Nvidia has just pitched itself as the platform for traditional carmakers to compete with Tesla, announcing a first-of-its-kind partnership with Mercedes-Benz to power the next generation of autonomous vehicles. “This is the biggest partnership of its kind in the transportation industry,” said Jensen Huang, chief executive of the graphics chipmaker, at an event live-streamed from Stuttgart and Silicon Valley.
From 2024, Mercedes will begin delivering over-the-air software updates to its entire fleet through a complete solution provided by Nvidia. Tesla already upgrades its vehicles with over-the-air updates. Nvidia’s Orin chips and its DRIVE software platform will enable an in-vehicle computing system and AI computing infrastructure that can power automated driving and safety features. UBS analysts described the partnership as a groundbreaking move and an “iPhone moment” for Nvidia, given the software and services revenues it could create as the industry moves towards more of a subscription model for improving the driving experience.
It has agreed a 50-50 revenue split with Mercedes on future subscription services. “Unlike other partnerships — most significantly Toyota — this deal cements its position as a platform (not just technology) supplier of both hardware + software and allows it to play in what could be a big recurring revenue stream,” they said. Nvidia could offer the same technology to other carmakers, although analysts have warned of a move away from AI and deep learning to more rules-based software for self-driving cars, German producers have been shifting their strategy — Mercedes’ parent Daimler abandoned a similar collaboration with BMW last week that relied on Intel technology. Also last week, Volkswagen ruled out working with big tech companies to develop software for its new vehicles. It said it would accelerate the growth of a newly established digital unit.
