BERLIN—A group of German auto makers agreed to pay slightly more
than €2.5 billion ($2.71 billion) for Nokia's digital mapping
service, prevailing over Silicon Valley bidders in a battle for a
key enabling technology for self-driving cars.
German luxury car makers Audi, a unit of Volkswagen AG,
Mercedes-Benz parent Daimler AG, and BMW AG have agreed in
principle to purchase the telecommunications group's digital
mapping service Nokia Here, according to a person familiar with the
situation.
If a deal is struck, which isn't yet certain, the German auto
makers plan to invite other automotive companies such as Fiat
Chrysler Automobiles NV, Renault SA, PSA Peugot Citroë n, Ford
Motor Co., Toyota Motor Corp. and General Motors Co. to invest in
Nokia Here, two people familiar with the situation said.
"The goal has always been to run the service as an open platform
for everyone," one person said. "The final signing could take place
in the next few days."
Nokia Here generated more than half its €970 million in 2014
sales from the auto industry, the rest from location-based
services. The deal price may be less than Nokia hoped to achieve.
Nokia built the business out of Navteq, an online mapping service
that it bought in 2008 for $8.1 billion.
Nokia declined to comment. Audi, Daimler and BMW also declined
to comment.
The German car makers entered the bidding after Nokia announced
in April that it was considering a sale in the wake of its
acquisition of Alcatel-Lucent and its plan to focus on its
telecommunications equipment business.
The car makers feared that Nokia Here's technology—the most
advanced digital map of the world's major road networks—could fall
into the hands of Google Inc., Uber Technologies Inc. or Apple Inc.
That would put auto makers at risk of losing control of information
systems inside the car that are vital to self-driving cars and
future automotive safety systems.
Separately, German auto-parts supplier Robert Bosch GmbH and the
Dutch digital mapping company TomTom NV agreed to work together to
develop high-definition digital maps needed for self-driving cars,
the companies said on Tuesday.
"We will only be able to have self-driving vehicles on the
highway in 2020 with highly accurate maps," said Dirk Hoheisel,
Bosch general manager, in a statement.
Bosch said it will provide technology to make TomTom digital
maps more accurate and better able to incorporate data produced by
the automobile's systems.
"We want to have highly accurate maps for self-driving vehicles
of all highways and similar roads in Germany by the end of 2015,"
said Jan-Maarten de Vries, a TomTom automotive division vice
president.
Car makers think that the car could become a platform for
generating income—from location-based services that find nearby
restaurants, parking garages or to book hotels and other services
that turn the data generated by the car into profits.
Uber, the car-hailing service, initially joined with China's
tech giant Baidu Inc. But the Uber-led consortium fell apart and
Uber dropped out of the bidding last month. Uber bought digital
navigation technology and hired employees from Microsoft Corp. in a
bid to lessen its dependence on Google and Apple, whose mapping
technologies help power Uber's ride-sharing app.
That left a group of private equity investors and the German car
companies as the remaining bidders.
By early July, Nokia was holding exclusive talks with the German
car makers. Talks have been bogged down in details, from how much
Nokia Here is actually worth to patents on intellectual property.
But people familiar with the situation say the two sides are close
to finalizing a deal.
The battle over Nokia Here has put a huge spotlight on an
obscure part of the technology industry that will play a big role
in the future development of cars, trucks and other forms of
transportation.
Today, many people use Google Maps or another navigation service
to get to their destination.
But once cars become even partially self-driving, the car's
computer will need infallible information about the road ahead and
traffic around the car in real-time. That is why the digital
mapping business has taken on such importance.
"We are not just building a map," said Floris van de Klashorst,
in charge of Nokia Here's connected driving business, during a
recent interview. "We are creating a 3D high-definition digital
representation of the world in real-time."
Digital mapping services have shifted from an old model of
providing a static map that is stored on the car's navigation
system to a dynamic system that provides drivers with information
about traffic and road conditions in real-time.
Nokia Here and its rivals are developing collaborative systems
that would allow each car to upload data to a cloud-based computer
network as it cruises down the road. This information is then
available in real-time for users of their systems.
"That's why we need more car companies involved," said Mr. van
de Klashorst. "The more cars providing information the better the
map."
Write to William Boston at william.boston@wsj.com
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