Ford, Volkswagen Explore Venture to Challenge Tesla, Waymo

The two companies consider different options for how they will structure the new business, and an agreement could be announced in mid-November. These people say.

An option may mean that Volkswagen takes up to 50% stake in Ford's existing car without a car. Another may be the creation of a new company that will combine automakers' auto car units, the people said. Creating a new company would create a global technology brand and could make it easier for the two manufacturers to share ownership of new patents and intellectual property rights, and open the waiting for further collaborators, the people said.

Earlier this year, Ford and Volkswagen said they explored a strategic alliance that would include codecision of a number of commercial vehicles as well as other projects, but these talks have expanded to a broader discussion of how Ford and VW could collaborate globally, said these people.

Volkswagen refused to comment.

Ford says in a statement that this exploration covers "talks about potential cooperation in a number of areas."

The negotiations, which were first reported by the German business daily Handelsblatt, come as traditional car manufacturers try to ward off the challenges of beginners from Silicon Valley who want to maintain the traditional automotive industry.


who launched its first electric car in 2008, has drawn in front of rivals Mercedes-Benz, Audi and


on the US market for luxury plug-in cars. Alphabet Inc.'s Waymo is in front of many automakers in its self-propelled car effort and may end up with technology over the next decade, analysts say.

Because of these challenges, conventional car manufacturers at times

Ford have invested billions in their autonomous driving operations, with plans to bring a fully-fledged car to the market in 2021[ads1] for commercial use.

In early 2017, Dearborn, Mich., Car dealership committed $ 1 billion to Pittsburgh-based artificial intelligence firm Argo AI, acquiring a majority stake in launch. And this summer, Ford has carved out a new freestanding unit, Ford Autonomous Vehicle LLC, to attract out-of-investment.

The development of this technology is the core of future business models that Ford pursues, such as driving and delivering services using robo vehicles.

In the United States, light control of automobile vehicles has enabled Waymo and the traditional car manufacturers to cloak millions of kilometers of self-propelled tests. Volkswagen is far behind and eager to piggy back on Ford's comprehensive testing program, telling the people familiar with the case.

Volkswagen's Managing Director Herbert Diess hopes to present an overview of the planned Alliance with Ford to his Board at their next regular meeting on November 16, these people said.

The Volkswagen Board in November is traditionally used to plan long-term investment. Earlier, the company has presented a five-year investment plan. The current plan, which runs through 2022, has earmarked nearly 40 billion dollars to develop self-propelled cars, electric vehicles and new mobility services such as driving and car sharing.

The run to lead in these new markets affects some manufacturers to restructure their business, it can be serving as stand-alone ventures as or even more valuable than their traditional operations.

Earlier this year,

General motors

divorced its driver-free car operation in an independent entity, GM Cruise LLC, which attracts billions of dollars in new investment from Japan

SoftBank Group

and Honda Motor Co. Honda, as part of the investment, plans to collaborate with a completely autonomous car for mass production with the Detroit car manufacturer.

Volkswagen and Ford account for about one fifth of all new passenger cars sold world class wide. Pooling resources can give them a strong position in self-propelled cars and other new technologies, analysts say.

"We have a wide range of discussions about how we can help each other around the world," Bob Shanks, Ford Chief Financial Officer, said last week.

"Collaboration is not limited in any way, regardless of whether there are different types of technology, product segments or geography."

Volkswagen has fallen behind rivals in developing self-drive cars. It has been dropped by its diesel emissions scandal, which has cost more than $ 30 billion in fines, penalties and compensation for consumers so far.

But it has developed a standard electric car technology platform and strikes to produce millions of battery-powered cars out of the next five years. Ford stands for taking advantage of Volkswagen's expertise in the field.

Frank Witter, CFO of Volkswagen, suggested last week when he reported revenues in the third quarter that the company could open its electrical vehicle technology to third parties.

George Galliers, a car analyst at Evercore ISI, said a Volkswagen investment in Ford's autonomous driving operations would be a "big win for Ford." Ford would also benefit greatly from Volkswagen's electrical vehicle technology, "said Gallier.

"Having access to what is expected to be the first and largest dedicated [battery-electric vehicle] platform from a traditional [manufacturer] could be very beneficial, he said.

Write to William Boston at

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