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

News Ford, Volkswagen to hold news conference about global alliance 1:12 PM, Jul 11, 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".

The move deepens a global alliance aimed at slashing development and manufacturing costs.

The need for cost-sharing partnerships is underlined by the current downturn in vehicle sales and predicted changes to ownership models as new technologies are proven.

VW will also follow Ford's lead, investing in self-driving startup ArgoAI; Ford has already invested $1 billion in the company, VW will invest a further $2.6 billion.

"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. $1 billion will come from funding, while the remaining $1.6 billion will come in the form of VW's Autonomous Intelligent Driving (AID) company, which has more than 200 employees and has been responsible for self-driving-car development for the VW Group.

Argo AI's technology will be incorporated into both Ford and VW vehicles as part of each company's plans to offer geofenced driverless robotaxis or goods delivery services in the United States and Europe.

Ford CEO Jim Hackett said: "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".

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VW will purchase Argo AI shares from Ford for $500m over three years.

Ford hopes to sell 600,000 vehicles in Europe using VW's technology over six years starting in 2023. One potential element could be an investment by Volkswagen in Argo AI, the self-driving vehicle systems company majority owned by Ford.

- Ride-hailing company Uber joined with Toyota to build autonomous vehicles a year ago.

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. The two automakers will also look at other ways to work together on electric vehicles, but it didn't go into much detail there.

In January the company's announced a global alliance to help develop commercial vans and medium-sized pickup trucks for global markets beginning as early as 2022.

Analysts at Citi said Ford's licensing of Volkswagen's MEB platform was a "transformational" step for both companies.

Shares of Ford rose 2.6 percent in afternoon trading Friday.

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