German automakers explore alliance to develop self-driving cars

Volkswagen, BMW and Daimler, the parent of Mercedes-Benz, are in talks about forming an alliance to jointly develop autonomous driving technology and spreading the costs. Germany business monthly Manager Magazin, citing company sources, reports that the suppliers Bosch and Continental are also part of the talks, and that the alliance should remain open to other manufacturers and technology companies.

Volkswagen CEO Herbert Diess and BMW Development Board member Klaus Frohlich are the main characters behind the push, the publication reports, with high-level working groups assigned to hashing out the details and a March deadline identified for a decision on whether to move forward. The working groups are reportedly tackling questions such as which technology should be used as the basis and which roles each company would play in the alliance.

The companies see an alliance as a way to keep up with advances in self-driving vehicle technologies in the U.S. and China. "If we combine our knowledge and technology, then we can even overtake Waymo," the magazine quoted one of the participants in the talks as saying.

In related news, Germany's Handelsblatt says BMW and Daimler have been examining whether to cooperate on product development for autonomous vehicles as a way to reduce the billions of dollars in expected development costs and establish a common industry standard. The publication also reports BMW and Mercedes are discussing co-developing a new platform for small cars to underpin the next-generation 1 Series and A-Class.

Such a move could cut billions in costs, insiders tell Handelsblatt, but because both companies just released new versions of their compact cars, any new co-developed platform wouldn't debut until at last 2025. It would also test the two companies' deep-seated rivalry. But they are reportedly taking a cue from Ford and Volkswagen's recent announcement that they will share the costs of developing commercial, electric and self-driving vehicles as a sign of the times for automakers.