- Ford and VW provided details on a new alliance.
- Initially, the Ford and VW alliance will develop commercial vans and pickup trucks.
- Future collaborations could entail electric and autonomous vehicles.
DETROIT – On Tuesday, Ford and Volkswagen revealed details of a global alliance.
In a joint statement, the automakers said that “Volkswagen CEO Herbert Diess and Ford CEO Jim Hackett confirmed that the companies intend to develop commercial vans and medium-sized pickups for global markets beginning as early as 2022.”
The alliance will be strictly an agreement to collaborate; there will be no merger or “shared ownership,” Ford and VW said.
According to the companies, “the alliance will drive significant scale and efficiencies and enable both companies to share investments in vehicle architectures that deliver distinct capabilities and technologies.”
On a conference call with the media and Wall Street analysts, Hackett expressed a strong view that, given the level of new technology entering the auto industry and the arrival of new players such as Tesla and Waymo, carmakers much work together.
“You can’t do it alone,” he said. “We’re forging an alliance as a true collaboration.”
For his part, Diess said that VW and Ford have “developed trust for each other.”
The outlines of the new alliance were fairly modest. Volkswagen has previously announced a pickup truck, the Amarok, while Ford is a leader in the US pickup market, with the bestselling F-150 and a forthcoming Ranger mid-size truck. In Europe and the US, Ford also has a strong commercial van business.
VW won’t be competing against Ford in pickups in the US
Ford’s president of global markets, Jim Farley, stressed to the media and Wall Street that the pickup collaboration specifically wouldn’t bring a co-developed Ford-VW to the US, where Ford dominates the market. A new mid-size pickup will be for the Europe, South America, and Africa markets.
An anticipated tie-up on new-mobility efforts was pushed off, at least for the moment.
“Volkswagen and Ford also are committed to exploring potential collaboration on EVs, autonomous vehicles and mobility services,” the companies said.
“Over time, this alliance will help both companies create value and meet the needs of our customers and society,” Hackett said. “It will not only drive significant efficiencies and help both companies improve their fitness, but also gives us the opportunity to collaborate on shaping the next era of mobility.”
The history of global auto alliances is a mixed bag. The most successful is the Renault-Nissan-Mitsubishi alliance, which last year was the world’s largest automaker by sales. But that group is now under fire as former Nissan chairman and architect of the alliance Carlos Ghosn awaits further legal action in Japan after being arrested last year on allegations of financial impropriety.
From Ford’s perspective, alliance makes sense to Hackett due to what the CEO is facing as he leads both a restructuring of Ford’s operations and an elevated pace of investment in future technologies.
“Our balance sheet is strong,” Hackett said. But he added that Ford is pursuing this alliance with VW as something of a hedge, to “derisk” the future, as Hackett put it, and to ensure that the carmaker can sustain investment even amid a sales downturn.
“This keeps Ford healthy,” he said.
Hackett indicated that the financial benefits of Ford-VW alliance would become evident at the end of a 2023-24 time frame. Farley added that Ford could see $500 million in annual benefits from the combination.