DETROIT—A deal between General Motors and technology supplier Mobileye bears little resemblance to the sort of weighty, conditions-laden contract GM normally attaches to a purchase agreement.
GM agreed to shoulder a portion of the development costs, and went easy on the fine print and intellectual-property terms. It was a contract “that would not look anything like a typical supplier had seen before relative to terms and conditions,” Steve Kiefer, GM global purchasing chief, said in an interview this month.
The goal: Strip out the bureaucracy and battles over costs and control to get an innovation into production.
“There's a recognition that this is an innovation relationship. The emphasis is on speed and win-win,” Kiefer said. “How do we do something that will share risk and reward between us and the innovation supplier, the software supplier?”
The approach underscores the degree to which GM and other large automakers are leaning on—even courting—suppliers that can offer an edge in the fast-moving realms of autonomous driving, electrification and connected-car technology.
“With the amount of technology going into vehicles now, automakers are forced to be more flexible on their terms because of supply and demand,” said Jeoffrey Burris, principal of Advanced Purchasing Dynamics, a suburban Detroit consulting firm.
GM said January at the Consumer Electronics Show in January that it's working with Mobileye, a maker of camera-based crash-avoidance systems, to crunch real-time data collected by OnStar to create high-definition maps to aid in the adoption of autonomous driving. GM said it would consider integrating the technology into its products as early as this year.
Kiefer said the fresh approach is not exclusively for software or tech firms. He foresees applying it to purchase agreements with any of GM's large suppliers when there is a unique technology to be had.
Kiefer spoke only in broad terms about the Mobileye contract. But he outlined key elements of the new approach, including:
• Flexibility on intellectual-property ownership: Kiefer said GM had been “a little rigid on IP sharing and ownership” but is now forging contracts that are more favorable to the supplier.
• Cost sharing: “In the past, we would say, “You spend your own money and if it goes into production, great. If it doesn't, you lose,'“ Kiefer said. “Now, in some cases we're saying, “I pay a portion. You pay a portion. We're in this together and both motivated to get it into production.'“
• Less legalese: GM has streamlined some legal requirements, including simplified nondisclosure agreements.