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Volkswagen and Ford Explore Self-driving and EV Partnerships

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【Summary】So far, we know that both parties have expressed interest in co-developing commercial vehicles, which includes driverless cars and EVs.

Michael Cheng    Nov 07, 2018 6:00 AM PT
Volkswagen and Ford Explore Self-driving and EV Partnerships
author: Michael Cheng   

The auto industry is transitioning into a new phase, as businesses prepare to roll out self-driving and electrified vehicles. The effort required to develop automotive technologies is massive, forcing some car brands to explore new strategies and collaborations.

Recently, Detroit-based Ford and automotive giant Volkswagen announced exploratory talks about partnerships involving autonomous vehicles and electric cars. At this stage, discussions have not materialized into formal plans. However, such activities within the space have become frequent in the past few years, with tech companies forming alliances and partnerships with well-established auto brands in order to gain a foothold in the market.  

Joining Forces, Pressuring New Players

Very little information has been released about potential Ford-Volkswagen partnerships. So far, we know that both parties have expressed interest in co-developing commercial vehicles, which includes driverless cars and EVs. A consolidation of automotive projects between the two groups would put pressure on other automotive businesses in the sector, including EV maker Tesla and Waymo.

Such arrangements would also allow both Ford and Volkswagen to effectively compete with General Motors – a current leader in the race to build fully autonomous vehicles.  

"The world's biggest and fifth-biggest automakers want to join forces to move into electric vehicles and autonomous driving," said Handelsblatt, a business newspaper in Germany.

"The extent of the planned cooperation between the erstwhile rivals comes as a surprise to the industry, but reflects the scope of the transition in mobility and the pressure from new players."

The two companies have several options when it comes to structuring partnerships within the industry (suggested by William Boston from MarketWatch). Volkswagen could consider taking a stake in Ford's autonomous vehicles arm. Alternatively, the two parties could start fresh by forming a new company. The latter option would enable both businesses to share ownership of technologies, patents and projects. Furthermore, Ford and Volkswagen could open up the venture to include additional partnerships in the future.

Memorandum of Understanding

According to a report by Reuters, Ford and Volkswagen will provide an update about potential collaborations by the end of the year. A memorandum of understanding has been issued, though it's too early to make any conclusions about the partnership without official announcements from the auto brands.

"Too early to speculate on any details," explained Jennifer Flake, a Ford spokeswoman.

"Our MOU (memorandum of understanding) with VW covers conversations about potential collaborations across a number of areas. It is premature to share additional details at this time."

Speculating further into this matter, a collaboration involving EVs could be on the table, based on Volkswagen's EV goals and Electrify America projects. The automaker is of the view that mass adoption of EVs will happen prolifically when costs become lower than diesel-powered vehicles.

Volkswagen could also be looking to expand its presence in the US. Ford and the German car manufacturer are already working together in an EV joint venture (IONITY), with objectives to develop ultrafast EV charging infrastructure across Europe. Other participants in the joint venture include BMW and Daimler.

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