Volkswagen, Ford Spar Over Alliance Investments

Matt Posky
by Matt Posky
volkswagen ford spar over alliance investments

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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  • Akear Akear on Feb 14, 2019

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

    • See 1 previous
    • Inside Looking Out Inside Looking Out on Feb 14, 2019

      "why Hackett is still on charge" Because he refuses to plug into Tesla Supercharger.

  • Sportyaccordy Sportyaccordy on Feb 14, 2019

    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.

    • Steve203 Steve203 on Feb 14, 2019

      "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.

  • Crtfour I live in East Tennessee where most of the time driving is pretty low stress. But for work I have the misfortune of passing through Atlanta every 3-4 months. And passing through downtown you have to change lanes and merge so many times I still can't seem to keep it straight. On my last trip I ended up in an exit only lane ; the lane next to me where I had to get into was stopped so I was blocking the exit lane with this guy behind me blowing his horn and flashing his lights. I finally managed to get over finally allowing this guy to floor it and be on it's way. I consider myself a good driver with the exception of passing through there.
  • Pishta Those 80 B2000's were very Ford Courier like but the 81's had a completely new for Mazda dash. Less pods, more integration in one window. These didn't get the F motor until 84(?) only with the B2200 option. Single wall beds had lost of rust through issues. The 80 Quad headlamp grill was very rare, I dont rememeer seeing but one growing up.
  • FreedMike So it has transited out of existence here...
  • TheEndlessEnigma Self fulfilling prophesy. Ford spends virtually nothing on sales and marketing for the Transit....then scratches their collective heads not understand why it doesn't sell to their assumed objectives. If you do not market the vehicle, it will not sell. Pretty simple to understand really. Ford sure is working hard to make itself a niche automobile company, trucks and SUV's only. But that's OK, Kia/Hyundai/Toyota/Honda and yes even Volkswagen & Nissan are more than happy to sell to those customers Ford is apparently happy to walk away from.
  • NJRide I would think this segment would have a following but I guess not enough of a price difference with larger vans and probably too unrefined to be a sort of minivan alternative