Published: Sat, July 13, 2019
Money | By Ethel Goodwin

Volkswagen to contribute $2.6 billion to Ford's autonomous venture

Volkswagen to contribute $2.6 billion to Ford's autonomous venture

Ford and Volkswagen have announced a partnership to invest billions in electric and autonomous vehicles.

The two companies announced plans in January to collaborate on developing commercial vans and medium-sized pickup trucks while exploring electric and autonomous vehicles together.

The VW investment includes $1 billion in cash and the $1.6 billion value of VW's 200-person autonomous intelligent driving company.

"Unlocking the synergies across a range of areas allows us to showcase the power of our global alliance in this era of smart vehicles for a smart world".

VW is buying the Argo shares for another $500 million from Ford, which acquired a majority stake in the Pittsburgh-based startup in 2017.

Unprecedented shifts facing the auto industry are forcing players to consider new partnerships and potential consolidation. (Ford will still complete its billion-dollar investment in Argo AI). A Ford spokeswoman said the No. 2 United States automaker was in productive talks with the German company across a number of areas and more details would be provided on Friday.

The two automakers will become equal owners of Argo AI, and they plan to put autonomous vehicles on the roads in the USA and Europe as early as 2021, the companies said Friday.

Demand for passenger vehicles has flattened, and automotive and high-tech rivals have invested billions of dollars in self-driving auto research and development.

Ford will also sell electric cars in Europe based on its own platforms, including the Mustang-inspired Mach E SUV due out in 2021 and the electric F150 it has under development. If that can't or won't happen, then an agreement that will do something to bolster Ford's sales in Europe, where the company recently announced 12,000 job cuts and a number of plant closures.

The US automaker will use VW's electric vehicle architecture - the "Modular Electric Toolkit" - to deliver more than 600,000 vehicles over six years starting in 2023 with a new Ford model for European customers, while VW expects to produce 15 million cars over the next decade. The companies will also jointly develop commercial vans and medium pickups starting in 2022 to share costs and "generate significant synergies". "This improves the positions of both companies through greater capital efficiency, further growth and improved competitiveness".

The electric vehicle cooperation will help reduce development costs and make battery-powered vehicles available faster across the globe, VW CEO Herbert Diess said in a statement. Both sides reiterated on Friday the tie-up does not include entering equity ties between Ford and VW.

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