Fiat Chrysler is to join an alliance that BMW leads to develop self-driving vehicles, which intensifies a race by automakers and tech companies to develop the so-called robotaxis that can be called up using a smartphone and charges per minute.
It is estimated that by 2030, the market for these types of self-driving taxis could be worth over $2 trillion, as younger clients abandon ownership of cars in favor of a mobility service that is pay-per use.
Fiat Chrysler said it was planning to put autonomous vehicle technology into production no later than 2021, which matches a timeframe that is shared by its rival companies who currently are developing their own autonomous vehicles.
Automakers have been seeking alliances as a way to share high costs involved with the development of autonomous cars that according to one consulting company will represent between 10% and 15% of all vehicle across Europe in 2030.
FCA CEO Sergio Marchionne said the possibilities of economies of scale and synergies were available by joining this alliance.
Marchionne has argued for some time that automakers need to merge to survive the high costs in developing vehicles that are more technologically advanced.
In April, the CEO at FCA said the automaker was seeking new partners in the development of self-driving vehicles as it would be disastrous to bank all its solutions on one outcome.
FCA is a member of a separate alliance with Google parent Alphabet Inc.’s unit for self-driving called Waymo to develop autonomous vehicles based upon the hybrid minivan Chrysler Pacifica.
Autonomous vehicles will give carmakers the ability to disrupt the taxi market that is operated by fleet operators as well as ride-hailing companies.
Without needing to pay a driver, ride-hailing could be more cost effective allowing it to compete against other types of transportation such as buses.
Ride-hailing companies, which represent approximately 33% of the worldwide taxi market, could expand by eight-fold to over $285 billion before 2030, once robotaxis become operational said Goldman Sachs.
Auto suppliers Continental and Delphi Automotive have joined the alliance with BMW and Intel. The group said it was on its timeline to put 40 autonomous test vehicles into operation by the end of this year.