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Volkswagen & Ford Still at Odds Over Autonomous Driving Partnership

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【Summary】German automaker Volkswagen AG and the Ford Motor Co are still hashing out details of an alliance first announced in June 2018 to work together on self driving cars and other related technology. The two automakers are at odds over how much the VW will invest in Ford’s autonomous driving unit as part of the deal.

FutureCar Staff    Feb 13, 2019 7:00 PM PT
Volkswagen & Ford Still at Odds Over Autonomous Driving Partnership

German automaker Volkswagen AG and the Ford Motor Co are still hashing out details of an alliance first announced in June 2018 to work together on self driving cars and other related technology. The alliance was meant to save both automakers billions of dollars in developmental costs.

According to Reuters, the two automakers are at odds over how much the VW will invest in Ford's autonomous driving unit as part of the deal.

Sources told Reuters that Ford was originally seeking at least a $1 billion investment from the German automaker. VW reduced that amount to $500 million.  

Two years ago, Ford invested $1 billion in autonomous driving and robotics startup Argo AI to jumpstart its autonomous driving development and wanted VW to do the same.

In November 2018, VW was still negotiating a possible $1 billion investment in Argo AI.

However, since November VW changed its mind and was hesitant to invest that much in Ford's autonomous vehicle unit. Instead the automaker is seeking a working partnership according to the people familiar with the talks that spoke with Reuters and asked not to be identified.

According to Reuters sources, some of the hesitation from VW to sink that much money in Argo centers around concerns about the current state of Ford's self-driving technology, one person said.

In a statement, Ford wrote, "Our talks with Volkswagen continue," Ford said in a statement. "Discussions have been productive across a number of areas. We'll share updates as details become more firm."

VW and Ford declined to discuss further details of the talks.

"We are still in ongoing negotiations with Ford, which we are conducting constructively and openly," VW said in a statement on Wednesday.

Another roadblock in the negotiations is how much Ford and Argo value VW's autonomous technology assets that will be shared in the collaboration, the sources told Reuters.

As of last month, the two companies remained optimistic.VW Chief Executive Herbert Diess and Ford CEO Jim Hackett both voiced optimism last month that the deal involving electric and autonomous vehicles would be finalized, but provided no timeline.

MEBPlattformVolkswagenDB2018AU02213_medium-1-e1537185437464.jpg

Volkswagen's MEB EV Platform

Some of the negotiations center around Ford's use of VW's MEB EV platform, including the volume involved 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.

The MEB platform developed by VW as a modular EV platform designed to contain all of the electronics, wiring, batteries and electric motors which can be configured easily be the foundation for a wide range of new electric models. VW said last year that the MEB platform could become the base for 10 million vehicles.

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.

The talks around teaming up on EVs and AVs have advanced together so far, but are not necessarily linked, the sources said. Ford would walk away from a deal it felt was unfair, a second person said.

Sources previously said the framework of a deal would include VW investing in Ford's Argo AI business. VW, Europe's largest automaker, has earmarked $50 billion to develop electric cars, autonomous driving and new mobility services by 2023 as it plans to slowly phase out internal combustion and diesel powered vehicles.

VW has been open about its desire to work with other companies around self-driving cars and when the Ford alliance was first announced Diess said teaming up with an American company made sense at the time, given the more advanced U.S. regulatory environment.

Automakers continue to make deals with Silicon Valley tech companies and venture capital firms to jump start their autonomous driving technology and the Ford VW collaboration with Argo AI is just one example.

SoftBank bought a stake in GM's Cruise unit for $2.25 billion in May 2018, and in October 2018 SoftBank and Toyota said they would jointly develop self-driving car services. Honda followed SoftBank last October, agreeing to invest $2.75 billion in Cruise to catch up in the race to develop autonomous vehicles.

Ford reportedly is seeking a deal as large as rival General Motors' Cruise division reached with Japan's SoftBank Group Corp and Honda. That deal netted $5 billion for Cruise which pushed its valuation to $14.6 billion, the sources said.

resource from: Reuters

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