ZCZC
BCN-06
US-GERMANY-VOLKSWAGEN-FORD
Ford, Volkswagen join forces on the new frontier of electric autos
NEW YORK, July 13, 2019 (BSS/AFP) – Volkswagen and Ford are teaming up on
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 announced they were expanding their
alliance, accelerating cooperation among otherwise competing global
automakers 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.
But this is not a merger or traditional corporate tie-up.
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.”
He told reporters that Ford will take advantage of motors, batteries and
other components VW developed to build a new electric model called ID.3 which
is due next year with a starting price of 30,000 euros ($33,800).
The news sent Ford’s share price up 2.9 percent, while VW also posted a
solid gain on the Frankfurt stock market.
MORE/HR/0948
ZCZC
BCN-07
US-GERMANY-VOLKSWAGEN-FORD 2 LAST NEW YORK
– Drive down costs –
Diess said this could be just the start of greater cooperation between the
two manufacturers.
“Our global alliance is beginning to demonstrate even greater promise and
we are continuing to look at other areas on which we might collaborate,” he
said.
Automakers worldwide have been forced to transform quickly in the race to
dominate new technologies.
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.”
VW and Ford said their alliance would let them roll out self-driving
technology in more markets than other companies.
The US automaker will use VW’s electric vehicle architecture — the
“Modular Electric Toolkit” — to deliver more than 600,000 vehicles over six
years starting in 2023 with a new Ford model for European customers, while VW
expects to produce 15 million cars over the next decade.
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, which spewed out higher-than-permitted levels
of harmful pollutants.
“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.”
BSS/AFP/HR/0950