Mergers – The “Changing” Automotive Landscape!

30 March 2019

In recent years the transportation and mobility market has been booming to a rapid pace. Start-ups, OEMs, Tier 1s, Oil and Gas companies, telecoms, infrastructure, insurance services and transportation companies have all invested and developed solutions in the field. This level of investment has created a massive influx of Start-ups worldwide that looks to be steadily growing and creating a new “business paradigm”. Y-mobility is supporting some mobility, autonomous driving, Artificial Intelligence and Electrical vehicles start-ups and through our constant communication and interaction with Investment Funds, Entrepreneurs and Corporates we are able to better understand the market needs and trends. Here at Y-Mobility, we understand that the Autonomous Connected Electric and Share (ACES) trends would have different levels of penetration in the market but they would go hand by hand and the companies that can present a solution covering all these trends would be taking a good market share.

Currently we believe that the market in mobility and connectivity are over saturated and we would start to see a consolidation of start-ups, corporations and partnerships with the objective of increasing their market share whilst amalgamating their technologies and overall capabilities.

In the last month we saw the formation of another large partnership in two of the ACES trends. Ford & VW as well as Daimler & BMW. Although Ford & VW positioned their partnership around the development of Self-driving vehicles and Daimler & BMW are planning to work on the Mobility space these two partnerships are quite related as both have the same ultimate goal. Consolidate the market of ACES for the luxury, mid-low and transportation market.

Ford & Volkswagen

Ford and Volkswagen have officially confirmed the first details of their broad ‘global partnership’, which will begin with the two Giants, pairing up to deliver commercial vehicles in the near future. In addition, the two have also signed a MoU (Memorandum of Understanding) to “investigate collaboration” on autonomous/electric vehicles and mobility services, as well as other “additional vehicle programmes” in the future as  stated in their joint announcement.

The two Giants would work in consolidating the market of freight and transportation in the commercial vehicle space, an area on which both companies alreadyhad a large market share with the Ford transit and the VW Transporter. Two of the biggest sellers in the industry and with a tremendous potential to offer new mobility services and autonomous functionalities, tap into a market in which both brands already have a large stake.

This partnerships would give them the opportunity to explore and co-invest in mobility solutions and autonomous driving within their current consumers base and share the cost of the development of these technologies. It would not be surprising, if next year, they end up having a common platform developed for freight and transportation too as part of their common work.

However, we would need to wait and see as these two giants have somewhat “different” mentalities regarding mobility, technology implementation and culture. So it would be interesting to see how this partnership develops and if it comes to full “fruition” as they both hope.

Daimler & BMW

The biggest announcement this month was the merger between BMW Group and Daimler. The two luxury brands are pooling their mobility services to create a new global player providing sustainable urban mobility for customers. The cooperation will see the two – formerly – rival manufacturers bring together services in different areas with 5 (five) joint ventures: REACH NOW for multimodal services, CHARGE NOW for charging, FREE NOW for taxi ride-hailing, PARK NOW for parking and SHARE NOW for car-sharing, with the aim of becoming a “leading provider” in the mobility market.

This collaboration would aim to consolidate the shared-mobility marketplace in Europe and join forces to tackle the Asia and EU market. It would allow them to consolidate their investments, suppliers, resources, re-structure the partnership to serve the customers better and also enable them to better integrate their mobility services.

It would also send a clear message to their automotive competitors and the American (Google, Apple, Amazon, Uber & Lift) and Chinese (Baibu, Alibaba) technological  companies in this space that they are a major, active and evolving player in the industry. Not too many people know that Daimler and BMW have a mayor rivalry for many years, sometimes even exceeding the limits. For “historians” of the industry, their lawsuit and court battles in regards to the tallest building in Munich are still a reference of many conversations to the day. Nonetheless, this initiative demonstrates the maturity of both companies and the changes in the mindset of their senior management teams to be able to recognise that collaborating and hence innovating together would be of greater benefit rather than to engage in futile (and costly) competition.

For us, as an active member of the mobility market, this is one of the biggest – and most positive – outcomes of the merge. If BMW and Daimler can collaborate and make a successful partnership, we all need to learn and understand that in the new mobility era, collaborating in a win-to-win situation is far more profitable in many ways as it enables efficiency improvement and facilitates market penetration.

The big Impact of these Merges:

Like in all markets, in mobility too there are constantly winners and losers. So even though we believe that these partnerships would help to facilitate higher penetration of the mobility services and it would improve the technological development of autonomous vehicle, the downside of these merges would be affecting the start-ups ecosystems in this area which is a vibrant and active one the past few years. BMW, Daimler, Ford and VW have been investing heavily and have been working in the mobility ecosystem with start-ups and entrepreneurs for the last 3 years. With the consolidation of the recent partnerships some start-ups would be affected as the OEMS would reduce the interaction in the ecosystems looking, promoting or investing more in mobility as their main investment would be to develop the partnerships and do their work “in-house”. As a consequence of this, we could potentially see a lot of start-ups disappearing from the market due to lack of investment and a lot of reluctance from investors to invest in this space for the next coming years.

Article by David Fidalgo for Y-Mobility

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