Ford, Volkswagen expand alliance to electric autos

Andrew Cummings
July 12, 2019

Ford and Volkswagen plan to unveil a broader global alliance on Friday that will focus on developing autonomous technology and electric vehicles.

Prof Peter Wells, director of the Centre for Automotive Industry Research at Cardiff Business School, told the BBC earlier this year, that the increasing number of collaborations between auto firms was aimed at lowering the risk and cost of developing new technologies.

The need for cost-sharing partnerships is underlined by the current downturn in vehicle sales and predicted changes to ownership models as new technologies are proven.

VW will invest $2.6 billion into Argo AI, Ford's self-driving cars venture, and Ford will build an electric auto using VW's MEB electric vehicle platform, the companies said.

The cooperation with VW on electric vehicles in Europe is part of Ford's previously disclosed $11.5 billion EV investment worldwide.

Ford created Ford Autonomous Vehicles in 2018, pledging to invest $4 billion until 2023 and has sought outside investors to help share the spiralling cost of developing autonomous vehicles. That's the automaker's in-house autonomous vehicle development unit, which now has 200 employees. The two well-known automotive companies will be collaborating on their autonomous and electric vehicles and technologies considered critical for the future of the industry. VW will also purchase $500 million in Argo shares over the next three years. The two carmakers will remain independent and competitive in the marketplace, but the joint venture on Argo allows them to "deliver unmatched capability, scale and geographic reach", according to Ford CEO Jim Hackett.

Ford may leverage its access to VW's electric-car architecture to comply with stricter European emissions rules.

The automakers will work together to develop a self-driving system and integrate it into their own vehicles, with Ford already planning to debut a hybrid utility vehicle aimed at providing commercial ride-hailing and package delivery services by 2021.

Volkswagen intends to launch a vehicle with Argo's platform in "the early 2020s", according to CEO Herbert Diess.

Analysts at Citi said Ford licensing Volkswagen's MEB platform is a "transformational" step.

VW's Argo AI investment includes $1 billion in cash, which matches what Ford first committed to the company in 2017, along with the integration of its existing Autonomous Intelligent Driving company that is now 200 employees strong. Ford shares were up 0.4% to $10.15 as of 1:25 p.m. Thursday in NY.

The two companies announced a joint venture in January, to develop commercial vans and pickups starting in 2022.

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