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What Fiat Chrysler Stands to Gain from Collaborating with Google

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Fiat Chrysler Automobiles

Italian-American automaker Fiat Chrysler Automobiles (FCAU) has a bad reputation of having low margins in the auto industry. Among its peer group (VCR), which includes General Motors (GM), Ford Motor (F), and Volkswagen (VLKAY), the company’s margins are the lowest.

For this reason, FCAU is trying to expand its margins by reducing production costs and bringing in manufacturing efficiency. The company also seems to have understood the importance of innovation.

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Fiat Chrysler and Google

In 2Q16, Fiat Chrysler began to collaborate with Google (GOOGL) to produce about 100 Chrysler Pacifica hybrids to test Google’s self-driving technology. Also, FCAU and Google both will co-locate their engineering teams to make the design, testing, and manufacturing process hassle-free.

But in terms of innovation, Fiat Chrysler is lagging behind peers like GM and Ford. While GM and Ford have accelerated their plans to build mass-targeted electric vehicles, Fiat Chrysler seems to be lacking the same vision.

According to a recent report from Reuters, Fiat Chrysler (FCAU) CEO Sergio Marchionne, stated the following about the company’s electric vehicle, Fiat 500e: “I hope you don’t buy it because every time I sell one it costs me $14,000.”

Why is this important?

That said, this collaboration with Google could prove to be an important step for Fiat Chrysler in the future. The potential future integration of Google’s self-driving technology in FCAU’s vehicles should enhance the automaker’s appeal to customers. At a time when FCAU has been unable to bring innovation on other fronts, perhaps autonomous vehicle development will help it keep pace with changing auto industry dynamics.

Now let’s see how Ford is trying to speed up its autonomous vehicle development.

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