UPDATE 2-Google, Fiat Chrysler to partner on self-driving minivans

(Recasts throughout; adds background on autonomous driving
developments, executive comments)
By Bernie Woodall and David Shepardson
DETROIT/WASHINGTON, May 3 (Reuters) - Alphabet Inc's Google
GOOGL.O unit and Fiat Chrysler Automobiles (NYSE:FCAU) NV FCHA.MI
FCAU.N have agreed to work together to build a fleet of 100
self-driving minivans in the most advanced collaboration to date
between Silicon Valley and a traditional carmaker, the companies
said Tuesday.
The deal marks the first time that Google has worked
directly with an automaker "to integrate its self-driving
system, including its sensors and software, into a passenger
vehicle," the companies said in a statement on Tuesday.
Google and Fiat Chrysler engineers will work together to fit
Google's autonomous driving technology into the Pacifica
minivan. Some engineers for both companies will work together at
a facility in Southeast Michigan, where Fiat Chrysler has its
major North American engineering center, the companies said.
Google said it is not sharing proprietary self-driving
vehicle technology with Fiat Chrysler, however, and the vehicles
will not be offered for sale to the public.
The agreement between Google and Fiat Chrysler comes as
rival technology and auto companies are accelerating efforts to
master the complex hardware and artificial intelligence systems
required to allow vehicles to pilot themselves.
General Motors Co (NYSE:GM) GM.N in March agreed to acquire San
Francisco self-driving car startup Cruise Automation
German automakers Daimler AG DAIGn.DE , BMW AG
BMWG.DE and Volkswagen AG VOWG_p.DE last year bought digital
mapping company HERE to accelerate their autonomous driving
development.
Some features already available on mass market cars, SUVs
and trucks take steps in the direction of replacing a human
driver, such as automatic emergency braking, adaptive cruise
control and automatic lane-keeping.
Some analysts said a self-driving minivan would make sense
for testing the technology in a fleet of mass transit vehicles
deployed in a controlled environment, such as a Google or Fiat
Chrysler campus or a city center.
"Minivans fit into the transportation fleets easily," said
Karl Brauer, a senior analyst at Kelley Blue Book. "They can be
a box-on-wheels and can move more humans around."
Google's self-driving car engineers had previously purchased
Lexus sport utility vehicles made by Toyota Motor Corp 7203.T
and retrofitted sensors and other hardware into the cars on
their own.
Tuesday's deal holds benefits for both companies. Fiat
Chrysler has a net debt pile of 6.6 billion euros ($7.6
billion). Chief Executive Sergio Marchionne has been trying
unsuccessfully for more than a year to convince reluctant
rivals, including GM, to consider a merger to spread the rising
costs of advanced safety and emissions technology.
Fiat Chrysler shares rose more than 2 percent in after
market trading after the Google agreement was announced.
Google has said that it does not want to build self-driving
vehicles on its own and has explored alliances with auto
companies, but none have been finalized. Working more closely
with Fiat Chrysler could help Google refine its systems as a
step toward offering them in regular production cars.
The deal does not preclude either FCA or Google from
cooperating with others, the companies said in their statement.
"The opportunity to work closely with FCA engineers will
accelerate our efforts to develop a fully self-driving car that
will make our roads safer and bring everyday destinations within
reach for those who cannot drive," John Krafcik, chief executive
of the Google Self-Driving Car Project, said in a statement.
Collaborating with Google provides an opportunity for Fiat
Chrysler "to partner with one of the world's leading technology
companies to accelerate the pace of innovation in the automotive
industry," Marchionne said in a separate statement.
The Fiat Chrysler vehicles will more than double Google's
testing fleet, which currently includes about 70 Lexus SUVs and
small prototype cars designed by Google. Google is now testing
self-driving vehicles in four U.S. cities.
Executives at other automakers, including GM, Ford Motor (NYSE:F)
F.N and Daimler DAIGn.DE , have expressed wariness about
alliances with Alphabet or other technology companies that could
relegate them to the role of hardware suppliers.
John Elkann, Fiat Chrysler's chairman, in April dismissed
the idea that automakers must shoulder alone the burdens of
heavy investments in automated driving or ride sharing. By 2030,
Elkann said, fully self-driving cars will likely account for
just 15 percent of global sales.
"Boring old car makers need to figure out how to make this
profitable and guard against falling into the ... trap of
ignoring that business while chasing profits in other parts of
the value chain," Elkann said.