Illustration: Sarah Grillo/Axios

Rivals BMW and Daimler are the latest automakers to start pooling resources in order to stay competitive while they push toward full autonomy.

The big picture: Once there was a race among auto and tech companies to develop self-driving cars, but now there's a shared belief that it's frustratingly hard and incredibly expensive to do so at scale.

  • For some, partnering on a step-by-step progression through the various levels of autonomy seems the most expedient way to try to bring the technology to market.

What's happening: BMW and Daimler, Mercedes Benz' parent, are teaming up on automated driving, joining a growing list of AV research couples: Toyota and Uber, GM and Honda, and Ford and Volkswagen.

  • BMW and Daimler will focus on next-generation technologies for driver-assistance systems, highly automated highway driving and self-parking features — which are all considered Level 3 or 4 autonomy.
  • They aim to make those technologies available in the mid-2020s for global markets while separate research continues on longer-term projects.
  • For example, Mercedes and Bosch will start testing Level 4 and 5 robotaxis in San Jose, California, this summer.

BMW and Mercedes are usually bitter rivals, but the shifting transportation landscapehas a way of turning enemies into friends.

  • The German luxury carmakers are also pooling their resources on mobility services, investing $1 billion in a joint venture that spans ride-hailing, multi-modal transportation and related services.

What we're hearing: Industry experts predict even more collaboration on automated driving technology in the near future.

  • The likelihood of a recession or cyclical downturn means big R&D expenditures are riskier, says Sam Abuelsamid, principal analyst at Navigant Research.
  • AV development becomes more complex as the level of autonomy increases, Michael Hafner, head of driving technologies and automated driving at Mercedes-Benz Cars, explains in a blog post.
  • Shouldering the technological and financial burdens together makes sense, even though BMW and Mercedes will always be competitors, Hafner writes.

What's next: AVs aren't here yet, but already they're becoming a commodity. What will differentiate auto companies in the future won't be whose AV technology is safer — airlines don't compete on safety, after all — but which one delivers a better customer experience.

"Once they’re driving the speed limit in the middle of the lane and keeping you from dying, that’s not a differentiated experience."
— Mike Ramsey, research director, Gartner

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