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If it's a thing that traditional builders have, it's a fight. They do not plan to switch to advanced technology, and if they do, they fail.
The last plan?
German automakers Daimler (DDAIF) and BMW (BMWYY) are joining forces and are spending $ 1.1 billion to create various mobility solutions. The company's joint venture aims to provide loading, parking and shuttle services as well as carpooling and multimodal transportation solutions. The auto market is undergoing tremendous change and this partnership between Daimler and BMW is the latest recognition of this change.
Mary Barra, CEO of General Motors (GM), said some time ago that the auto industry will change more in the next few years than in recent decades. With electric cars capable of surpassing performance cars and driverless solutions that are popping up all over the world, it's hard to discuss its logic.
This is not the first partnership we have ever seen outside of Germany: Volkswagen (VLKAF) (VLKAY) announced a new partnership with Ford (F) last month. In particular, German automakers are under fire from critics because of a global conflict that is pinching them both. However, this question does not prevent these companies from investing.
Whether it is recognized or not, it is clear that Tesla (TSLA) has pushed the limits of electric vehicles. If BMW, Daimler, GM, Volkswagen and many others investing billions of dollars in electrical transmissions are not enough proof, Daimler and BMW working on charging services certainly are.
This helps answer the question that many people are asking the auto industry: how will users charge for their car? Third-party operators have appeared throughout the United States and Europe to provide these services, while Tesla has the Supercharger network. Traditional automakers do not have such a solution, individually, but have invested in some of these third-party companies to advance other networks.
Daimler-BMW vs. Uber, Lyft
The carpool area is the most interesting part of the pact. BMW, Daimler and others have no intention of letting Uber, Lyft and other global carpool companies share the future of transportation. This is perhaps a fear for their business model or perhaps after noting the massive valuations that these companies are collecting. Uber could be valued at $ 120 billion for its possible IPO – more than Fiat Chrysler (FCAU), Ford and GM combined – while we talk about Lyft with a valuation of 20 to 25 billion dollars, about half of the market capitalization of BMW.
This is not Daimler's first foray into the region. In 2017, the builder acquired Beat, an assistance service that is doing quite well in Latin America. This summer, he announced that he would work with Nvidia (NVDA) and Bosch to create a standalone relay service in the San Francisco Bay Area. Now he is also working with BMW on carpooling.
At this point, we do not know what the German tandem could have. Although it is a noble effort, it is possible that it is too little and too late to catch up with other companies. After all, $ 1 billion is peanuts when talking about an Uber or a Lyft.
If Daimler, BMW or other companies were to absorb the operating losses recorded by Uber and Lyft in recent years, investors would have any interest. Or probably they would. The auto industry is undergoing a very interesting transformation on the technology side and does not have enough timely and informed mergers and acquisitions – which Daimler-BMW has not ruled out – catching up can be difficult.
What comes to mind? The acquisition of Cruise Automation by GM for a billion dollars in August 2016 resulted in a valuation of $ 14.6 billion following the investments of SoftBank (SFTBY) and Honda Motor (HMC). Not only does GM claim a very commendable acquisition, but it is also well positioned in the autonomous taxi race.
In the end, we do not know what Daimler-BMW will do next, but the first step is to establish a partnership.
Daimler shares closed up 0.42% to $59.25 Friday, while BMW closed up 0.27% to $27.63.
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