Another Alliance Forms in the AV Space

At the ADAS & Autonomous Vehicles USA conference in Detroit on September 25, I spoke about some previously unusual alliances being formed in the car industry to tackle AVs, such as those between Ford and VW, Mercedes and BMW, and several heavy truck manufacturers. And now, we have another one. On September 27, 2019, Japanese carmakers Toyota and Subaru announced a “new business and capital alliance” to develop what they are calling “CASE” (connected, autonomous/automated, shared, and electric) vehicles. The two companies had previously announced a joint venture to develop battery electric vehicles using Subaru’s all-wheel drive technology (which is on all Subaru vehicles) and Toyota’s vehicle electrification technologies.

The press release notes that the companies have worked together for more than 14 years, but this new alliance is designed to take advantage of what both companies are seeing as a “once-in-a-century period of profound transformation” and refers specifically to the opportunities being presented in connected and autonomous vehicles. As part of the agreement, Toyota will increase its equity stake in Subaru, and Subaru will in turn purchase shares in Toyota.

The car industry has gone through periods of consolidation (think Fiat/Chrysler) and brand elimination (Mercury, Pontiac, Oldsmobile, etc.) in the past, and it’s probably just a matter of time before additional consolidation occurs as industry players have no choice but to combine in order to make AVs a reality. Such consolidation raises several legal issues, including labor and employment concerns, real estate issues from idling factories, as well as antitrust concerns. Baker Donelson’s AV team has attorneys that can advise industry players on those and other related issues.