By Christina Rogers And Alistair Barr 

Ford Motor Co. is pursuing a deal with Alphabet Inc.'s Google to build self-driving cars that would use the software giant's technologies, said a person familiar with the talks.

The talks are intended to help Ford, which under Chief Executive Mark Fields has sharpened its focus on advancing car technologies, accelerate its efforts to bring autonomous cars to market.

Any agreement wouldn't be exclusive to Ford, this person said, and Google continues to talk with other auto makers. A partnership could be announced early next year, the person said.

As part of the deal being considered, Ford would develop software for components including steering, braking and acceleration while Google would provide the overarching self-driving software that governs those functions, this person said.

Autonomous-driving technologies and sensors would need to be integrated into future Ford vehicles so they don't protrude. Google's latest prototype cars have integrated sensors in their design.

In a statement, Ford said it is talking to a variety of companies about advancing its mobility plan but the talks are private and it declined further comment. A Google spokesman declined to comment.

Discussions between the two companies on an autonomous-driving car using Google technology was reported earlier by website Yahoo Autos.

News of the talks lifted Ford stock 3.4% to $14.20 in 4 p.m. trading on Tuesday. Its shares are off nearly 18% between Mr. Fields taking the wheel in July 2014 and Tuesday's close, despite the company earning record profit in North America this year.

Earlier actions such as raising the dividend and showcasing future innovation have fallen flat with investors. This month, Mr. Fields disclosed plans to spend $4.5 billion to develop electrified vehicles through 2020, and Ford's stock price barely reacted.

Meantime, recent and potential automotive rivals such as Apple Inc., Tesla Motors Inc. and Uber Technologies Inc. have captured much of the stock momentum Ford was attracting a few years ago when it avoided bankruptcy during the financial crisis. Tesla is valued by investors at about $30.1 billion, or more than half of Ford's current market capitalization.

"What we're seeing is fatigue from the stock," said Brian Johnson, a Barclays auto analyst, referring to Ford shares' lackluster performance this year. "With Ford at record levels of profitability, it is just too easy for investors to say 'this can't last,' " Mr. Johnson added.

Mr. Fields disagrees. "We can find ways to generate revenue on a more consistent basis," he said in a recent interview, noting such businesses can act as "buffer" against industry ups and downs. He has said Ford can't end up like Nokia Corp., a once-dominant phone maker that fell behind in the smartphone industry.

Earlier this decade, Mr. Fields argued the global market for cars and trucks is a growth industry. But analysts' projections for global sales increases and Ford's own sales momentum have fallen short due to turbulence in emerging markets and other factors, leading to lower margins than initially forecast.

Central to Mr. Fields's new strategy is a focus on services. Ford recently expanded its Silicon Valley research and development lab and has recruited several outsiders, including former investment banker John Casesa and former aerospace executive Ken Washington, to focus on tech development and mobility services such as ride sharing and short-term car rentals.

Mr. Casesa is leading a strategy team looking for tech-sector partnerships and steering investments to new areas. In November, Ford hired another former banker, Joseph Heyer, to lead business development and figure out ways to monetize the service businesses it is testing.

Ford Chairman Bill Ford also is looking toward a future where technology will change the way people get around. His venture fund, Fontinalis Partners LLC, has provided venture funding for Lyft Inc., an Uber competitor, and says if Ford is to compete in Silicon Valley's world, "we're going to need partnerships with big companies and startups...we have to make great cars and trucks today but we also have to imagine a future of transportation as service."

The 54-year-old Mr. Fields must proceed cautiously, though. Fifteen years ago, at the height of the dot-com bubble, Ford plowed billions of dollars on ventures that strayed from the core task of building cars and trucks. Then-CEO Jacques Nasser snapped up luxury brands, like Aston Martin, as well as e-commerce projects, junk yards and auto repair shops.

"This is a family-run business that understands the boom times are quickly followed by survival times," Morgan Stanley auto analyst Adam Jonas said, noting that Apple could disrupt the traditional model of owning a car.

Ford also needs to keep pace with traditional rivals.

General Motors Co. will introduce a new 200-mile range electric car, the Chevrolet Bolt, by 2017 and is developing a so-called "Super Cruise" feature for Cadillac that will allow drivers to ride in a car with hands off the steering wheel on the freeway.

Toyota Motor Corp. recently announced it would establish a $1 billion research lab in Silicon Valley to accelerate the development of smartcars and in December acquired a small stake in machine-learning venture Preferred Networks Inc.

Mike Ramsey contributed to this article.

Write to Christina Rogers at christina.rogers@wsj.com and Alistair Barr at alistair.barr@wsj.com

 

(END) Dow Jones Newswires

December 22, 2015 20:07 ET (01:07 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.
Tesla (NASDAQ:TSLA)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more Tesla Charts.
Tesla (NASDAQ:TSLA)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more Tesla Charts.