not being available to them at all. And, indeed, some of the former Nokia subsidiary’s other customers may now feel pressure to turn elsewhere. More than half of HERE’s 2015 revenues – estimated at $1.1 billion – will come from the auto industry.
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The acquisition could also prove a challenge for new entries into the automotive market, such as Apple, which is believed to be developing its own autonomous vehicle program, and Uber, the car-sharing service that has said it would like to eventually field a fleet of driverless vehicles.
The HERE acquisition could also put Google, the tech giant, into a new position of power. Google has been mapping much of the world’s roads, but it has also become a leader in the development of autonomous vehicle technology.
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The German coalition is expected to add a fourth partner, private equity firm General Atlantic, which could take as much as a third of the stake in HERE, according to a report by the Reuters news service.
The acquisition could spur the development of competing mapping services. TomTom, the navigation system manufacturer, has set up a similarly venture in a new partnership with the German supplier Bosch.
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HERE was created in 2008 when Nokia purchase the mapping company Navteq for $8.1 billion. It originally focused on smartphone navigation but later shifted emphasis to the auto industry.