By on January 22, 2019

Cooperation is commonplace among automakers. Chrysler has worked with, or been purchased by, just about everyone at this point, but it’s far from the only manufacturer to get chummy with a rival company. Ford and Volkswagen are busy discussing their future together and Toyota tapped other brands to help it co-develop performance models like the 86 and Supra.

Despite their longstanding and occasionally bitter rivalry, Mercedes-Benz and BMW could be the next duo to cozy up to one another. According to German outlet Handelsblatt, BMW chairman Harald Krüger and Daimler management board member Ola Källenius are currently examining the possibility of an automotive alliance. 

The primary goal would be the joint absorption of billions in development costs and the establishment of a common industry standard for autonomous vehicles. However, self-driving tech appears to be a secondary issue. With the margins (and demand) for small cars looking slimmer than ever, the pair are considering developing next-generation compact cars together — most likely starting with the 1 Series and A-Class. Insiders informed on the matter believe shared development and manufacturing of the models could save the companies billions.

The prospective fruits of such an endeavor would need years to ripen. Daimler just released its new A-Class a few months ago, while the 1 Series saw a revamp only a year earlier in China. Neither car is due for an update for some time, and any new compact architecture wouldn’t come into play for at least a few more years. Handelsblatt claimed 2025 at the earliest.

Both automakers also seem concerned with the cost of developing autonomous systems capable of keeping up with the big boys in Silicon Valley. While other automakers have made meaningful headway, GM is not quite the industry leader it once seemed, and the rest of the field has settled in a gray area or simply abandoned the race. It’s no longer obvious who exactly is leading the charge into autonomy. Still, tech companies have soldiered on in the hopes that they can one day provide inexpensive alternatives to car ownership. Part of the preliminary talks between BMW and Mercedes-Benz involve how to avoid financial disaster if and when that day comes.

“Those who are the first to dominate autonomous driving, who are the first to offer a functioning autonomous taxi fleet, occupy a huge market,” said Dietmar Voggenreiter of the consulting firm Horváth & Partners. “In the US, Waymo and Uber are hard to beat as platform operators,” he continued, “but in Europe, roles are not yet dispersed.”

While the pair already cooperate loosely via Daimler’s Car2Go and BMW’s DriveNow, both short-term rental programs, joint development and production would be new ground for the pair.

Currently, both find themselves part of an ongoing European investigation into whether the duo were part of a larger automotive cartel that worked together to manipulate the prices of automotive parts. That, plus other unsavory accusations (some of which pitted BMW and Mercedes against each other), could make the companies choose to keep their distance.

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