In what industry analysts have described as an automotive earthquake, Volkswagen and Ford who were once rivals, have announced that they will work together on developing self-driving and electric cars in a move designed to give them “significant global scale” in new automotive technologies.
Volkswagen plans to invest $2.6 billion, Ford has already committed to putting $1 billion into the self-driving unit which has been valued at $7 billion. Both automakers will become equal owners of Argo AI, and they plan to put autonomous vehicles on the roads in the U.S. and Europe as early as 2021. The deal also includes a plan for Ford to use Volkswagen’s electric vehicle platform to build zero-emissions cars for the European market starting in 2023.
During the announcement, Ford CEO Jim Hackett noted that “the stakes are high here,” while adding that “there’s only going to be a few winners who create the leading platforms for the future. We cannot be late, Ford can’t be late, and we have to be great.”
Joe Hinrichs, President of Ford’s Automotive Business said, “The auto industry, in the past we’ve been criticized for a lack of interest in working together, and what you’re seeing with Volkswagen and Ford is a commitment to doing that on a number of projects.”
Volkswagen CEO, Herbert Diess said the firms were continuing to look at other areas which they could collaborate on and that the tie-up “improves the positions of both companies through greater capital efficiency, further growth and improved competitiveness.” This alliance has made Argo AI one of the highest-valued autonomous vehicle development companies in the world.
It is expected that these kind of partnerships between Ford and Volkswagen will become more common. As it will be recalled, in February, BMW and Daimler unveiled a joint venture covering new-generation services such as driverless vehicles, ride-hailing, and pay-per-use cars.