Economy

VW, Ford broaden alliance to autonomous, electric vehicles

VW, Ford broaden alliance to autonomous, electric vehicles

Global auto giants Volkswagen and Ford announced Friday they were expanding their alliance to include the development of self-driving cars.

Ford said it will become the first additional automaker to use Volkswagen's electric vehicle architecture to build electric vehicles for the European market starting in 2023.

"While Ford and Volkswagen remain independent and fiercely competitive in the marketplace, teaming up and working with Argo AI on this important technology allows us to deliver unmatched capability, scale and geographic reach", Ford's chief Jim Hackett said in a statement. The two automakers will also look at other ways to work together on electric vehicles, but it didn't go into much detail there.

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.

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. Now, as suspected, Ford will also use VW's modular electric vehicle architecture (called MEB) to offer a new battery EV in Europe. Ford and VW say they will independently design "purpose-built vehicles to support the distinct people and goods movement initiatives of both companies".

"A VW investment in Ford's AV business would provide a crucial public validation data point (similar to SoftBank's investment in GM Cruise), and could be just the start of external capital for Ford's AV business", Schwarz said.

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Sharing the MEB platform with other automakers will increase volume to spread development costs and make EVs "more affordable for consumers, and be better for the environment", said VW CEO Herbert Diess.

Suppliers familiar with Ford's plans say the No. 2 US automaker is developing a broader portfolio of electric vehicles, a lot of them crossovers that will carry the Ford and Lincoln brands, for North America and China.

The partnership with Ford and Volkswagen will allow the firms to "share significant [research and development] costs in the high triple-digit millions", Diess said.

Volkswagen's MEB platform can be used for a variety of vehicle types.

Ford created Ford Autonomous Vehicles LLC in 2018, pledging to invest $4 billion until 2023 and has sought outside investors to help share the spiralling cost of developing autonomous vehicles.

Volkswagen will contribute its Autonomous Intelligent Driving (AID) company to the venture.