Ford, VW decide to team up on self-driving, electric cars
Ford Motor Co. and Volkswagen said Friday they will team up to develop selfdriving cars and share electric-car components. The move broadens an existing alliance and shows how automakers are putting aside rivalries to manage the cost of new technologies.
The agreement calls for Volkswagen to purchase a stake in a Ford-backed startup that is developing selfdriving technologies and for Ford to use electric-car components developed by Volkswagen.
As auto sales slump around the world, hardpressed carmakers have little choice but to join forces to fend off Silicon Valley challengers and avoid obsolescence.
“There’s only going to be a few winners who create the platforms for the future,” said Ford’s chief executive, Jim Hackett. “We cannot be late.”
But Volkswagen and Ford, which already cooperate on commercial vehicles and pickups, must show that they can avoid the power struggles among managers and engineers that have doomed other alliances.
Volkswagen, which sold more cars than any other company last year, is known for its insular, hierarchical culture and has little experience cooperating with rivals. An alliance with Suzuki ended in 2015 with bitter feelings on both sides.
“Autonomous driving is a very, very expensive technology,” Ferdinand Dudenhöffer, a professor at the University of Duisburg-Essen in Germany, said in an email. “One has to invest today in order to make the first sales in 2030, maybe. Therefore it makes a lot of sense for Ford and VW to work together.”
Dudenhöffer questioned whether Hackett and Herbert Diess, chief executive of Volkswagen, could make the compromises necessary for the alliance to succeed. Both are “alpha wolves,” Dudenhöffer said.
It may help that Ford and Volkswagen are dividing the labor to take advantage of each company’s strength. Ford is ahead of Volkswagen in autonomous driving, while Volkswagen is more advanced than Ford in electric cars.
Volkswagen has agreed to invest $2.6 billion in cash and other resources in Argo AI, a Ford-backed startup that is working on sensors, software and other technologies to enable cars to drive themselves. Volkswagen will fold its autonomous vehicle project, which is based in Munich, into Argo, including 200 employees. The agreement values Argo at $7 billion.
In 2021 Ford aims to put Argo’s systems in driverless taxis and delivery vehicles in the United States. Volkswagen plans to use self-driving technology in its Moia ride-sharing service, a fleet of six-seat, battery-powered vans already operating with human drivers in Hamburg, Germany, and expected to be introduced in other European cities.
In a separate agreement, Ford plans to build electric cars based on motors, batteries and other standardized components that Volkswagen has developed and is using in a model called the ID.3, due next year. Volkswagen has said the car will sell for less than $34,000, making battery-powered transportation more accessible to middle-income buyers.
Diess said the company expected to sell 15 million electric vehicles in Europe over 10 years, starting in 2020. Ford plans to introduce a vehicle in Europe made from VW components in 2023 and to sell 600,000 electric cars over six years.
The need for companies to share the cost and risk of developing autonomous vehicles has become more urgent because car sales are slowing in all major markets.
“The financial investment is immense, and yet we don’t know when they will be in the marketplace or how they will make money,” said Michelle Krebs, a senior analyst at Autotrader. “It’s not just the money. The talent pool for people developing these vehicles is small.”