Ford and Volkswagen partner to invest autonomous and electric vehicles

Jeannie Matthews
July 13, 2019

Ford and Volkswagen have announced plans to expand their global alliance to include electric vehicles, while also confirming their bakkie tie-up "remains on track".

As automotive profits have fluctuated with changing consumer demand and rising technological expectations, Ford and Volkswagen hope that the joint research and development into autonomous and electric vehicles will keep them competitive.

"Unlocking the synergies across a range of areas allows us to showcase the power of our global alliance in this era of smart vehicles for a smart world".

Argo AI has announced Volkswagen is making a widely anticipated commitment to invest $2.6 billion into its technological incubator, building on top of an already eye-watering $1 billion one made by Ford in 2017.

Also announced Friday was a plan to share VW's modular EV platform for high-volume cars, known as the MEB, with Ford.

Unprecedented shifts facing the auto industry are forcing players to consider new partnerships and potential consolidation.

VW will invest $2.6 billion in Argo AI.

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The two automakers will become equal owners of Argo AI, a robocar firm that was majority-owned by Ford, with plans to put autonomous vehicles on the roads in the US and Europe. VW, meanwhile, has been working on MEB since 2016 and expects to build 15 million cars using the platform in the next decade.

The financial transaction of the MEB sharing dealing wasn't mentioned, but Ford did state that the cost of licensing the platform was part of the more than $11.5 billion the automaker has committed to developing EVs. Argo AI's goal is the same - developing hardware and software for self-driving vehicles that can be manufactured and deployed at scale.

"Looking ahead, even more customers and the environment will benefit from Volkswagen's industry-leading EV architecture".

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 vehicle firms was aimed at lowering the risk and cost of developing new technologies.

It's important to note that the two will remain separate companies, and this teaming up does not include any cross ownership. "This improves the positions of both companies through greater capital efficiency, further growth and improved competitiveness". "It makes a lot of sense to combine forces".

In February, VW and Ford discussed an approximate valuation of US$4 billion, a person familiar with the deliberations said.

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