FRANKFURT (Reuters) – Ford Motor Co (F.N) and Volkswagen AG (VOWG_p.DE) joined forces to develop autonomous and electric cars on Friday and said they were also looking at other areas of cooperation, deepening a global alliance to slash development and manufacturing costs.
FILE PHOTO: Volkswagen’s CEO Herbert Diess speaks ahead of Volkswagen Group’s annual general meeting in Berlin, Germany, May 14, 2019. REUTERS/Hannibal Hanschke/File Photo
Ford and VW have already started cooperating in the area of commercial vehicles as part of the auto industry’s broader effort to redraw production and sales footprints to cope with more stringent regulation and fragmented markets.
VW will invest $2.6 billion in Argo AI, Ford’s self-driving cars venture, and will buy $500 million worth of Argo shares from Ford, giving the two automakers equal stakes in the startup.
Ford also will build an electric car in Europe using VW’s MEB electric vehicle platform, the companies said.
“Our global alliance is beginning to demonstrate even greater promise, and we are continuing to look at other areas on which we might collaborate,” VW’s Chief Executive Herbert Diess said on Friday.
Ford expects to build more than 600,000 electric vehicles in Europe over six years, sourcing components and the vehicle underpinnings from VW, helping both companies to drive down costs. VW said it had committed $7 billion to its MEB platform, which is expected to underpin 15 million vehicles worldwide from the VW group over the next decade.
Analysts at Citi said Ford’s licensing of Volkswagen’s MEB platform was a “transformational” step for both companies.
“It likely provides VW with an unassailable scale advantage,” Citi analyst Angus Tweedie said in a note published on July 10.
The broader alliance, which covers collaboration beyond joint investments in Argo AI, does not entail cross-ownership between the two companies.
Ford created Ford Autonomous Vehicles LLC in 2018, pledging to invest $4 billion until 2023 and has sought outside investors to help share the spiraling cost of developing autonomous vehicles.
Volkswagen will contribute its Autonomous Intelligent Driving (AID) company to Argo, which will boost the self-driving unit’s employees to 700 from 500.
(Graphic: Automakers’ investments in electric vehicles: tmsnrt.rs/2Hcr3H4)
Editing by Bernadette Baum