Ford, Volkswagen promise details on electric, autonomous vehicle alliance

HAMBURG/DETROIT (Reuters) – Ford Motor Co and Volkswagen AG (VOWG_p.DE) said on Thursday they are expanding their global alliance announced in January with deals expected to involve collaboration on electric and autonomous vehicles.

Further details on a technology-sharing agreement are expected to be announced at New York press conference on Friday. The companies said Volkswagen Chief Executive Herbert Diess and Ford CEO Jim Hackett would appear together, but provided no additional information in a news release. (bit.ly/2LP9TjA)

The automakers could outline more than one agreement. One potential element could be an investment by Volkswagen in Argo AI, the self-driving vehicle systems company majority owned by Ford.

The value of VW’s contribution to the collaboration is more than $2 billion, including about $1 billion invested, said two industry sources who requested anonymity discussing the deal.

VW declined to comment. A Ford spokeswoman said the No. 2 U.S. automaker was in productive talks with the German company across a number of areas and more details would be provided on Friday.

Ford created Ford Autonomous Vehicles LLC in 2018, pledging to invest $4 billion until 2023. It has sought outside investors to help share the spiraling cost of developing autonomous vehicle technology.

Pittsburgh-based Argo AI, a start-up bought by Ford in 2017, is part of that unit.

Volkswagen and Ford have been discussing for months how to share the burdens of investing in future electric and autonomous vehicles. The apparent agreement between the global manufacturers is the latest sign of how pressure to cut carbon emissions and fend off challengers from the technology industry is driving consolidation among automakers.

Rather than continue developing their own, proprietary technology, automakers are sharing vehicle components and technologies.

As with Ford and VW, much of this sharing is happening without outright takeovers and mergers. Honda Motor Co last year joined forces with General Motors Co to develop autonomous vehicles by investing $2.75 billion in GM’s Cruise Automation self-driving vehicle unit. Alphabet Inc’s Waymo has agreements with Fiat Chrysler Automobiles and Jaguar Land Rover [TAMOJL.UL] to buy and equip vehicles with its self-driving systems.

In February, Germany’s Daimler AG and BMW said they would pool resources on automated driving technology.

Fiat Chrysler in May made a merger proposal to France’s Renault SA aimed at tackling the heavy costs of technological and regulatory changes in the industry, but ultimately abandoned the deal.

Analysts at Citi said Ford licensing Volkswagen’s MEB platform is a “transformational” step.

“Not only does it likely further de-risk VW estimates in 2020 by guaranteeing some profits from electric vehicles next year, but also likely provides VW with an unassailable scale advantage in the market with it potentially producing around 400,000 battery electric vehicles in Europe next year,” Citi analyst Angus Tweedie said in a note published on July 10.

VW signed a deal in March to develop a pickup truck using a Ford platform, and the carmakers have been in talks about extending the alliance to include autonomous driving and mobility services, as well as Ford’s use of VW’s MEB electric-vehicle platform.

In June, Volkswagen ended its partnership with Aurora only days after the self-driving software start-up firm announced an alliance with Fiat Chrysler.