7/5/2016 | 3 MINUTE READ

The Future of Automotive M&As: Mobility and Autonomy

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Last year there were 591 automotive-related mergers and acquisitions (M&As) totaling $62.1 billion, according to PricewaterhouseCoopers (PwC). The number of deals was up nine percent with the combined value soaring 60 percent to its highest level since 1999. While the bulk of these were between traditional automotive firms—led by ZF’s $12 billion purchase of TRW—a new type of M&A is pushing to the forefront. It centers around advanced mobility and autonomous-driving as carmakers and suppliers race to find tech partners to help them develop next-generation technologies as well as ride- and car-sharing services.

The rapid pace has continued this year. In May alone there were about a dozen major new mobility/autonomy investments, including a few so-called megadeals valued at $1-billion or more. The players include heavyweights such as Apple, BMW, Fiat Chrysler, Ford, General Motors, Google, Porsche, Toyota and Volkswagen, as well as a variety of Silicon Valley start-ups and other emerging tech firms. As with more traditional M&As, new mobility collaborations can help a company in several ways, such as providing access to new products, processes, customers, technologies and markets. They also are incubators for another key resource: software engineering talent. 

Ford’s recent $182-million investment in Palo Alto, California-based Pivotal Software is a good example. As part of Ford’s new Smart Mobility subsidiary, Pivotal is expected to help the automaker develop cloud-based mobility and connectivity technologies—the two companies previously worked together to create a smartphone app that allows users to access vehicle functions remotely. And Ford vows to apply Pivotal’s methodology and analytic tools to its own product development, engineering and information technology groups with the hope that Pivotal’s expertise will help its own engineers learn how to better leverage and expand their software development skills from vehicle-focused technologies to consumer applications. 

GM, which earlier this year invested $500-million in the ride-sharing company Lyft and formed its own Maven personal mobility brand, doubled down with the purchase of San Francisco-based Cruise Automation for a reported $1 billion. Analysts say Cruise’s 40-person team has extensive know-how in computer vision and analytical systems needed for self-driving cars, which GM believes will provide it with a “unique technology advantage.” 

Toyota announced an unspecified investment in Uber and is partnering with the ride-hailing service to develop new features and mobility programs. This follows last November’s creation of its own Toyota Research Institute (TRI) to develop artificial intelligence for next-generation vehicles. The $1-billion TRI investment includes research centers in California and Massachusetts, where the automaker is partnering with researchers at Stanford University and MIT.  

Apple is investing $1-billion in Didi Chuxing, which competes against Uber in China. Didi claims to have 99 percent of China’s taxi-hailing business and 87 percent of the country’s private ride- and car-sharing market. Google, meanwhile, is building a development center near Detroit to make it easier to collaborate with auto industry partners on its self-driving technology. One of the first projects involves outfitting 100 Chrysler Pacifica hybrid minivans with Google’s automated driving systems. 

Other recent deals include VW’s $300-million investment in Israel-based Gett, a five-year-old company that offers delivery and taxi-hailing services. And BMW is partnering with California’s Scoop Technologies, which markets a namesake carpooling app to help co-workers and neighbors coordinate and share rides. BMW also inked recent deals with several other new mobility companies, including Moovit, RideCell, Summon, Zendrive and Zirx. 

Don’t bother learning all the names. Many of these companies probably won’t be around in a few months or years. Investing in such start-ups is inherently risky and expensive. But the entrepreneurs and engineering talent behind them are driving the innovation that’s transforming the transportation market and creating a variety of new mobility services. As PwC notes, new businesses are being created to develop and manage breakthrough technologies and integrate them into the auto industry. And it expects M&A investments and other strategic partnerships to continue to increase in coming years to help sort out the winners and losers.  

With more than 25 years of experience, Steve Plumb has covered every aspect of the auto industry as an industry writer, editor and marketing professional. He was the founding editor of AutoTech Daily and rejoined the AutoBeat team in 2015. He previously was the editorial director for a leading public relations company. 


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