Last Friday German auto giants BMW and Daimler revealed a wide-ranging partnership on mobility services and technologies, according to The Verge.
The companies will create, own, and operate five new standalone companies that are each focused on specific products and services: ride-hailing, electric vehicle (EV) charging, car-sharing, multi-modal transportation, and parking.
The standalone companies will combine each firm’s existing services – BMW’s Reach Now and Drive Now car-sharing services will be merged with Daimler’s Car2Go service, for instance. In total, the companies will spend $1.1 billion on the venture. The agreement follows the automakers’ announcement last March that they would merge their mobility services.
The newly minted joint venture will create a mobility powerhouse in three highly competitive areas:
- Ride-hailing. MyTaxi, the Daimler-owned service, is already a market leader across Europe. It boasts a superior market share to Uber in several countries, including Germany and Spain. The newly minted service will be called Free Now, and given the combined resources between the companies, could be well-positioned to out-compete Uber on the continent.
- Car-sharing. BMW and Daimler operate some of the most popular car-sharing services, both in Europe and globally. Daimler’s Car2Go service has 3 million global users, while BMW’s DriveNow offering, for its part, has over a million customers. In comparison, competing car-sharing startup Zipcar last disclosed in 2016 that it had only 1 million global users. The automakers’ new car-sharing service will be known as Share Now.
- EV chargers. Known as Charge Now, the automakers’ EV charger initiative won’tactually involve building chargers, but will instead help consumers find existing nearby chargers. Daimler and BMW have, for their part, backed a pair of independent EV charger networks. ChargeNow will likely attempt to funnel customers to these chargers as possible, perhaps offering discounts or other promotions to get people in the door.
While creating specialized companies has its benefits, Daimler and BMW would be wise to not keep them completely siloed. By creating five separate businesses, the automakers may be able to reap the benefits of specialization to provide higher-quality services than possible under one massive mobility unit. But if the companies are too siloed, they could suffer from a lack of knowledge-sharing.
For instance, car-sharing and ride-hailing businesses are interested in similar data around customer acquisition — Share Now and Free Now could share data to inform their respective strategies without cannibalizing users from one another. It also makes sense for the companies to unite their service into a single app, setting themselves up to benefit from positive spillover from one service to another.
Such an approach would effectively mirror the approach of mobility challengers like Uber, which houses its services in one app. Daimler and BMW have formed a new mobility behemoth, and it remains to be seen if such a partnership between formerly fierce competitors is the answer in the shifting transportation space.
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