By Christoph Rauwald, Oliver Sachgau, and Bloomberg
February 28, 2019

Daimler AG and BMW AG have agreed to cooperate on developing self-driving cars, the latest move by the luxury-car rivals to share costs as a technology shift shakes up the industry.

The German manufacturers have signed a memorandum of understanding to jointly develop the next generation of autonomous-driving technology, which should be market-ready by the middle of the next decade, they said Thursday in an emailed statement. Additional partners, either technology companies or auto manufacturers, could join the venture, according to the statement. Bloomberg News first reported plans for cooperation in December.

“Combining the key expertise of our two companies will boost our innovative strength and speed up the spread of this technology,” said Klaus Froehlich, BMW’s head of development.

Automakers have become more open to reaching out to competitors to share surging costs for electric and self-driving cars. German rival Volkswagen AG is in negotiations with Ford Motor Co. to cooperate on vans and potentially on autonomous vehicles. Partnerships are also a way to become more agile in the race to dominate digital services such as ride-hailing to counter cash-rich giants like Alphabet Inc.

Daimler’s Mercedes-Benz brand and BMW lead the lucrative luxury-car segment, where margins are higher than in the mass-market segment but economies of scale are more difficult to generate. As new technology reshapes the industry, traditional competition is giving way to collaboration.

BMW created a self-driving research center near Munich in 2017, where it’s been working on technology that will be featured in its iNEXT model. The vehicle is due out in 2021 with so-called Level 3 autonomy, which means the car can operate on its own but requires driver supervision. Daimler will launch a pilot program for more advanced self-driving vehicles this year in San Jose.

Joining forces on self-driving cars will deepen Daimler and BMW’s existing cooperation. The manufacturers already collaborate on components purchasing and bought digital-mapping company HERE Technologies for 2.5 billion euros ($2.8 billion) in 2015 together with VW’s Audi. Last week, the pair combined their respective car-sharing platforms Car2Go and DriveNow as well as other mobility offerings.

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