Fiat Chrysler wants more partnerships--now, with Uber & Amazon

June 9, 2016

If Game of Thrones has taught us anything, it's that success depends on strategic partnerships. Sergio Marchionne has taken that message to heart: after wooing Volkswagen and General Motors (and getting shot down both times), he tried to hook-up with Apple (no response), then swiped right on Apple's favorite frenemy, Google

Now, reports suggest that Fiat Chrysler's CEO is sidling up to two more friends-with-significant-benefits: Uber and Amazon.

Details about Marchionne's discussions with those two companies are limited. According to people familiar with the matter, talks with Uber center on FCA developing a fleet of autonomous cars for the ride-sharing company in a deal that could be announced by the end of the year. FCA has proposed a similar arrangement with Amazon, with Marchionne & Co. building self-driving delivery vehicles for the company.

Our take

Unsurprisingly, FCA, Uber, and Amazon have remained mum on these rumors. However, to folks on the sidelines--including us--both deals make a lot of sense. (Uber and Lyft drivers might disagree.)

FCA doesn't have the resources that many other automakers do. That's had an impact on FCA's research and development efforts, which stalled during the company's restructuring in 2009 and have had trouble keeping up with competitors ever since.

Most notably, FCA hasn't devoted much capital to developing autonomous driving software, which is, along with electrification, a trend that's poised to upend today's auto industry. And so, FCA has established a relationship with Google, which has devoted more resources to self-driving technology than any other company. 

Using that partnership to forge other alliances is a good way for FCA to maximize its investments. On that front, Amazon and Uber both seem like especially good candidates:

  • Amazon is already working on delivery by drone. Adding swarms of autonomous vehicles to deliver packages at street-level would seem like a no-brainer.
  • Uber has made it clear that it doesn't want to build cars itself, but instead wants to develop more partnerships with automakers. So far, the company has made do with its fleets of human drivers, but that's becoming expensive. Maintaining a fleet of autonomous cars might be pricey, but it would cost far less than paying wages and benefits for drivers. Previously, Uber's CEO has offered to buy 500,000 autonomous Teslas. If FCA can provide vehicles equipped with Google's self-driving technology--and do so at a competitive price--that's a win-win. 

Should they come to fruition, let's hope these partnerships pan out better for Marchionne than they've done for most folks in Westeros.

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