* Deal aimed at accelerating production of "robo-taxis"
* Bosch and Mercedes to develop software and algorithms
* Car and tech firms racing to secure slice of market
* Pact acts as counterweight to new players like Uber
(Adds details that Mercedes will have two years exclusivity
before products can be sold to other companies, that Mercedes
will still make conventional vehicles, that Mercedes has a team
of 500 engineers on the project in Stuttgart and Silicon Valley)
By Edward Taylor
FRANKFURT, April 4 Mercedes-Benz owner Daimler
and supplier Robert Bosch are teaming up to
develop self-driving cars in an alliance aimed at accelerating
the production of "robo-taxis".
The pact between the world's largest maker of premium cars
and the world's largest automotive supplier forms a powerful
counterweight to new auto industry players like ride-hailing
firms Uber and Didi which are also working on self-driving cars.
Technology companies and carmakers are striving to adjust to
a shifting landscape in the auto industry as consumers
increasingly use smartphones to locate, hail and rent vehicles,
rather than going out and buying cars.
The alliance not only marks an end to Daimler's efforts to
develop an autonomous car largely on its own, but moves the auto
industry's ambitions beyond simply developing prototype vehicles
towards industrial-scale production of self-driving cars.
Financial terms were not disclosed of the deal between the
two German companies, which was announced on Tuesday.
Bosch - which was founded in 1886, the same year that
Mercedes founder Carl Benz patented the motorcar - will develop
software and algorithms needed for autonomous driving together
with the carmaker.
Bosch said Mercedes would be able to use the jointly
developed system for two years before it could be offered to
The deal will help the automotive supplier make up ground in
a competitive autonomous driving system sector where rivals
Continental, Delphi, ZF and others
have also made heavy investments.
For Daimler and its Mercedes division, teaming up with Bosch
helps them throw more engineering resources at autonomous cars,
allowing them to speed up the process of creating a
production-ready system for autonomous cars by several years.
The autonomous system will now be ready by the beginning of
next decade, Daimler said, without disclosing when it had first
envisaged the commercial launch of automated taxis, or
"The prime objective of the project is to achieve the
production-ready development of a driving system which will
allow cars to drive fully autonomously in the city," Daimler
said in a statement on Tuesday.
The company will continue to build and sell vehicles that
can be manually operated by individual drivers.
CAR COMES TO DRIVER
The market for advanced driver assistance systems and
autonomous vehicles is expected to grow from about $3 billion in
2015 to $96 billion in 2025 and $290 billion in 2035, Goldman
Sachs said last year.
Daimler is focusing its efforts on the app-based car-sharing
and ride-hailing sector dominated by China's Didi, and
U.S.-based Uber and Lyft. Like autonomous cars, this
market is a big global growth area and is expected to expand by
28 percent a year to 2030, according to consultancy McKinsey.
"Within a specified area of town, customers will be able to
order an automated shared car via their smartphone. The vehicle
will then make its way autonomously to the user," Daimler said.
"The idea behind it is that the vehicle should come to the
driver rather than the other way round."
The cutthroat competition to launch self-driven cars has
forced carmakers to shift strategy from an evolutionary towards
a revolutionary approach.
Instead of evolving driver assistance systems to achieve
full autonomy, carmakers are now experimenting with radical car
designs combined with software-driven development - which has
led to alliances with technology companies.
Mercedes-Benz's arch rival BMW teamed up with
Israeli autonomous vehicle tech company Mobileye and
chip maker Intel last year to develop new technology
that could put autonomous cars on the road by 2021.
Intel has since agreed to buy Mobileye for $15.3 billion, a
deal which followed Qualcomm's $47 billion move to
acquire Dutch automotive chip supplier NXP.
Before deciding to partner with Bosch, Mercedes-Benz had two
engineering teams, totalling about 500 people, working on
autonomous vehicles. One took an evolutionary approach,
upgrading the capabilities of conventional vehicles, while the
other team took a more radical approach to the car's design.
Bosch and Mercedes did not disclose how many additional
engineers they would assign to the teams in Stuttgart and
"Cars which do not rely on any driver input have a different
architecture and sensor setup, with more radar and cameras,"
Christoph von Hugo, a senior Mercedes-Benz safety manager, told
Reuters at a recent event to present safety systems.
NO STEERING WHEEL NEEDED
The current Mercedes E-Class can cruise without driver input
on highways, keeping the distance to the car in front and
staying in lane using a system which has "level 2" autonomy.
Full autonomy - known as an "eyes off, brains off" or "level
5" system - does away with even the need for a steering wheel.
"We don't want to wait until level 3 has arrived before we
start with level 4/5. That will be too late," von Hugo said,
adding the prospect of new revenue streams from maintaining
fleets of robo-taxis was a big motivating factor for doubling up
the carmaker's R&D efforts.
Autonomous vehicles came closer to road-going reality after
Google unveiled a prototype car which it developed
with the help of Bosch back in 2012. Mercedes-Benz responded by
developing an S-class limousine that drove 103 km (64 miles)
between the German towns of Mannheim and Pforzheim a year later.
Real commercial applications for autonomous cars will start
to take off between 2020 and 2025, Ola Kaellenius, Daimler board
member and head of Group Research and Mercedes-Benz Cars
development told Reuters last month.
"If you take the robo-taxi, you start perhaps in a city or
several cities or areas of cities, and then you grow from
there," he said. "The key is to get to something that you can
commercialise, scale up."
Bosch is already one of the world's largest suppliers of
advanced driver assistance systems (ADAS) and recently announced
an alliance with U.S. tech firm Nvidia to develop a
self-driving computer for production cars. Mercedes-Benz and
auto supplier ZF also have separate alliances with Nvidia.
The Bosch-Daimler alliance will rely on high-definition
mapping systems provided by HERE, the digital mapping firm owned
by BMW, Mercedes, Audi and Intel.
(Editing by Pravin Char and Mark Potter)