The wolf is coming! The three giants of BBA "alliance" for autonomous driving

BBA, once again "chose" to stand together.

Profit margins in the luxury car sector are higher than in the mass market, but economies of scale are harder to generate. As new technologies reshape the industry, traditional competition is giving way to collaboration.

German local media reported that Audi will form an alliance with its rivals Daimler and BMW to develop autonomous driving , and the official announcement may be made at the Frankfurt Motor Show in September.

BMW and Daimler announced in July that they had entered into a long-term development partnership to develop highly automated driving functions, including Level 3 highway automated driving and autonomous parking, while the non-exclusive partnership is open to other automakers and technology partners.

Automakers are being forced to collaborate due to the huge development costs of key technologies (electrification, intelligent networking), where they face competition from tech giants.

Audi, BMW and Daimler previously collaborated to acquire Nokia's map company HERE in 2015. In 2018, BMW and Daimler went a step further, merging their time-sharing rental businesses and seeking to occupy a larger market share.

1. Cost reduction is the top priority

The cooperation between Daimler and BMW is expected to integrate approximately 1,200 technicians from both parties to jointly develop autonomous driving technology, with the goal of mass-producing the technology on new vehicles in 2024.

One of the reasons why the two companies chose to cooperate in the field of autonomous driving is to reduce costs.

Daimler's first quarter financial report for 2019 is not optimistic. The company's net profit in the first quarter was 2.15 billion euros, down 9% year-on-year, and its earnings before interest and taxes (EBIT) fell to 2.8 billion euros, down 16% year-on-year.

The BMW Group's first quarter 2019 financial report showed that quarterly revenue fell 0.9% year-on-year, and its profit before interest and taxes was 589 million euros, a year-on-year decline of 78.2%.

Among them, the automotive business suffered a loss for the first time since the first quarter of 2009 (310 million euros), while it had a profit of 1.881 billion euros in the same period last year. The profit margin of the automotive business was -1.6%, compared with 9.7% in the same period last year.

Pressure to develop electric and self-driving cars has led to a surge in research and development costs for major global automakers, including Daimler.

Take Daimler's Mercedes- Benz as an example. Its annual R&D expenditure has increased from about 8 billion euros four years ago to 14 billion euros (about 15.7 billion US dollars). However, the original idea of ​​relying on new car sales to offset and support subsequent R&D investment has also encountered difficulties.

“We’ve learned that developing these systems is a bit like climbing a mountain,” said Michael Hafner, head of autonomous driving at Mercedes-Benz. “The closer you get to the top of the mountain, the thinner the air around you becomes, the more force you need to take each step, and the more complex the challenges you have to solve become.”

It is reported that although Audi's A8 has the first-mover advantage of being the world's first mass-produced L3, funding issues may also be the reason why Audi decided to go this way.

Earlier, Audi's parent company Volkswagen Group announced that it would carry out in-depth cooperation with Ford Motor Company in the field of autonomous driving, including investing in Ford's autonomous driving company Argo AI, and integrating Audi's original AID (autonomous driving research and development department).

2. Standards alliance is a long-term strategy

As the saying goes, first-rate companies set standards, second-rate companies build brands, and third-rate companies make products.

Another focus of the cooperation between Daimler and BMW is that the two parties will set up a technical standards committee to select potential supplier partners for ADAS and autonomous driving technology in the coming months.

"Someone has to standardize the technology and regulation will follow," said Klaus Froehlich, BMW's board member responsible for research and development. The rising costs of developing self-driving cars have forced BMW and Daimler to join forces to share the financial and engineering burden.

Just a few months ago, 11 companies including Audi, BMW, Daimler, Aptiv, Baidu, Continental, Fiat Chrysler, HERE, Infineon, Intel and Volkswagen jointly released a framework document called "Safety First for Autonomous Driving" (SaFAD).

This white paper is a long and detailed document, which is roughly divided into two parts. Among them, design safety defines the scope requirements of autonomous driving, covering 12 core principles. Including design operation scope (ODD), safety, user responsibility, user and vehicle takeover, data recording and other aspects.

Former Daimler CEO Dieter Zetsche once said that standards are a chicken-and-egg problem. Someone must standardize the technology, and regulation will follow.

The focus on standards has become a top priority for several other automakers as well.

In April this year, Ford Motor, General Motors and Toyota Motor announced that they would form the Automated Vehicle Safety Consortium (AVSC) to establish safety and testing rules for driverless cars.

The alliance will work with SAE International to deliver a safety framework that addresses critical functional safety needs.

For example, the European Association of Automotive Suppliers (CLEPA) decided to let Nvidia lead a new working group to develop evaluation methods for connected and automated cars.

Founded in 1959 and headquartered in Brussels, CLEPA has more than 3,000 member companies covering almost all products and services in the automotive supply chain. Many of these technologies, such as seat belts, airbags and ESP, were developed in Europe by CLEPA member companies.

Currently, the CLEPA working group defines an open standard for creating simulation scenarios, describing road topology representations, sensor models, world models, as well as industry standards and key performance indicators to advance verification methods for the deployment of autonomous vehicles.

In addition to CLEPA, Nvidia is also working with major international organizations to develop standards and regulations for automated vehicles. As automakers make progress in autonomous driving, electric vehicles, and connected car technologies, standards will play an increasingly important role. Especially in the absence of government regulation, the industry may need to develop its own standards to gain consumer confidence.

It's clear that autonomous driving is considered a major step in the evolution of the automotive industry. The idea of ​​allowing for fully driverless driving may never come to fruition, but there's still a lot of work to be done for automakers.

Let's see where all these giant alliances will take us and what the final product will look like. But right now, we don't know how far the above alliances can go. After all, the three BBAs are still "life and death" competitors in the terminal market.

Just as the first thing the new BMW CEO did was to do his best to block Daimler.