Fiat, Google Plan Partnership on Self-Driving Minivans

  • Carmaker's stock leads Italian index, European auto shares
  • Fiat Chrysler to build vehicles for Google's test fleet

Fiat Chrysler Automobiles NV was the best performer among European automotive shares after becoming the first major carmaker to reach a cooperation deal with Alphabet Inc.’s Google to develop self-driving vehicles.

QuickTake Driverless Cars

Fiat Chrysler rose as much as 3.2 percent and was trading up 1.5 percent at 7.01 euros as of 11:03 a.m. in Milan, one of two companies posting gains Wednesday on the 16-member Stoxx Europe 600 Automobiles & Parts Index. That pared Fiat Chrysler’s decline this year to 18 percent, valuing the Italian-American auto manufacturer at 8.93 billion euros ($10.3 billion).

The carmaker plans to develop about 100 self-driving prototypes based on the Chrysler Pacifica hybrid-powered minivan that will be used by Google to test its self-driving technology, the companies said late Tuesday. The partners’ engineering teams will work together on the project at a facility in southeastern Michigan.

Fiat Chrysler “is now potentially in front” of competitors following investors’ criticism that it was lagging behind the industry in autonomous driving, said Massimo Vecchio, an analyst at Mediobanca SpA in Milan.

The accord marks Google’s first agreement to work directly with an automaker to integrate its self-driving system since the technology giant began developing autonomously operated cars on its own in 2014. Fiat Chrysler Chairman John Elkann said last month that the auto industry should work with “new industry participants” like Google and Apple Inc. rather than trying to compete with them.

Fiat Chrysler Chief Executive Officer Sergio Marchionne, who mentioned a possible partnership with Google in December, has been directly involved in talks with the U.S. company, people familiar with the matter said in April. The two companies will remain free to cooperate in driverless technology with other partners, said people familiar with the matter.

Google, which has run more than 1.4 million miles of tests on its own driverless prototypes, has been in discussions with various auto manufacturers about working together. A deal with General Motors Co. couldn’t be concluded because of disagreements over ownership of technology and data, a person familiar with the matter said in April.

Setting up a partnership with Google is in line with Marchionne’s approach to development. He contends that carmakers waste capital developing multiple versions of the same technology and that the industry should consolidate to become more profitable. He intends to put Fiat Chrysler in a better position for a merger by the time he steps down as the manufacturer’s CEO in 2018.

Google needs more cars to develop and test its autonomous technology, but doesn’t want to invest in factories to build them. The joint project meanwhile offers Fiat Chrysler a window into new technology and helps the company prepare for a time when self-driving cars may be a big part of the transportation business, said Maryann Keller, an independent auto-industry consultant in Stamford, Connecticut.

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