Intel (NASDAQ:INTC) has been behind the curve in the self-driving-car race as compared to rival chipmaker NVIDIA (NASDAQ:NVDA). But Chipzilla is pulling out all the stops to change the status quo by building an alliance of automakers and component suppliers.
So it doesn't come as a surprise that Intel's engineering alliance of BMW, Delphi Automotive, and Mobileye is now welcoming Fiat Chrysler Automobiles (NYSE:FCAU) in a bid to strengthen its technology development and share the high costs of developing autonomous cars. But what's more important to note is that this new entrant brings a new dimension to the alliance's ambitions. Here's how.
What does Fiat bring to the table?
Fiat Chrysler has already been involved in self-driving-car development -- with Waymo. The automaker has supplied its Pacifica Hybrid minivans to Alphabet's self-driving-car division for ferrying passengers on public roads. The two companies are expected to eventually launch a ride-sharing service, and this might be the plan with the Intel alliance as well.
As it stands, Fiat Chrysler hasn't made any big moves of its own in the autonomous-car space when compared to the likes of Ford or General Motors. Therefore, the company has decided to pen partnerships with technology companies such as Waymo and Intel to make a dent in this space.
The Intel alliance will now focus on developing a platform that's capable of delivering a high level of automation in cars. More specifically, the companies plan to create a system that could deliver Level 3 autonomy to full automation, which can then be used by automakers around the world in their own vehicles.
What's more, Fiat's plan of putting autonomous cars into production by 2021 coincides with the alliance's timeline of bringing a highly automated driving platform to the market by the same year. Moreover, Fiat's entry indicates that the alliance might be considering moving into the ride-sharing space as well, since the automaker fills a void for the alliance.
BMW, for instance, isn't a mass-market carmaker as it makes luxury cars. Last year, the German company sold just over 2 million units, while Fiat Chrysler moved about 4.7 million units. Additionally, Fiat has an affordable minivan in the Pacifica. The top end Pacifica Hybrid model sells for just under $45,000.
Therefore, Intel and its partners could now consider moving into the ride-sharing space once their technology is ready. This could be a big deal in the long run as ride-hailing services could grow to a whopping $285 billion by 2030, according to Goldman Sachs.
Taking on NVIDIA
Fiat's addition to Intel's self-driving-car alliance can help the involved parties put more cars on the roads and accelerate their technology development. The companies are on track to put 40 autonomous vehicles on the road for testing purposes by the end of this year. This excludes the fleet of 100 cars that Intel plans to deploy after closing its Mobileye acquisition earlier this month.
Earlier in August, Intel announced that its Mobileye division would build a fleet of self-driving vehicles with Level 4 autonomy and test them in the U.S., Europe, and Israel. The tests are expected to begin this year and eventually gain critical mass, allowing Intel to collect more data and improve its self-driving-car technology.
This could help Intel in its fight against NVIDIA, which is already supplying its self-driving-car platform to Tesla's entire model lineup, and it also has several partnerships with automakers and component manufacturers. What's more, NVIDIA will enable Level 3 autonomy in Audi's next A8 sedan, which means that the car will be able to mostly drive itself.
Intel is trying to make a statement by announcing its intention of jumping into Level 4 autonomy, which is a high automation level and needs a human driver to take over only if there is no map of the road available. NVIDIA, on its part, believes that it can deliver Level 4 autonomous capabilities by the end of next year.
Intel, however, seems to be in a strong position to catch up to NVIDIA given the amount of expertise that it has assimilated with its engineering alliance. Moreover, Fiat's addition has opened up a new area for the alliance to tap into, which could prove fruitful for Intel in the long run.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Ford, Nvidia, and Tesla. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.