(Recasts throughout; adds background on autonomous driving developments, executive comments)
By Bernie Woodall and David Shepardson
DETROIT/WASHINGTON, May 3 (Reuters) - Alphabet Inc's Google unit and Fiat Chrysler Automobiles NV have agreed to work together to build a fleet of 100 self-driving minivans in the most advanced collaboration to date between Silicon Valley and a traditional carmaker, the companies said Tuesday.
The deal marks the first time that Google has worked directly with an automaker "to integrate its self-driving system, including its sensors and software, into a passenger vehicle," the companies said in a statement on Tuesday.
Google and Fiat Chrysler engineers will work together to fit Google's autonomous driving technology into the Pacifica minivan. Some engineers for both companies will work together at a facility in Southeast Michigan, where Fiat Chrysler has its major North American engineering center, the companies said.
Google said it is not sharing proprietary self-driving vehicle technology with Fiat Chrysler, however, and the vehicles will not be offered for sale to the public.
The agreement between Google and Fiat Chrysler comes as rival technology and auto companies are accelerating efforts to master the complex hardware and artificial intelligence systems required to allow vehicles to pilot themselves.
General Motors Co in March agreed to acquire San Francisco self-driving car startup Cruise Automation . German automakers Daimler AG, BMW AG and Volkswagen AG last year bought digital mapping company HERE to accelerate their autonomous driving development.
Some features already available on mass market cars, SUVs and trucks take steps in the direction of replacing a human driver, such as automatic emergency braking, adaptive cruise control and automatic lane-keeping.
Some analysts said a self-driving minivan would make sense for testing the technology in a fleet of mass transit vehicles deployed in a controlled environment, such as a Google or Fiat Chrysler campus or a city center.
"Minivans fit into the transportation fleets easily," said Karl Brauer, a senior analyst at Kelley Blue Book. "They can be a box-on-wheels and can move more humans around."
Google's self-driving car engineers had previously purchased Lexus sport utility vehicles made by Toyota Motor Corp and retrofitted sensors and other hardware into the cars on their own.
Tuesday's deal holds benefits for both companies. Fiat Chrysler has a net debt pile of 6.6 billion euros ($7.6 billion). Chief Executive Sergio Marchionne has been trying unsuccessfully for more than a year to convince reluctant rivals, including GM, to consider a merger to spread the rising costs of advanced safety and emissions technology.
Fiat Chrysler shares rose more than 2 percent in after market trading after the Google agreement was announced.
Google has said that it does not want to build self-driving vehicles on its own and has explored alliances with auto companies, but none have been finalized. Working more closely with Fiat Chrysler could help Google refine its systems as a step toward offering them in regular production cars.
The deal does not preclude either FCA or Google from cooperating with others, the companies said in their statement.
"The opportunity to work closely with FCA engineers will accelerate our efforts to develop a fully self-driving car that will make our roads safer and bring everyday destinations within reach for those who cannot drive," John Krafcik, chief executive of the Google Self-Driving Car Project, said in a statement.
Collaborating with Google provides an opportunity for Fiat Chrysler "to partner with one of the world's leading technology companies to accelerate the pace of innovation in the automotive industry," Marchionne said in a separate statement.
The Fiat Chrysler vehicles will more than double Google's testing fleet, which currently includes about 70 Lexus SUVs and small prototype cars designed by Google. Google is now testing self-driving vehicles in four U.S. cities.
Executives at other automakers, including GM, Ford Motor and Daimler, have expressed wariness about alliances with Alphabet or other technology companies that could relegate them to the role of hardware suppliers.
John Elkann, Fiat Chrysler's chairman, in April dismissed the idea that automakers must shoulder alone the burdens of heavy investments in automated driving or ride sharing. By 2030, Elkann said, fully self-driving cars will likely account for just 15 percent of global sales.
"Boring old car makers need to figure out how to make this profitable and guard against falling into the ... trap of ignoring that business while chasing profits in other parts of the value chain," Elkann said.
(Additional reporting by Agnieszka Flak in Milan; Editing by Tom Brown)