Ford Motor Co. and Volkswagen AG said they will jointly develop some vehicles and share costs amid huge industry shifts.
Ford and VW will begin with medium pickups and commercial vans, the automakers said. The duo are looking to expand cooperation with self-driving cars and electric vehicles, a shift full of risk and potential reward. Neither company is buying a stake in the other as part of what they’re calling an alliance.
“It’s my opinion, you can’t do this alone,” Ford CEO Jim Hackett said on a conference call today. His VW counterpart, Herbert Diess, said: “We have developed trust for each other” over months of discussions. “Our approach is smart and pragmatic.”
Both CEOs will be part of a joint committee concerning joint projects. VW and Ford will each have an equal number of members.
“These are a series of projects and they’re being managed that way,” Hackett said of VW-Ford collaboration.
Initially, the alliance will focus on pickups and vans. Ford will engineer mid-size pickups for both automakers. Ford will engineer and make larger commercial vans for European customers. VW plans to develop and build a city van.
Longer term, the companies agreed “to investigate collaboration” on self-driving vehicles (formally known as autonomous vehicles, or AVs in industry-speak) and electric vehicles and mobility services, according to a statement.
Such vehicles and services are likely to consume billions of dollars across the industry. Technology companies are involved in developing self-driving vehicles, putting pressure on traditional automakers As a result, Ford and VW are looking to work together.
“Both EV and AV are big costs for investment,” Hackett said. “Both are really important for each company’s future.”
Some analysts expect similar collaborations as self-driving vehicles are developed and cars and trucks gain more technology generally.
“A single automaker can’t be all things to all customers around the globe as vehicle and technology development become increasingly more expensive,” Michelle Krebs, executive analyst at Autotrader, said in a written statement.
In the case of Ford and VW, both companies have regional gaps.
Wolfsburg, Germany-based VW is a major player in China and Europe but is still relatively small in the United States and North America. Dearborn, Michigan-based Ford gets most of its profit from its home North American operations. Its European operations are struggling and it lags VW and General Motors Co. in China.
Not part of today’s announcement is the possibility that Ford factory space may be used to make VW vehicles in North America.
“I would hint with you, part of the leverage” of the alliance “is to use existing facilities,” Hackett said. “But there’s nothing to announce there.”