Ford and the Volkswagen Group are combining forces in a global alliance, and they will start by making pickup trucks together, the two automakers announced on Tuesday. The companies will also build commercial vans together, and are exploring collaborations on autonomous and electric vehicles as well as new mobility services as well.
Neither company is taking an ownership stake in the other, but the alliance will be overseen by a joint committee with an equal number of people representing each automaker. The medium-sized pickup truck will be built for both companies as early as 2022. The vans are expected to be built in a similar time frame. Volkswagen will build a city van, while Ford will build a larger, 1-ton commercial Transit vans. The announcement ends more than half a year of speculation about the two automakers coming together.
The team-up comes at a time of immense change in the auto industry. Almost every major automaker is shifting to electric vehicles and exploring autonomous technology. Many of them are toying with the idea of new mobility services, like shared fleets of cars, bikes, and scooters.
”It’s my opinion that you can’t do this alone,” Ford CEO Jim Hackett said during a press call about the news. “We believe the fundamental shift is healthy, as it allows automakers to focus on their respective strengths and participate in developing these new mobility solutions, yet at the same time for our customers, offer many competitive options that they didn’t think they might get from automotive companies.”
There is also a ton of interest (and money) being poured into these emerging technologies from companies outside the auto industry, which Hackett said was a factor in the tie-up with Volkswagen.
Ford and Volkswagen have been seen as having complimentary approaches to these new technologies that are changing the industry. Volkswagen is on the cusp of rolling out an entire line of electric vehicles, which are the result of a massive investment in the technology. Ford has teased its first EV, which is supposed to be on the road in 2020 as part of a more (relatively) modest rollout. Ford is knee deep in the “new mobility” space, having run ride-sharing services, bike-sharing networks, and even scooter-sharing programs. Volkswagen, meanwhile, hasn’t experimented as much with mobility.
Both companies have been working on autonomous vehicles, but they’ve taken different approaches. Ford invested $1 billion in Argo, an artificial intelligence startup that was developing its own software stack for self-driving cars, and the automaker has been testing the tech for years. Volkswagen has a number of different partnerships with self-driving companies, and Audi is developing some technology in-house. But the German automaker has not done as much real-world testing as Ford.
“From Volkswagen’s perspective, it would make a lot of sense to cooperate with an American player given that the regulatory conditions for preparing the breakthrough of autonomous driving are more advanced in the US than they are in Europe,” Volkswagen CEO Herbert Diess said on the call. Combining resources on autonomous driving is one of the things being discussed, Diess said. It had previously been rumored that Volkswagen was considering investing $1 billion or more into Argo.
Another factor that led to the alliance is that Ford has struggled lately. The automaker is planning layoffs and plant closures, especially in Europe, where Ford’s profit flatlined in 2018. It has also run into trouble in China.
Those two markets happen to be very strong for Volkswagen, and so this is another way that the two companies see themselves fitting together. “While both partners have a global footprint, Volkswagen is a market leader in Europe and China, and Ford is one of the major players in the United States,” Diess said. “When it comes to future technology, we can build on comparable strong foundations.”
Collaborating on electric vehicles for the Chinese market — which is currently the biggest in the world — is another one of the things being discussed, Diess said.