The auto suppliers have been gearing up on software. Continental acquired Elektrobit’s automotive software division in 2015 for $665 million. Similarly, Harman International Industries acquired two software companies in 2015, paying $780 million for Symphony Teleca and $170 million for Red Bend Software, which produce connected devices and over-the-air updates. The same goes for Intel, which acquired two companies this year, Yogitech and Itseez, for their advanced assisted driving software, robotics, and autonomous machines division.
The manufacturers are doing the same. General Motors bought Cruise Automation for $1 billion in 2016; while Toyota hired the full 16-person team from Jaybridge Robotics, and plowed $1 billion into the Toyota Research Institute. Uber paid $680 million for Otto in the same year that the startup was founded, allegedly to gain access to the pool of former Google, Apple, and Tesla staff that Otto had hired.
Defence and fear is at the heart of most of these acquisitions. Even though the incumbents are globally established brands, they fear the loss of influence that might unfold over the next decade.
Today’s traditional car manufacturers are facing fierce competition across a range of industries, including software, ridesharing, and technology companies. In an attempt to maintain–and in some instances, gain back–control, automakers have been increasing their acquisitions and formal partnerships with 21st-century competitors in these industries. As Sam Myers of Balderton Capital writes for VentureBeat, “Traditional car manufacturers are convinced that the race for automation will play a key part in determining their position in the market for the coming decades. What is clear is that they cannot get there alone. The deep-learning elements needed for self-driving will need to come from outside.”