Fiat Said in Talks With Uber as Marchionne Seeks Tech Deals

Jun 08, 2016

Companies said to consider partnership on driverless cars
Fiat Chrysler also has held early discussions with Amazon

Fiat Chrysler Automobiles NV, the first major automaker to strike a deal with Google on driverless cars, now has started discussions on a similar partnership with Uber Technologies Inc., people familiar with the matter said.

A venture with Uber could be announced by the end of the year, said one of the people. Talks are at a preliminary stage, and the ride-hailing service is holding conversations with several other carmakers, said another person. They asked not to be named because the process is confidential.

Fiat also has had initial contacts with Inc. on self-driving vehicles for the web retailer’s deliveries, the people said. No agreements have been reached and negotiations could still fall apart. Fiat and Uber declined to comment. A Milan-based spokesman for Amazon said the company doesn’t comment on rumors and speculation.

Fiat Chief Executive Officer Sergio Marchionne has been pursuing partnerships with tech companies, including offering to build a car for Apple Inc. The debt-laden carmaker is more open than some other carmakers to cooperating with the likes of Google as it lacks the resources to develop self-driving features on its own. The risk is that it’s relegated to the role of hardware producer for tech companies.

“The question here is if Fiat Chrysler is right in working with new industry participants or it should rather try to compete with them like the other carmakers are doing,” said Massimo Vecchio, an analyst at Mediobanca in Milan. “We believe that the scenario where every carmaker develops its own autonomous driving is another example of capital wasting in the industry.”

Platform Suppliers

Uber, which received a $3.5 billion investment from Saudi Arabia last week, offers access to a massive fleet of cars to gather data and help improve systems. Adopting self-driving vehicles would allow the ride-sharing pioneer to lower the costs and risks of working with human drivers. Uber joined with Google in April to create an advocacy group for safety regulations for self-driving vehicles.

The role of carmakers “isn’t to be a platform but to supply the platform,” Paulin Dementhon, CEO of Drivy, a peer-to-peer car rental service, said in an interview in Berlin. Many auto manufacturers “come to us and say we will be the platform. I don’t think they have a chance.”

Fiat Chairman John Elkann has said carmakers should have a “practical approach” and work with new industry participants such as Google and Apple. He argues that carmakers should avoid past mistakes of wasting resources in an effort to move beyond “boring” car-making.

Some of Fiat’s bigger rivals have been investing in various tech ventures, including ride-hailing services, to have an inside look at an industry that’s challenging traditional car ownership. Toyota Motor Corp. agreed last month to make a strategic investment in Uber, while Volkswagen spent $300 million for a stake in Gett, the taxi-ordering rival to Uber.

In January, General Motors Co. invested $500 million in Lyft Inc., the second-largest U.S. ride-hailing service. GM leases vehicles to Lyft drivers in Chicago, and the companies plan to expand the program.

Fiat and Google agreed last month to develop about 100 self-driving prototypes based on the carmaker’s Pacifica minivan. The vehicles will be used by Google to test its self-driving technology. The accord is Google’s first with a major automaker since the technology giant began developing self-driving cars on its own in 2014.