Robo-Taxis is a reality soon

Mercedes-Benz owner Daimler and supplier Robert Bosch [ROBG.UL] are teaming up to develop self-driving cars in an alliance aimed at accelerating the production of "robo-taxis".

The pact between the world's largest maker of premium cars and the world's largest automotive supplier forms a powerful counterweight to new auto industry players like ride-hailing firms Uber and Didi which are also working on self-driving cars.

Technology companies and carmakers are striving to adjust to a shifting landscape in the auto industry as consumers increasingly use smartphones to locate, hail and rent vehicles, rather than going out and buying cars.

The alliance not only marks an end to Daimler's efforts to develop an autonomous car largely on its own, but moves the auto industry's ambitions beyond simply developing prototype vehicles towards industrial-scale production of self-driving cars.

Financial terms were not disclosed of the deal between the two German companies, which was announced on Tuesday.

"The prime objective of the project is to achieve the production-ready development of a driving system which will allow cars to drive fully autonomously in the city," Daimler said in a statement on Tuesday.