The New BMW-Mercedes Alliance Could Transform Mobility

The market potential must be huge to get these two rivals in bed together.

Mallory Short / The Drive

Millions of Americans already use their smartphones to hail a ride, book a car rental, or pay for parking, but a new alliance pairing BMW and Mercedes-Benz looks to make it possible to travel “from Point A to B seamlessly,” no matter what form of transportation you use—whether by bicycle, car, even mass transit—using a single app.

In what one senior executive is describing as a “historic moment for the industry,” the traditional German rivals will combine and expand upon a collection of mobility services that already includes the ReachNow and Car2Go ride-sharing and high-tech parking services in over 1,000 cities around the world. 

“These two major players are joining forces to provide mobility services at levels so far unheard of,” said Peter Schwarzenbauer, the BMW AG board member who helped negotiate the alliance.

BMW and Mercedes are by no means the only automakers exploring alternative transportation opportunities. Former Ford Motor Co. CEO Mark Fields rechristened the Detroit automaker “a mobility company, rather than an automotive manufacturer,” before launching such ventures as the Chariot, a San Francisco-based shuttle-on-demand service. Volvo, meanwhile, has been experimenting with ways to integrate a variety of different mobility services in its home town of Gothenburg, Sweden.

Individually, BMW and Mercedes’ parent Daimler AG have now set up a number of their own mobility ventures while also partnering with new entrants in the field. The Bavarian maker partners with 1,000 facilities around the world to help 22 million motorists find and pay for parking. They offer electric vehicle charging in some markets, and going forward, the joint venture now being formed will even partner with public transit operations through five “verticals.” What is perhaps most significant is the goal of making it possible to get from one place to another “seamlessly,” organizing and even paying for all forms of transportation using a single app that will also be able to serve as a digital ticket—much the way long-distance travelers can use a smartphone to pass through security and board a plane.

Schwarzenbauer offered a number of scenarios during a conversation at the New York International Auto Show shortly after the partnership was announced. One suburban commuter might use a car-sharing service like Car2Go to get from home to the local train station for the trip downtown. From there they could already have a ride-sharing service waiting. A tourist might take a mini-shuttle from their hotel to a neighborhood where they switch to a public bicycle service.

Schwarzenbauer declined to discuss specific projects and partners, noting that the alliance is in the formative stage and still needs to win approval from regulators in Europe. But mobility services operated by the two companies already have a presence in a number of American cities, such as Austin, San Francisco and Seattle. Some of those ventures may soon be rebranded.

The partnership did not come entirely as a surprise to several competitors who commented on background at the NY show. The world of transportation, especially at the local level, is expected to change dramatically in the coming years. Companies like Uber and Lyft are already gaining traction in many cities and a study released in December by the Boston Consulting Group forecast that by 2030, about 25 percent of the miles Americans log on the road will be in driverless vehicles operated by ride-sharing services.

Add the indifference Millennials have shown to the automobile and some observers expect that new vehicle sales could drop sharply over the coming decade, so traditional automakers are racing to find new ways to rebuild their balance sheets.

In the process, a number of erstwhile rivals have decided to team up. This isn’t the first time BMW and Daimler have worked together, either: the rivals have previously partnered on development of wireless EV charging and high-definition mapping. But Schwarzenbauer said that when it comes to designing and building cars, and other vehicles, they will remain “fierce competitors.”