Old-line car parts supplier Delphi Automotive made a huge bet on the future of driving Tuesday, buying autonomous car start-up NuTonomy Inc. for $450 million.
It’s a big deal for Delphi, which started out long ago as a division within General Motors. The move gives NuTonomy access to capital and is a big payday for founders and investors.
And, auto analysts say, the acquisition signals a consolidation period for self-driving car start-ups as major players in the global automotive industry position themselves for radical change.
“You’re going to see a lot of larger companies with healthy balance sheets gobble up a lot of start-ups,” said autonomous vehicles consultant Grayson Brulte.
Last year, General Motors paid about $1 billion for Silicon Valley driverless technology start-up Cruise Automation. This year, Ford paid about $1 billion for a tiny Pittsburgh start-up, Argo AI.
The start-up field is crowded, and Brulte expects more deals to come soon.
“There’s too many people competing for the same prize,” he said.
One reason big companies with strong balance sheets are rushing to buy self-driving start-ups is the scarcity of specialized talent needed to create autonomous-vehicle software and hardware.
“There’s not enough engineering talent, there’s not enough artificial intelligence talent, and there’s not enough policy talent to go around,” Brulte said.
Boston-based NuTonomy was founded in 2013. It has been testing autonomous taxis in Singapore and Boston since last fall.
Delphi Chief Technology Officer Glen DeVos says Delphi wants its autonomous system to be used on commercial vehicles in limited areas by 2019. DeVos says NuTonomy brings advanced software and fleet management experience to Delphi.
NuTonomy will remain in Boston and will maintain partnerships with French automaker PSA Group and ride-hailing provider Lyft. NuTonomy’s 100 employees will work with Delphi’s 100-member autonomous vehicle team.
By March, Delphi will have changed its name to Aptiv. In an effort to remake itself for a new age, the company said in September it plans to split itself in two, with Delphi Technologies focused on powertrains and Aptiv focused on self-driving and connected vehicle technology.
Delphi has long experience in supplying automotive electronics to major automakers. Aptiv will continue as an industry supplier, even as it builds NuTonomy’s business.
Elon Musk, chief executive at Tesla, issued a one-word tweet in reaction to the deal: “Groan.” Tesla is fashioning its own autonomous technology.
The Associated Press contributed to this story.
9:40 a.m.: This article was updated to include comment from autonomous vehicles consultant Grayson Brulte.
This article was originally published at 8:20 a.m.