Ford-Volkswagen partnership involves shared production of commercial vans
Ford and Volkswagen will work together to produce midsize pickups for global markets starting in 2022, followed by commercial vans in Europe. The automakers are also discussing collaboration in other areas including electric and autonomous vehicles.
Ford has the popular Ford Ranger pickup while VW has the slower-selling Amarok in Europe. Ford will develop and build pickups for both companies. The truck would be the successor to the Amarok for worldwide distribution, and potentially the U.S., said VW CEO Herbert Diess, which could mean the Wayne, Michigan, plant could be building Volkswagens in the future.
On the Ford side, the Rangers under discussion are for Europe, South America, and Africa only at this point, said Jim Farley, head of global markets. North America is a subject still on the table.
Ford will engineer and build large commercial vans for both companies, presumably based on the Ford Transit. VW will develop and build small commercial vans such as a successor to the Ford Transit Connect. Although the future is electric, there will still be a need for regular combustion engines as well as hybrids and pure electric vehicles, said Diess.
And the two companies are considering additional vehicle programs in the future where they will share the investment in vehicle architectures, said Jim Hackett, Ford president and CEO, in a conference call today.
“The first step is now signed and working,” said Diess. “In the continuing steps, a focus is on electric and autonomous vehicles and technology and other mobility services. Passenger cars are not part of the current talks.”
The alliance is designed to benefit both automakers by providing technology, products, and manufacturing at a lower, shared cost. It also helps them geographically: Ford is strong in the U.S. while VW is strong in Europe and China.
Production will take advantage of plant capacity from both automakers. Hackett said there will be no job reductions at Ford plants. Diess said they will continue to favor countries that have low-cost manufacturing today, such as Poland and Turkey. Global manufacturing also helps companies work around international tariffs.
Diess used the Detroit auto show this week to announce plans to invest $800 million USD in a new plant in Chattanooga, Tennessee, which will be the North American base for producing electric vehicles using its new MEB platform. The move will add 1,000 new jobs at the plant.
Ford and VW signed a memorandum of agreement last summer to collaborate on commercial vehicles. Diess said VW did not have a clear strategy in this area and lacked the economies of scale that it has for its passenger cars. “In the discussions we found there might be more synergies.”
With its MEB electric vehicle platform, VW is further ahead in its EV plans than Ford. Volkswagen Group plans to introduce 15 million vehicles based on the MEB platform in its first wave. By 2025, the VW brand aims to sell 1 million electric cars annually across the globe. Diess said the aim is to be No. 1 in electric vehicles by 2025, and they will be affordable for millions of buyers because the scale will keep costs down.
Both automakers are working on autonomous vehicles, and Ford has the added technology it acquired from Argo AI. The resources from each company are being pooled.
The two have used words such as alliance, partnership, and joint initiatives, always stressing that no equity will be exchanged. The automakers reinforced there will be no cross-ownership between the two companies—nor is there a merger in the works. The alliance will be governed by a joint committee led by Hackett and Diess. Partnerships are common in the auto industry.
“You can’t do this alone,” Hackett said.