Published: Fri, July 12, 2019
Markets | By Otis Pena

Ford and VW Sign Contract to Collaborate on Electric and Autonomous Vehicles

Ford and VW Sign Contract to Collaborate on Electric and Autonomous Vehicles

Neither company will hold a stake in the other. The German-carmaker will also contribute its own self-driving arm, which includes more than 200 employees and is valued at $1.6 billion. Ford already has committed to putting $1 billion into Argo, which the companies now value at $7 billion. It already has invested $400 million. Its CEO, Bryan Salesky, said in a statement his company's "technology could one day reach almost every market in North America and Europe, applied across multiple brands and to a multitude of vehicle architectures". These will be designed at Ford's facility in Cologne, Germany and will go into production starting in 2023, at a rate of 100,000 a year for six years.

As for Ford and Volkswagen, Hackett and VW CEO Herbert Diess left the door open to more collaboration between the companies, but they did not say whether there were specific additional partnerships in the works.

"Our global alliance is beginning to demonstrate even greater promise, and we are continuing to look at other areas on which we might collaborate", said Diess.

Credit Suisse said an an expanded alliance between the two companies could combine VW's strength in EVs with Ford's in autonomous vehicles, allowing both to "address these challenges in a more capital-efficient manner". It's also another in a series of investments, purchases and partnerships between auto and tech companies as they develop new technology while they are still cranking out vehicles powered by internal combustion engines.

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The decision to team up helps the Ford and Volkswagen share the steep costs - and risks - of developing technology for driverless vehicles, and gives Argo AI more cash to attract talented engineers, crucial to success. It could also be years, if not decades before carmakers can profit off of autonomous vehicles. FCA also is selling vans to Google autonomous vehicle spinoff Waymo, which is negotiating a partnership with the Renault-Nissan alliance. It plans to deliver a Level 4-capable self-driving system for "ride sharing and goods delivery services in dense urban areas".

"The auto industry, in the past we've been criticized for a lack of interest in working together, and what you're seeing with Volkswagen and Ford is a commitment to doing that on a number of projects", said Joe Hinrichs, president of automotive for Ford.

Executives from both companies said that sharing the MEB platform is created to do that. "The combination of these two massive automakers is exactly what needs to happen to accelerate the adoption of AV and EV technology".

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