New alliance between Volkswagen and Ford can be launched

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DusseldorfThe planned big alliance of Volkswagen and ford has taken the last hurdle. As confirmed on Thursday evening in Group circles, the VW Supervisory Board has approved the additional cooperation projects with the US auto company. In the future, Volkswagen and Ford also want to work together on autonomous driving and in electromobility. This will significantly increase the existing cooperation with light commercial vehicles.

The two CEOs Herbert Diess and Jim Hackett want to present the details on Friday afternoon German time at a press conference in New York. At Ford, internal approval of the Alliance had been made earlier.

Volkswagen offers Ford access to its Modular Electrical Modular System (MEB) for a license fee. Behind the bulky term hides the platform on the basis of which in future most of the electric cars of the VW Group are to be manufactured – and in the future also in Ford.

The Wolfsburg are leading the MEB among the major manufacturers, but that had its price. The development costs were in the billions. Part of it is to be brought back in via Ford, it says in Wolfsburg. US analysts speculate that Ford could pay several hundred million euros for it.

With the Volkswagen MEB electrical kit, Ford plans to launch its own model program for purely battery-powered vehicles in Europe. So far, the US group lacking in the European market such cars. Ford suffered massive losses in recent years in Europe, in 2018 it was nearly 400 million US dollars. As part of a comprehensive savings program, 12,000 employees are scheduled to leave by the end of next year, and six plants will be closed in Europe.

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Without electric cars, the US company could not reduce the average consumption of vehicles sold in European countries as much as the EU demands. Ford would have to pay heavy fines from 2021 – extremely high amounts that could jeopardize Ford's existence in Europe.

In return, Volkswagen gets access to Argo, the Ford subsidiary for autonomous driving. In this field, the Americans are significantly further than the German competitors. Analysts see a lead at Ford of about two years.

The two car companies now want to found a joint venture, where all activities in the field of autonomous driving on both sides are introduced. At Volkswagen, this includes, for example, the Munich subsidiary AID, which transacts over Audi connected to the VW Group.

Development devours billions

Diess and Hackett also expect greater savings from this cooperation. Although the number one (VW) and number four (Ford) are already heavyweights in the industry. However, the expenditures for the autonomous systems are immense, because extensive tests and development work are necessary. By the middle of the next decade at the earliest, there will be ready-to-use autonomous systems that devour billions.

The cooperation with the US start-up Aurora VW boss Diess had ended a few weeks ago. This cleared the way to focus exclusively on cooperation with Ford.

This Friday, the two chief executives should also announce further details about the cooperation with light commercial vehicles, which was already started in January. Ford and Volkswagen initially want to produce pick-ups together. As reported by group of companies, Ford will in the future produce for Volkswagen pick-ups. These vehicles are to run off the belts at Ford plants in South America and South Africa.

Volkswagen stops production of its own pick-up Amarok at its own commercial vehicle plant in Hanover earlier than planned. VW has never really been happy with this car and has therefore not posted any profits.

The companies had confirmed the talks about an extension of the alliance in advance. It was on the right track, had VW boss Diess recently told top managers. A Ford spokeswoman said, "The talks with Volkswagen have been productive in a number of areas." However, the corporations did not want to comment on further details at this time.

More: VW is making the radical switch to electromobility and can set the pace by partnering with Ford – to the annoyance of BMW and Daimler.

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