Companies

Volkswagen, Ford announce alliance centered on vans, pick-ups

Reuters Detroit | Updated on January 15, 2019 Published on January 15, 2019

Ford and VW will announce their partnership against the backdrop of the Detroit auto show   -  File photo

The partnership will explore the development of electric and self-driving technology

Volkswagen AG and Ford Motor Co said on Tuesday they will join forces on commercial vans and pick-ups and also they were exploring shared development of electric and self-driving technology, actions meant to save the automakers billions of dollars.

Ford and VW announced their partnership against the backdrop of the Detroit auto show. The partnership, which starts with sales of vans and medium-sized pick-ups in 2022, will not involve a merger or equity stakes, the companies said.

The expanding alliance, which will be governed by a joint committee that includes the CEOs of both companies, highlights the growing pressure on global automakers to manage the costs of developing electric and self-driving vehicles, as well as technology to meet tougher emissions standards for millions of internal combustion vehicles they will sell in coming years.

“The actions we take tied to our alliance agreements may influence a number of our business plans for key regions, and we look forward to begin sharing a number of those details with you starting in the next several weeks,” Ford CEO Jim Hackett said in an e-mail to employees.

Ford will engineer and build medium-sized pick-ups for both companies, Volkswagen said. Ford will also engineer and build larger commercial vans for European customers, while Volkswagen will develop and build a city van.

The companies estimate the commercial van and pick-up cooperation will yield improved annual pre-tax operating results starting in 2023.

Ford and VW have signed a memorandum of understanding to jointly develop electric and self-driving vehicles, VW Chief Executive Officer Herbert Diess said in a copy of a speech provided to Reuters.

US AND CHINA SLOWDOWNS

Europe's biggest automaker and the No. 2 US automaker have been exploring closer cooperation as trade frictions force carmakers to rethink where they build vehicles for Europe, the US and China. Slowdowns in the world's largest auto markets - China and the US - have ratcheted up the pressure to cut costs.

The tie-up with Volkswagen is a big bet for Ford's Hackett since he took over in May 2017 from the ousted Mark Fields with the mandate to speed up decision-making and cut costs. Some analysts and investors have been frustrated by Ford's laggard stock price and a perceived lack of details from Hackett about the Dearborn, Michigan-based automaker's $11 billion restructuring.

Last week, Ford said it would cut thousands of jobs, discontinue building money-losing vehicles and look at closing plants as part of a turnaround effort for its unprofitable European business.

On Monday, Volkswagen said it would invest $800 million to build an electric vehicle plant in Chattanooga, Tennessee, prompting US President Donald Trump to congratulate the city and state in a post on Twitter the following day.

But the White House has been pushing to end subsidies on electric vehicles that would help the plant and the alliance.

 

 

Published on January 15, 2019
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