Volkswagen CEO Dr. Herbert Diess and Ford President and CEO Jim Hackett | Credit: Ford

Ford will use VW’s expertise in electric-mobility to rollout EVs in Europe, while VW will invest $2.6bn to join Ford in autonomous driving venture

Ford and Volkswagen are to expand their global alliance as they seek to capitalise on the rapidly growing market for electric vehicles (EVs) and scale-up their investment in self-driving AI technologies.

The two rival car giants announced the collaboration on Friday, which is aimed at advancing autonomous driving technology and delivering cost efficiencies for customers by taking advantage of VW’s manufacturing scale and Ford’s investment to date in AI technology.

It will firstly see Ford design and release a new EV model in 2023 with parts and components supplied by VW using the latter’s dedicated Modular Electric Toolkit expertise and architecture.

Ford said it expects to deliver more than 600,000 European EVs over six years using VW’s electric architecture, including commercial vehicles and “compelling crossovers and imported iconic vehicles such as Mustang and Explorer”. The move is part of the US carmaker’s plan to invest more than $11.5bn in EVs worldwide and step up its e-mobility offering in Europe.

VW, which started developing its EV architecture in 2016, has to date invested around $7bn in the platform. The German carmaker also plans to use build around 15 million EVs of its own over the next decade as the global auto industry races to take the lead in the increasingly competitive e-mobility market.

VW CEO Dr Herbert Diess said scaling the company’s EV design and manufacturing architecture “drives down development costs for zero-emissions vehicles, allowing for a broader and faster global adoption of electric vehicles”

“Looking ahead, even more customers and the environment will benefit from Volkswagen’s industry-leading EV architecture,” he said. “This improves the positions of both companies through greater capital efficiency, further growth and improved competitiveness.”

The collaboration will also see VW invest $2.6bn in Argo AI as part of a deal which values the driverless car technology firm – which has already secured investment from Ford – at $7bn.

It means Ford and VW will have equal stakes in Argo AI and, combined, the two will own a “substantial majority” of the start-up, which is largely focused on developing its technology for ride-sharing and goods delivery services in dense urban areas.

The two companies claim Argo AI’s self-driving platform is the first to feature commercial deployment plans for Europe and the US. It added that with Ford and VW’s backing it will also have “the largest geographic deployment potential of any autonomous driving technology to date”.

Both carmakers said they saw significant potential and profitable growth from tapping into new business areas tied to autonomous technology.

Ford president and CEO Jim Hackett said the US and German car rivals would “remain independent and fiercely competitive in the marketplace”. But he added that teaming up and working with Argo AI on autonomous technology would “deliver unmatched capability, scale and geographic reach”.

“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,” he said.

Co-opetition may be a horribly clunky word, but as automakers seek to minimise the risks and maximise the opportunities associated with the hugely disruptive transition to electric and autonomous vehicles the business case for working closely with fierce rivals has never been more compelling. Expect plenty more industry alliances as the auto industry seeks to navigate a decade defined by decarbonisation and rapidly evolving new transport service models.

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