Japanese mapping technology provider to acquire US rival

Japanese map platform developer, Dynamic Map Platform Co. (or DMP), announced last month that it had signed a definitive agreement to acquire Detroit-based rival, Ushr, in a deal reported to be worth up to US$ 200 million.

In this short piece, we consider the potential significance of this deal on the high-definition mapping market; a crucial area in the development of driverless cars.

The parties: DMP

DMP was founded in 2016 with its initial funding being provided by the Innovation Network Corporation of Japan (or INCJ); a public-private partnership between the government of Japan and various major corporations.  Alongside the INCJ, there have been additional investments from the most of the major Japanese auto companies including Toyota, Mitsubishi, Subaru, Suzuki, Isuzu, Nissan, Honda and Mazda.

DMP aims to establish a two-tiered approach to mapping data.  First, DMP operates in a "co-operative area" whereby it collects and integrates high-precision three-dimensional map data to be shared with all auto manufacturers.  Second, the manufacturers can then individually process and utilise this data in their products; the so-called "competitive area".

The parties: Ushr

Also founded in 2016, Ushr claims to be: "the most accurate, comprehensive and advanced high-definition map technology available on the market today."  With General Motors' GM Ventures as one of its main investors, Ushr has mapped all controlled access highways in Canada and the US.  Its mapping technology has also been deployed in GM's Super Cruise technology.

Potential significance of the deal

Accurate high definition mapping is essential to the successful deployment and commercialisation of autonomous vehicles.  As a result, a number of companies are jostling for position in this space:

• In 2015, BMW, Daimler and Audi purchased Nokia's digital mapping unit, HERE, for around US$ 3 billion.
• They were subsequently joined by Intel (15%, 2017) and Bosch (5%, 2018), who both bought stakes in the company.
• In China, only 14 companies – including Baidu, Alibaba and Tencent – have been granted licences to make high-definition maps.
• In January this year, TomTom sold its telematics fleet-management business to Bridgestone for US$ 1 billion, in an effort to free up resources to focus on the battle for mapping technology.

However, of all the players in this space, Waymo has long been regarded as the frontrunner, due to its access to the extensive global data collected through Google Maps.  Indeed, this has led some commentators to query whether Waymo may ultimately have a dominant position in the market.

DMP's move is seen as a coordinated attempt by the Japanese auto manufacturers to try and present an alternative to Waymo.  This acquisition, though relatively small in value, comes alongside a combined pledge by DMP and Ushr to invest more than JPY 10 billion (around US$ 90 million) into collecting mapping data in Japan and the US.  Further, Tsutomu Nakajima, the President of DMP made it clear that DMP's ambition goes well beyond these domestic markets, expressing a desire to have "the ability to expand globally in the future."

The major Japanese auto manufacturers missing from DMP's roster are, of course, Nissan and Mitsubishi.  There have been various reports recently that the Renault-Nissan-Mitsubishi Alliance is nearing a tie-up with Waymo to jointly develop self-driving cars.^[1]  It will be interesting to see whether this recent deal has any impact on that proposed tie-up.  Either way, DMP's surprise move makes clear that the race for a global leadership position in high definition mapping for autonomous vehicles is well and truly on.

^[1] Bloomberg, Waymo Is Nearing Robocar Deal With Renault-Nissan Alliance, 6 February 2019 (available here).