Alphabet's (GOOGL) - Get Report Waymo advanced mobility unit acknowledged that it's in talks with Honda (HMC) - Get Report toward a cooperative venture, one of the latest potential tie-ups in an industry racing to embrace self-driving technology.
Honda, in a statement, said a collaboration would "allow both companies to learn about the integration of Waymo's fully self-driving sensors, software and computing platform into Honda vehicles."
Both companies said no firm agreement has been concluded. A year ago, prior to Waymo's creation, Google was discussing a collaboration with Ford (F) - Get Reportthat didn't reach an agreement. Neither company formally acknowledged the talks.
Pending an agreement in the latest discussions, Honda engineers based in Silicon Valley and Tochigi, Japan, "would work closely with Waymo engineers based in Mountain View, California and Novi, Michigan," the automaker's statement said.
The Japanese automaker is known for pursuing technology mainly on its own but the cost developing driverless technology, on top of other strategies like electrification, may be proving a strain for a company of its size. Alphabet, by contrast, is one of the world's most cash rich and creditworthy enterprises, with more than $73 billion as of last spring.
"Honda's strategy of pursuing R&D alone without collaborating with other automakers puts it at risk of heavy development costs," Nomura Securities' Masataka Kunugimoto told Barron's. Honda's research and development outlays to sales ratio is the second-highest among major automakers, after BMW.
The automobile industry increasingly is feeling the heat from ventures like Uber and startups that are developing self-driving software with the goal of disrupting the century-old model of vehicle ownership by private individuals. Honda is experimenting with ride-hailing in southeast Asia by virtue of a recent investment in a Singapore-based startup.
Volkswagen (VLKAY) , the largest German automaker, recently invested in an Israeli ride-hailing company, Gett, and has announced the creation of its own ride-sharing subsidiary, called Moia. VW said it will show a self-driving and all-electric people-moving van at the North American International Auto Show in January
As activity and collaboration among automakers and suppliers toward self-driving capability increase, the pressure is rising on smaller and less affluent automakers to forge partnerships in order to avoid falling behind larger competitors. Regulators also are being urged to provide more guidance, as software developers push for clearer standards that allow different vehicle brands to co-exist in environments where, for example, they may be required to communicate with one another.
Doron Levin is the host of "In the Driver Seat," broadcast on SiriusXM Insight 121, Saturday at noon, encore Sunday at 9 a.m.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.