Ford, VW advance alliance plans on vans, pickups

DETROIT — Ford Motor Co. and Volkswagen Group are planning to collaborate on commercial vans and midsize pickups, company officials said at the Detroit Auto Show, and are exploring the joint development of autonomous and electric vehicles as part of a broad partnership designed to save both companies hundreds of millions of dollars.

The global alliance comes as both auto makers attempt to shore up their business in overseas markets and navigate rising costs associated with emerging technologies. Both sides have been talking since at least June.

"As someone with less than two years in the industry, it's my opinion that you can't do this alone," Ford CEO Jim Hackett said on a conference call with media and analysts. "We believe this fundamental shift is healthy. It allows us to focus on our strengths while at the same time, offer many competitive options."

Both auto makers ruled out any cross ownership, and Mr. Hackett stressed they would remain "two separate and distinct companies."

As part of the alliance, Ford will develop midsize pickups and large commercial vans for both companies as early as 2022. The midsize pickup will be based on Ford's new Ranger platform and will be produced for the South American, African and European markets only.

The large van will be based on Ford's Transit Custom, which is not sold in North America, and will be built for the European market. Volkswagen intends to develop and build a city van for both auto makers.

"With VW, it's really a must," VW CEO Herbert Diess said. "We didn't have a clear plan for light commercial vehicles. This was a problem to solve, and I think we found a solution … that makes both companies future-proof in that segment."

Mr. Hackett declined to say what plants the companies will use, while Mr. Diess said it's possible vans could be built in Ford's plant in Turkey. The companies both said they're open to working on additional vehicle programs.

Jim Farley, Ford's president of global markets, said the auto maker expects $500 million in ongoing annual pretax benefits from the pickup and van collaboration, while Mr. Diess said VW expects similar savings. The companies estimate the cooperation will yield improved annual pretax operating results starting in 2023.

The two sides also signed a memorandum of understanding "to investigate collaboration on autonomous vehicles, mobility services and electric vehicles."

Mr. Diess said the auto makers are looking at combining their autonomous vehicle development, including Ford-owned Argo AI, as well as VW research groups in Wolfsburg and Munich. On the EV side, Ford is looking to utilize VW's MEB platform.

"It's an attractive area," Mr. Hackett said. "Both the EV and AV are big costs for investment. Both are really important to both companies' future. That is part of the incentive to find ways to cooperate."

Citing privacy for competitive reasons, Mr. Hackett declined to say when Ford or VW may make further announcements related to AV or EV development, saying the memorandum of understanding "gives us the cover to do this work behind the scenes."

"I would not make the assumption we haven't reached any kinds of agreements," Mr. Hackett said. "There's more order to it than what's coming through today."

It's unclear how, if at all, the companies' workforces in the U.S. would be affected. Hackett declined to comment on any shuffling of jobs. The United Autoworkers union (UAW) has been trying to organize VW's plant in Chattanooga since 2011.

"We look forward to working with Ford and Volkswagen as they collaborate and create technology and jobs," Rory Gamble, vice president of the Ford-UAW department, said.

"Collaborations like today's announcement, that strengthen the industry, are good for our economy and our communities and we are confident that these will lead to well-paid union represented positions."

Jessica Caldwell, Edmunds executive director of industry analysis, said there are major long-term implications at stake for both auto makers.

"Auto makers aren't just competing with each other anymore, they're under intense pressure from well-funded tech companies who are eager to get in on the future of mobility," she said in an emailed statement.

"Cutting costs by sharing vehicle architectures and manufacturing facilities is just table stakes in this new world, and is a nice place to start. However, the key to success will be if Ford and VW can help each other fend off the upstarts and become leading forces in electric and autonomous vehicle technology.