Why Google and Ford Would Want to Team Up on Self-Driving Cars

December 22, 2015, 8:42 PM UTC
Kirsten Korosec

Could a game-changing deal between Internet giant Google and automotive behemoth Ford usher in a new era of self-driving cars?

If such a partnership is true, it could help Google move much more swiftly into an important new sector with a big automaker with global reach. At the same time, a deal could enable Ford, a slower mover on self-driving car tech, to leverage Google’s aggressive push into autonomous car software and computing.

According to a report in Yahoo Autos, Google (GOOG) and Ford (F) plan to create a joint venture to build self-driving cars and could announce the deal as early as next month at the CES trade show in Las Vegas. Another report in Automotive News, says that a deal between Google and Ford is “in talks,” and the parties have been negotiating on a contract manufacturing deal for a long time.

Either way, such a union could have huge upside for both parties.

WATCH: Why Ford is in Silicon Valley:

Ford told Fortune:

“We have been and will continue working with many companies and discussing a variety of subjects related to our Ford Smart Mobility plan. We keep these discussions private for obvious competitive reasons, and we do not comment on speculation.”

Ford opened up its Silicon Valley research lab at the beginning of this year to work on automotive computing, sensing, car and ride sharing and autonomous driving. Ford staffed the lab with over 100 researchers and engineers, many from the tech industry, and struck a deal with Stanford University to work on an autonomous Fusion Hybrid (Ford expanded its tech collaboration with Stanford to 13 projects).

However, Ford’s autonomous driving tech has been far less aggressive than some of the other self-driving car leaders such as Google and Tesla (TSLA). As I reported at the time that Ford opened its lab, the projects and tech under development there seemed rather lackluster back then.

Ford only announced last week that it planned to start testing its self-driving cars on California’s public roads and next year could have fully autonomous Ford Fusion Hybrids on California’s streets. In contrast, Google has been testing out its self-driving cars on roads for years and aims to commercialize the tech by 2020.

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Working with a Silicon Valley partner with more advanced software and computing would be in line with Ford CEO Mark Fields’ strategy for the company. Earlier this year Fortune asked Fields if Ford planned to work with Google or another company on self-driving cars. Fields responded:

When you think about some of these enabling technologies, we have to ask ourselves some very important questions like what do we want to develop as our own core competency? Who do we want to partner with? We’ve done that throughout our history as a company. Where it makes sense, we’ll work with others.

Ford could also use a Google, self-driving car, partnership to work on launching mobility and ride sharing tech. Ford has been working on this type of technology for awhile including at its Silicon Valley lab.

Ford and Google have also appear to have similar visions for the future of self-driving cars. Both Google and Ford plan to move much faster toward fully-autonomous cars, while other automakers are interested in a step-by-step approach focusing more on using computing to assist drivers.

Google’s strategy to work with a large automaker could have evolved over the last couple of years. Former Ford CEO Alan Mulally joined Google’s board, and Google hired John Krafcik as the CEO of its Self-Driving Car Project. Krafcik cut his teeth at Ford and spent 14 years there.

With Ford as a partner, Google would get massive global reach for its self-driving car software and computing. Ford is number 9 on the Fortune 500 list.

Both reports say such a deal wouldn’t be exclusive, so perhaps this union is the start of big auto partnering with big computing on self-driving cars.

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