BMW and Daimler, once bitter rivals, announced that they would merge their mobility businesses in an effort to stave off competition from tech upstarts like Waymo and Uber.
The new company will include businesses in car-sharing, ride-hailing, parking, and electric-vehicle charging. The deal means that Daimler’s Car2Go and BMW’s DriveNow/ReachNow services would operate in tandem. European and US regulators would still need to approve the deal, which could take several months. Each company will hold a 50 percent stake in a joint-venture model comprising both companies’ mobility services. Obviously, the two companies will remain competitors in their respective core businesses.
“We want to combine our expertise and experience.”
“As pioneers in automotive engineering, we will not leave the task of shaping future urban mobility to others,” Dieter Zetsche, chairman of Daimler and head of Mercedes-Benz, said in a statement. “There will be more people than ever before without a car who will still want to be extremely mobile. We want to combine our expertise and experience to develop a unique, sustainable ecosystem for urban mobility.”
Car2Go and ReachNow are similar in that they are like rental agencies, but they allow customers to book on short notice and use cars for brief periods of time. As of 2017, Car2Go is the largest car-sharing company in the world with 2.5 million registered members and a fleet of nearly 14,000 vehicles in 26 locations in North America, Europe, and Asia. DriveNow operates over 6,000 vehicles in nine European countries, and operates as ReachNow in three US cities.
The deal wasn’t entirely unexpected, but it still sent a powerful signal that BMW and Daimler desperately want their mobility businesses to become profitable. Car companies have had mixed success trying to squeeze revenue out of their mobility businesses, so a deal like this could allow both BMW and Daimler to gain economies of scale and tip the balance in their favor.
The question is whether the two companies can overcome their intense rivalry to work side by side in growing a business that does not come naturally to them. Along with Audi, the German automakers dominate the luxury car market but are in danger of being overwhelmed by well-capitalized interlopers from Silicon Valley. The fact that BMW and Daimler would even come together like this, after decades of intense competition, is a sign of the seriousness that these companies are taking the existential threat posed by companies like Uber and Waymo.