An expansive Ford, VW alliance could echo across global auto industry


How much more is now the central question, but in conversations with senior Ford and VW executives they do little to hide the likelihood that the answer will be “lots.” About the only thing off the table, said an executive with frequent C-suite access, is any sort of cross-equity swap.

Along with the possible collaborations on vans and other commercial vehicles, the talks now have expanded to include:

  • The sharing of assembly plants in the U.S. and other markets;
  • The possibility of combining marketing and distribution operations that would leverage each company’s strengths. Ford could play lead in the U.S., for one thing, while VW would be dominant in Europe and China, both markets where the American carmaker is struggling;
  • They may work jointly on products in other segments. While VW has been struggling to expand its presence in the booming light truck market, that’s one of Ford’s real strengths;
  • Perhaps the most far-reaching collaboration would see Ford and Volkswagen partner up on the development of autonomous and electrified vehicles.

Right now, autonomous and fully driverless vehicles remain largely the stuff of science fiction but the technology is expected to begin playing a major role in the transportation world within a decade. A study released late in 2017 by the Boston Consulting Group forecast nearly a third of the miles Americans clock on the road each year could be in fully driverless vehicles operated by ride-sharing services such as Lyft and Uber by 2030.

Those vehicles are also expected to be powered by electric drivetrains. Collectively, hybrids, plug-ins and pure battery-electric vehicles captured barely 4 percent of the U.S. market in 2017, but that has begun to surge, particularly in China, which has enacted strict new regulations promoting zero-emissions vehicles.

Ford’s focus on new technology is underscored by its repositioning as a “mobility company,” rather than an automotive manufacturer. The Dearborn, Michigan-based company was an early player in electrification but is playing catch-up now when it comes to longer-range models capable of challenging the likes of Tesla. Volkswagen, however, is going flat out.

Its Audi brand recently debuted the e-tron SUV that will be the automaker’s first Tesla fighter. A second all-electric Audi, the e-tron GT debuted at this month’s Los Angeles Auto Show. The all-electric Porsche Taycan follows next year, as does the first long-range battery electric vehicle (BEV) under the new sub-brand Volkswagen I.D. The second I.D. model, reports Reuters, will start as low as $23,000, sharply undercutting the Tesla Model 3. There’s an all-electric reincarnation of the legendary VW Microbus, to be called the I.D. Buzz, coming, as well. All-told, the dozen VW retail brands will have close to 50 battery-electric vehicles by mid-decade.

Source : CNBC