Mercedes joins forces with Bosch to develop self-driving taxis

The pact between the world’s largest maker of premium cars and the world’s largest automotive supplier forms a powerful counterweight to new auto industry players like ride-hailing firms Uber and Didi which are also working on self-driving cars.

Technology companies and carmakers are striving to adjust to a shifting landscape in the auto industry as consumers increasingly use smartphones to locate, hail and rent vehicles, rather than going out and buying cars.

The alliance not only marks an end to Daimler’s efforts to develop an autonomous car largely on its own, but moves the auto industry’s ambitions beyond simply developing prototype vehicles towards industrial-scale production of self-driving cars.

Financial terms were not disclosed of the deal between the two German companies, which was announced on Tuesday.

Bosch - which was founded in 1886, the same year that Mercedes founder Carl Benz patented the motorcar - will develop software and algorithms needed for autonomous driving together with the carmaker.

Bosch said Mercedes would be able to use the jointly developed system for two years before it could be offered to competitors.

The deal will help the automotive supplier make up ground in a competitive autonomous driving system sector where rivals Continental, Delphi, ZF [ZFF.UL] and others have also made heavy investments.

For Daimler and its Mercedes division, teaming up with Bosch helps them throw more engineering resources at autonomous cars, allowing them to speed up the process of creating a production-ready system for autonomous cars by several years.

The autonomous system will now be ready by the beginning of next decade, Daimler said, without disclosing when it had first envisaged the commercial launch of automated taxis, or robo-taxis.

“The prime objective of the project is to achieve the production-ready development of a driving system which will allow cars to drive fully autonomously in the city,” Daimler said in a statement on Tuesday.

The company will continue to build and sell vehicles that can be manually operated by individual drivers.


The market for advanced driver assistance systems and autonomous vehicles is expected to grow from about $3 billion in 2015 to $96 billion in 2025 and $290 billion in 2035, Goldman Sachs said last year.

Daimler is focusing its efforts on the app-based car-sharing and ride-hailing sector dominated by China’s Didi, and U.S.-based Uber [UBER.UL] and Lyft. Like autonomous cars, this market is a big global growth area and is expected to expand by 28 percent a year to 2030, according to consultancy McKinsey.

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