Emblems of German car Mercedes-Benz are pictured during a news conference about the new production line of the Mercedes-Benz S-class in Sindelfingen
Berlin - Mercedes Benz parent Daimler and supplier Robert Bosch are teaming up to develop self-driving cars in an alliance primarily aimed at accelerating the production of “robo-taxis”.

The pact between the world’s largest maker of premium cars and the world’s largest automotive supplier forms a powerful counterweight to new auto industry players like ride-hailing firms Uber and Didi, which are also working on self-driving cars.

Tech companies and car makers are preparing for a new way of doing business in the auto industry as customers use smartphones to locate, hail and rent vehicles, rather than going out and buying a car.

The alliance, which marks an end to Daimler’s efforts to develop an autonomous car largely on its own, is the latest example of a car and technology firm teaming up to secure a slice of this market which is expected to grow explosively over the next two decades.

Financial terms were not disclosed of the deal between the two German companies, which was announced yesterday.

Bosch, which was founded in 1886, the same year that Karl Benz patented the motorcar, will develop software and algorithms needed for autonomous driving together with the Stuttgart-based car maker.

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Teaming up with Bosch helps Mercedes-Benz throw more engineering resources at autonomous cars, allowing it to bring forward the date for having a production-ready system for autonomous cars by several years.

The autonomous system will now be ready by the beginning of the next decade, Daimler said, without disclosing when it had first envisaged the commercial launch of robo-taxis.

“The prime objective of the project is to achieve the production-ready development of a driving system which will allow cars to drive fully autonomously in the city,” Daimler said in a statement yesterday.

The German car maker has set its sights on the smartphone-based ride-hailing market which is dominated by China’s Didi and US-based Uber and Lyft.

Last year, Goldman Sachs projected the market for advanced driver assistance systems and autonomous vehicles would grow from about $3 billion (R40.8 billion) in 2015 to $96 billion in 2025 and $290 billion in 2035.

“Within a specified area, customers will be able to order an automated shared car via their smartphone. The vehicle will then make its way autonomously to the user,” Daimler said. "So the vehicle should come to the driver rather than the other way round.”