Digital mapping company HERE Technologies sold a 30% stake to Mitsubishi Corp and Nippon Telegraph and Telephone Corp (NTT), diluting German carmakers' stake to 54% amid uncertainty about the profit potential from autonomous cars. Mitsubishi and NTT will co-invest in the Amsterdam-headquartered company through their newly established, jointly owned holding firm COCO Tech Holding B.V. in the Netherlands, HERE said on Friday. "Their investment also means we are further diversifying our shareholder base beyond automotive, which is important given the appeal and necessity of location technology across geographies and industries," HERE's Chief Executive Edzard Overbeek said.
The Japanese companies said they would collaborate with HERE to develop services such as ways to tackle road congestion and improve supply chain efficiencies. High definition maps can also be used in fleet management, asset tracking, last-mile delivery, long-distance package delivery by drones and indoor mapping applications, Overbeek told Reuters.
Financial details of the transaction, which they said would close next year, were not disclosed. German carmakers BMW , Audi and Daimler saw high definition mapping as a strategic asset and bought HERE from Finnish telecoms group Nokia for around 2.5 billion euros ($2.8 billion) in 2015 to avoid becoming dependent on Alphabet's Google .
Friday's deal dilutes the stake held by each German carmaker from 25% to just under 18%, HERE said. Tech companies and automakers raced to develop self-driving vehicles after Google presented a prototype car in 2012, leading German manufacturers to develop robotaxis as a way to enter the ride-hailing business to take on Uber.
However, the technology costs and regulatory hurdles have spiraled, and ride-hailing businesses have struggled to reach sustainable profitability, leading to a reassessment of the business potential of robotaxis and ride hailing. "There has been a reality check setting in here," Daimler Chief Executive Ola Kaellenius said last month, adding that spending on robotaxis would be "rightsized."
The move comes as BMW and Daimler this week announced they will exit the North American car-sharing market, halting operations in Montreal, New York, Seattle, Washington D.C., and Vancouver, as they focus on the European market. Last year, Germany's Continental and Bosch , the world's largest automotive suppliers, bought a 5% stake in HERE.
In February, HERE, which employs around 8,000 people in 54 countries, partnered with Navinfo Co Ltd to offer location services in China. HERE is sticking to its goal of developing high-definition maps to help guide driverless cars, Overbeek said.
"Fully autonomous driving in city centres will come 10, 15, 20 years from now," he said.
