Lyft's recent alliance with automotive mega-supplier Magna International is one example of the rapidly-evolving landscape of automated-driving collaborations (image: Lyft).

Shifting sands in the AV landscape

Over the past 130 years, the auto industry playing field has become scattered with the ashes of countless defunct companies. Where there once were thousands of OEMs, a mere 10 vehicle makers took 73% of global sales in 2017. With the expected coming age of automated mobility services, that consolidation will likely continue. The signs are already showing.

With enough information, we can make reasonable guesses at how things will play out. However, the “unknown unknowns” as the old saying goes, will always mess up your projections. This is especially true when it comes to figuring out how to make money in a world of automated vehicles.

Most of the players are hedging their bets until they see some evidence.

Over the past year, we’ve seen new alliances coalesce as companies try to fill the gaps in their expertise. These range from strategic partnerships to outright acquisitions. A pair of Stuttgart-based companies that have collaborated seemingly since Karl Benz took his first drive—Bosch and Daimler—have paired to develop a full-automation driving system that also will be offered to others.

Aptiv (the autonomy and electrical business unit of the former Delphi) acquired startup nuTonomy to flesh out its stable that also includes Ottomatika and investments in a range of lidar and data companies. Ford has set up shop in Miami, where it will be working Dominos, Lyft, Postmates and eventually others to develop and validate a transportation-as-a-service platform. The aim is to optimize the deployment of AVs for maximum utilization and revenue-generating capability.

Denso has a relationship with Toyota that’s even closer than the Bosch-Daimler matchup. Until recently, Denso had been content to retain its traditional tier one supplier role; rather than developing stand-alone automated driving packages, Denso chose to develop components and subsystems and work with its customers on integration. And the formation of Toyota Research Institute - Advanced Development, with Toyota and Aisin Seiki, brings those companies into much tighter alignment.

Along with the announcement of the e-Palette alliance at the 2018 CES that includes Amazon, Pizza Hut, Uber, Didi and Mazda, the makings of a comprehensive new mobility business are starting to emerge.

Lyft itself has been an interesting case to watch. In early 2017, it seemed content to partner with a slate of companies including Waymo, General Motors, Jaguar Land Rover and Ford to deploy those company’s vehicles on Lyft’s ride-hailing platform. Then, mid-year, Lyft announced it would develop its own self-driving system that would be offered to other manufacturers.

Claims that Lyft had mountains of data to work from for this development were always dubious. Without its own fleet of vehicles, it could only collect data from the apps used by drivers and passengers. Such data could be useful for logistics algorithms, but not for training automated driving systems.

Meanwhile, another giant Tier 1 supplier, Magna, has been dabbling on the sidelines, demonstrating some basic SAE Level 2 and 3 automation systems without really diving into the deep end. Magna does appear to occupy a unique space among its top competitors, though: in addition to designing and manufacturing almost every component that goes into a vehicle, Magna also is capable of manufacturing complete vehicles.

Magna has shown several concepts developed in-house. And its Magna-Steyr unit in Austria builds vehicles for various OEMs including Mercedes-Benz, BMW, Jaguar, and Aston Martin. It recently made a $200 million equity investment in Lyft and will work with the ride-hailing provider to develop highly automated vehicles. A Magna-Lyft alliance has virtually all the bases covered, with the possible exception of automation software. In this regard, they have the option of enlisting help from the likes of Aurora Innovation, which is already working with Volkswagen and Hyundai.

This kind of combination of existing manufacturing infrastructure and engineering expertise could suddenly become an important force in the developing-autonomy market, which is getting more interesting by the minute.

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