Ford and VW could soon announce an autonomous collaboration

12 June 2019

Ford and VW could soon announce an autonomous collaboration

12 June 2019

A deal between Volkswagen (VW) and Ford to collaborate on autonomous technology could be announced as early as next month.

The two companies have resolved certain sticking points during negotiations and believe that a tie-up to develop and market driverless systems would help to create a global giant, according to people familiar with the situation.

Such a partnership could rival Waymo and General Motors’ Cruise unit in ambition and scope.

Volkswagen and Ford, which agreed to co-produce vans and pickups earlier this year, have been discussing an investment in Argo AI, the Ford-backed autonomous vehicle start-up. The carmakers discussed an approximate valuation for the technology company of $4 billion. (€3.5 billion).

Ford said its talks with Volkswagen are ongoing but did not provide specifics on the extent of progress.

‘Discussions have been productive across a number of areas. We will share updates as details become more firm,’ it said in a statement. VW declined to comment on the status of the talks.

Good fit

Officials from both sides, including VW CEO Herbert Diess and Ford Chairman Bill Ford, have stressed the strategic fit between the two manufacturers.

‘We fit together geographically really well, product line-wise, we fit together well,’ Ford, the great-grandson of founder Henry Ford, said at a conference in Houston in March. ‘We both came to the same realisation that as big as our balance sheets are, no company can do this alone.’

The framework VW and Ford are discussing would be to create an entity similar to a joint venture, with each partner having equal ownership of the self-driving software - a move which would create a global market leader in the technology. Any development by the two companies would have access to a huge fleet of vehicles, with all models in the VW Group and Ford’s leading car and commercial vehicle portfolio benefitting.

Collaboration efforts

Since the announcement of the two companies working together in the commercial vehicle market, there has been speculation over further tie-ups between Ford and VW, which would benefit each other in markets they are under-exposed to.

While Ford has made investments in autonomous technology, it lacks in electric vehicle (EV) expertise. The US carmaker has expressed an interest in collaborating in this market, possibly using VW’s MEB electric platform in its own vehicles. VW is more advanced in this field, recently launching its ID.3 pure-electric vehicle.

However, the road to a partnership on EVs is rockier. Speaking on the US television show Autoline Detroit earlier this year, Jim Farley, Ford’s president of global markets, said that the two companies’ programmes regarding electric vehicles are out of sync, ‘almost like snowboarding and skiing.’

While VW’s MEB EV platform is primarily aimed at low-cost passenger car segments, Ford intends to focus primarily on commercial vehicles and performance models when it comes to electrification. Electrical cooperation is only likely ‘if we find platforms where it makes sense,’ added Farley.