Building self-driving taxis is a team sport, and Nvidia (NVDA) wants to be the brains behind the operation. 

On Tuesday, the chipmaker unveiled a project that it says will move the tech out of development and onto roadways by 2020. Nvidia is teaming up with Bosch Ltd and Daimler AG to jointly produce and test autonomous taxis  built for Level 4 and Level 5 autonomy, the highest grades of automation. Level 5 autonomy wouldn't require any human involvement under any conditions. Level 4 wouldn't require any involvement under a predetermined set of conditions.

The Daimler cars will be built specifically for autonomous use, as opposed to current testing units that amount to standard cars outfitted with sensor kits. The new vehicles will integrate Bosch components and Nvidia's automotive AI supercomputer, called DRIVE Pegasus.

Danny Shapiro, Nvidia's Senior Director of Automotive, describes Nvidia's automotive technology as an "end-to-end platform for autonomous driving, from data center to car. It's all possible because of a unified architecture we have that includes GPUs, chips, and binary compatibility from the cloud to the car."

Shapiro added that Nvidia's systems allow cars to run multiple networks at once, processing data simultaneously from multiple inputs including cameras, maps and various sensors. And it also allows for synthetic testing of autonomous cars, meaning it's possible to test-drive the cars on "billions of miles" before ever hitting a physical roadway, he said.

"Redundancy plus diversity equals safety," Shapiro said. "Of course this requires a massive amount of computing, which is why everyone's looking to Nvidia for the solution."

Nvidia's automotive AI platform is already in use by many developers building autonomous car technology. The company says that there are more than 370 automotive and tech companies building on its AI platform, including mapping firms, carmakers, mobility services like Uber, and other startups. Nvidia's competitors include Intel (INTC) , which recently struck a deal with a European automaker to supply 8 million cars with its self-driving technology. Mobileye, also owned by Intel, provides driver assistance tech for millions of cars, and has said that it will begin producing Level 4 systems in 2021. 

The alliance between Nvidia, Daimler and Bosch is a big deal because it represents Nvidia's first major production commitment to the technology, said Mike Ramsey, research director in Gartner's CIO Research Group.

"Nvidia's technology has been incredibly important for the development of autonomous vehicles in testing and through AI work, both in the vehicles and in data centers where video and other sensor data is being analyzed," Ramsey said. "This deal is helping to cement its place in the actual production of the vehicles."

The vehicles will be tested at an unnamed city in the San Francisco Bay Area, as well as near Stuttgart, Germany, Bosch said in a press release. With the help of Nvidia's AI platform, Bosch and Daimler plan to roll out an autonomous shuttle fleet in Silicon Valley in the latter half of 2019.

"Both partners will offer customers an automated shuttle service on select routes in a city located in the San Francisco Bay in Silicon Valley. The test operation will provide information about how fully-automated and driverless vehicles can be integrated into a multi-modal transport network," Bosch said in a release.

That transport network could include a partner like Uber supplying the ride-hailing piece. Daimler previously struck a development partnership with Uber in 2017, but Shapiro said that more announcements in that area are likely soon. 

Jim Cramer and the AAP team hold a position in Nvidia for their Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells Nvidia? Learn more now.

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