By on February 13, 2019

Hoping to minimize development costs, Volkswagen Group and Ford Motor Co. recently forged an automotive alliance. Collaborative projects officially include commercial vans and pickup trucks, though the duo are also said to be working together on electric and autonomous vehicle development. Unfortunately, trouble in pinning down the details has slightly soured the relationship.

Through the alliance, Ford could make use of VW’s MEB platform, aiding its plan to roll out a myriad of electric cars in the coming years, while Volkswagen would have access to the Blue Oval’s autonomous unit, Argo AI. But the Germans reportedly aren’t interested in paying what Ford’s asking. 

According to Reuters, people familiar with the negotiations claim Ford wants VW to invest at least $500 million into its autonomous vehicle program. Considering SoftBank Group Corp and Honda jointly spent $5 billion just to have access to General Motors’ Cruise AV, the price seems reasonable. But the overriding assumption is that, despite its problems, GM’s program is further along than Ford’s.

Apparently, Volkswagen already managed to talk down the asking price at least once already. Ford reportedly sought an initial $1 billion investment, but talks dragged on for months, forcing down the fee. However, both companies maintained an optimistic face, with VW CEO Herbert Diess and Ford CEO Jim Hackett agreeing just last month that a deal would eventually be reached regarding electric and autonomous vehicles.

It’s curious why VW would be so hesitant to spend the money, especially after setting aside nearly $50 billion for the development of electric cars, autonomous driving tech, and new mobility services by 2023. Some of that cash was reportedly earmarked for its partnership with Ford.

From Reuters:

Another issue in the talks is how the companies value VW’s autonomous technology assets that will be added to the joint effort, the sources said.

Meanwhile, the companies also have been negotiating Ford’s use of VW’s MEB EV platform, including the volume involved, where VW would provide it and how much Ford would pay for its use, the sources said. However, Ford cannot use the platform until 2024 at the earliest, the people said.

Ford’s president of global markets, Jim Farley, suggested during the taping of Detroit television show “Autoline Detroit” on Monday there were challenges around the use of VW’s EV platform, saying the MEB was primarily designed for use in Europe and China, and for different consumer needs.

While some of Reuters‘ anonymous sources claim Ford will walk away from any deal it feels is unfair, most seem optimistic that a solution will be reached. Officially, neither Ford or VW had much to say on the matter beyond acknowledging that negotiations are ongoing.

[Image: Ford/Argo AI]

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10 Comments on “Volkswagen, Ford Spar Over Alliance Investments...”

  • avatar

    “the MEB was primarily designed for use in Europe and China, and for different consumer needs.”

    Translation: platform won’t pass IIHS crash tests? Or it won’t be able to get to 300 miles in the US? Or are they just disappointed they can’t throw an Excursion body on top.

  • avatar

    Having deal with Germans is like signing pact with the Devil. Germans are very stingy with money because they know how hard it is to earn money while Americans are ready to throw money on problems left and right in the hope to recoup it later which usually never happen. Ford did not learn lesson with “Crown Jewels”. Or did it?

    • 0 avatar

      Germans are very stingy with money because they know how hard it is to earn money

      Could be because Ford wants a big stack of money from VW for it’s vaporware, but Ford is turning up it’s nose at VW’s small passenger car EV platform. Hardly an equitable arrangement.

  • avatar
    Tele Vision

    “…aiding its plan to roll out myriad electric cars…”

    Fixed, though that’s a lot of cars.

  • avatar

    According to a piece on CNBC, Ford’s issue with the VW MEB platform is VW is focusing on small passenger car applications, while Ford is only interested in commercial vehicles and “performance” cars.

    All I can say is it’s going to get pretty lonely in European and Chinese Ford showrooms, when EVs are required, and all they have to sell are Transits and Mustangs.

  • avatar

    The real question should be why Hackett is still on charge.

    • 0 avatar

      “The real question should be why Hackett is still on charge.”

      I don’t understand why Hackett is given so much good press for his performance at Steelcase. Steelcase did an IPO in the late 90s. The stock quickly fell to half it’s IPO price and has been dead money ever since. Hackett laid off thousands and moved production to Mexico. He also cheapened the product, a lot. I worked for a couple Steelcase dealers during the Hackett era and heard all the gripes from the installers and project managers about the shoddy stuff the company was turning out. He also rogered the Steelcase dealers. One Hackett era product line was designed specifically to shift labor cost away from Steelcase, onto the dealers.

      As long as Hackett can keep Bill Ford hypnotized, his job is safe.

    • 0 avatar

      “why Hackett is still on charge”

      Because he refuses to plug into Tesla Supercharger.

  • avatar

    Two companies in trouble coming to the realization that they don’t have the answer to each other’s problems. Who didn’t see this coming.

    • 0 avatar

      “they don’t have the answer to each other’s problems.”

      The initial cargo van deal works great for VW. VW is converting Hannover and Emden to EV production. The large VW vans are built in Hannover, so they need to find a new home. With the deal, they get access to Ford’s van plant in Turkey, where labor costs are really cheap, as well as letting Ford do the R&D. Large commercial vehicles are one market segment where Ford has enough interest to actually do some work. The Ford Transit Connect will become a rebadged VW Caddy, so VW picks up volume at it’s Caddy plant in Poland.

      Elsewhere, Ford is on it’s way to being nothing but a marketing company for other people’s products. In China, Ford is slapping a blue oval on an SUV designed and produced entirely by it’s Chinese parter. In India, Ford has 5 different SUVs under development by Mahindra, two of which are on Mahindra platforms.

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