New York (AFP) – Volkswagen and Ford are teaming up with a massive $7 billion project to attack the new frontier in the global auto market: electric and self-driving vehicles, the companies announced Friday.
The German and US auto giants Volkswagen announced they were expanding their alliance accelerating cooperation among otherwise competing global auto giants as they face enormous costs in developing new technologies.
“It just makes sense for us. It makes both companies stronger,” VW chief executive Herbert Diess told reporters. “It makes a lot of sense to combine forces.”
Volkswagen will invest $2.6 billion in capital and assets in Ford’s self-driving unit Argo AI to market new-technology vehicles in the United States and Europe.
VW’s investment values Argo at more than $7 billion and will allow Ford to use VW technology to market “at least one” high-volume fully electric vehicle to European consumers starting in 2023.
Ford chief Jim Hackett said that while the automakers “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.”
– Drive down costs –
Ferdinand Dudenhoeffer, an analyst in Germany with the Center for Automotive Research, told AFP that prior to the alliance Ford had no electric models in development for the European market and going it alone was not possible.
“One has to invest today to see the first returns maybe in 2030 and there are major new competitors in this space, the tech companies Waymo and Apple, Amazon and Uber, Chinese companies.”
In their announcement on Friday, VW and Ford said their alliance would let them roll out self-driving technology in more markets than other companies.
Ford plans to deliver more than 600,000 electric autos in Europe over six years using VW’s “modular electric toolkit.”
Diess said the alliance would help his company drive down its costs in developing zero-emissions electric vehicles.
The company is working to turn the page three years after it was rocked by revelations it had installed emissions-cheating technology on millions of diesel vehicles sold worldwide.
“Ford has taken flack for years for not having a robust EV strategy and VW has had its own fair share of challenges, but this can help both companies reinvent themselves as innovative technology leaders,” said Jessica Caldwell, an auto analyst at Edmunds.
“Convincing car shoppers to go electric en masse is not an easy code to crack, but having two companies the size of VW and Ford working together to solve the puzzle could speed up the process.”