Deal benefits both companies both in the short and long term

Volvo Car Group and ride-sharing service Uber have signed up on a $300 million partnership to develop autonomous driving vehicles. It’s the latest partnership between a traditional automaker and a tech firm to accelerate the development of self-driving technology and at the rate these partnerships are being formed, it might be a good idea to start creating a chart to see who has partnered with who.

The Volvo-Uber deal allows both companies to pool their resources together and capitalize on the strengths of each other. For its part, Volvo will send over XC90 SUVs to Uber, which in turn will install its autonomous driving system that the company itself is developing for use in its ride-sharing service. Volvo will then use the vehicles with Uber’s self-driving tech for its own strategic purpose. The partnership covers hardware and software developments aimed at addressing important issues surrounding autonomous driving, particularly the safety and security of a system that is poised to redefine the entire auto industry moving forward. Both Volvo and Uber are also seen as 50/50 partners in this endeavor and whatever technology is developed for the purpose of this collaboration will be shared to the other party.

That said, the collaboration doesn’t both companies to one another, an important point considering how competitive the race to develop autonomous driving technology has become. For what it’s worth, Toyota has already made an investment in Uber. Likewise, Volvo and Uber are also part of a bigger lobbying group with Ford, Google, and Lyft to lobby for autonomous driving cars with lawmakers and regulators in the U.S.

Continue after the jump to read the full story.

Why it matters

It’s not uncommon to these days to wake up to news like this one. Unlike some of the partnerships that we’ve seen between automakers and tech firms, this one between Volvo and Uber can be seen as a win-win for both parties because the groundwork is clear between the two sides. Volvo sells Uber its cars. Uber installs its autonomous driving system into the cars for its business. Volvo gets its cars back with Uber’s self-driving system on them for their own use.

It’s a clear layout of what both companies stand to get from the partnership and it benefits both independent from one another. For Volvo, having Uber as a partner helps elevate the company’s appeal as it pushes forward with its aggressive reentry into the premium market. The Swedish automaker has long been known for its safety and reliability, but even those calling cards weren’t enough to get people to regard the company in the same breath as Mercedes-Benz, BMW, and Audi. This partnership with Uber helps Volvo in that regard because it shows the automaker’s commitment in achieving its own makeover.

As for Uber, having Volvo by its side allows the tech firm to utilize cars considered as some of the safest and most reliable in the industry. That’s a big bonus when you’re dealing with a technology like autonomous driving, which, as Tesla’s Autopilot system has shown, still has a long way to go before earning the public’s trust.

Granted, there are some differences in how Volvo and Uber plan to utilize the technology. Volvo wants the system to be used as a driver-assisted tech much like Tesla’s Autopilot system whereas Uber wants to go all the way in eliminating the driver altogether, making the cars drive by themselves on a full time basis. Uber’s strategy comes with some inherent consequences, most notably the loss of jobs from current Uber drivers that number in the millions all over the world.

It’s a delicate balance to navigate, at least in Uber’s case, because jobs are going to be at stake. But such is the price to be paid to pursue a system that may go down as one of the biggest technological evolutions of this century. And in the middle of all the chaos to become the first to implement a legitimate self-driving car, Uber can at least take solace knowing that it has Volvo as its partner.

Source: Reuters

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