Making the car of the future costs a lot of money. The tactic of the old titans of the automotive industry is to make pineapple to share costs and gain scale in the race to cut distances as fast as possible with Tesla, the rival that marks the step from Silicon Valley. Ford Motor and Volkswagen decide to expand their transatlantic alliance with an agreement to exchange technology for the development of electric cars and autonomous driving.
It is the worst worst kept secret in the automotive industry. The collaboration between two of the largest manufacturers in the world was announced in January. It concentrated on commercial vehicles, such as trucks and vans. Now what they do take it further. VW will share with Ford its platform and architecture for the development of electric cars, while the US group opens the door to the German to become the second investor of weight in Argo AI, a firm dedicated to autonomous driving systems .
VW proceeds to inject $ 2,600 million into the emerging company in Pittsburgh. It does so through a combination of capital and assets, since in practice the subsidiary of the American manufacturer absorbs the equipment of Autonomous Intelligent Driving based in Munich. That will allow you to test and launch your technology in Europe. The German automaker broke an agreement in June with Aurora, which now works with Fiat Chrysler. The alliance will allow them, therefore, to accelerate the introduction of their first autonomous vehicles.
Jim Hackett, CEO of Ford Motor, and Herbert Diess, CEO of Volkswagen, presented the details of the alliance at a joint event at a hotel on Wall Street, a few meters from the New York parquet. To give it dimension, the two companies have a combined production of 17 million vehicles on a global scale, which is equivalent to 21% of the market.
Alliances allow cost sharing without having to embark on a complex merger process, which allows them to continue operating as independent companies. General Motors did something similar last year that Honda Motor, with the Japanese company investing 2,750 million in Cruise Automotion. Google, through the subsidiary Waymo, works with Jaguar Land Rover and Fiat Chrysler. The technology has a huge checkbook to invest, like Apple.
The collaboration is announced just as Ford Motor is immersed in a process of restructuring its business in Europe, which includes the dismissal of 12,000 employees. The intention of the process of transformation of the American group is to concentrate more on the new mobility technologies. With this purpose, the subsidiary Ford Autonomous Vehicles was created last year and committed to investing 4,000 million until 2023. Argo AI, which it acquired in 2017, forms part of this division.
Volkswagen, meanwhile, committed to devote more resources to the electrification of their vehicles in the US after being forced to stop selling cars with diesel engines for the scandal of emissions. By sharing their platforms, therefore, the two manufacturers not only achieve savings at a time when sales begin to moderate. They also gain scale for the mass production of new autonomous electric vehicles.
The two manufacturers, in any case, will operate the independent vehicle business separately, although the marketing strategy will be unique and both will use the Argo systems. Neither will they share the income they generate with the sales of the new cars. The operation will help Ford Motor to meet the new environmental requirements in Europe, more stringent than in the US.