Why alliances are more crucial than ever to auto companies’ survival

The traditional automotive merger is being replaced by a dizzying array of ecosystems, alliances and collaborations as companies race to stay on top of the latest technological trends. Many of these new combinations involve players from outside the automotive world, such as Silicon Valley startups or semiconductor companies, which bring new skills and fresh ways of doing business. They allow auto companies to speed up the development time of autonomous driving, electrification and mobility as a service — and share the huge cost burden involved.

Startups and other companies from outside the auto industry “are recognizing the difficulty of what it will take to get this technology to market,” said Sam Abuelsamid, a senior analyst at Navigant Research. “At the same time, on the traditional auto industry side, they are recognizing that they are lacking some skills in software, electronic architecture and, especially, machine learning.”

Automakers or big suppliers that fail to set up or join such alliances risk falling behind, or even worse, analysts say. “It’s smart to be fast because there are a limited number of perceived winners out there,” said Andreas Jentzsch, a senior partner and managing director at Boston Consulting Group. “Right now, is really the moment of truth.”