Ford expects to deliver more than 600,000 European vehicles using VW’s MEB electric-vehicle architecture over six years.
By Murray Slovick, Contributing Editor
In the National Basketball Association (NBA), it’s common for superstars to want to play with other superstars on a team where they’ll be a front-runner for the NBA championship (see Kevin Durant and Kyrie Irving arranging to play in Brooklyn, LeBron James and Anthony Davis on the LA Lakers, etc.).
In the world of EVs and autonomous cars, the big boys also want to play together. However, these dynamic duos are being created for a different reason: Saving hundreds of millions of dollars in development costs for each company.
Ford President and CEO Jim Hackett and Volkswagen CEO Dr. Herbert Diess said their companies were joining forces to expand their global alliance to include electric vehicles, as well as to collaborate with Argo AI to introduce autonomous-vehicle technology in the U.S. and Europe.
Ford will use Volkswagen’s electric-vehicle architecture and Modular Electric Toolkit (MEB) to design and build at least one high-volume, fully electric, zero-emission vehicle in Europe starting in 2023. Ford expects to deliver more than 600,000 European vehicles using the MEB architecture over six years. Ford will pay Volkswagen a per-unit price for the MEB toolkit, which was not disclosed.
Prior to the announcement of their partnership, Ford had revealed an $11.5 billion electrification strategy that called for developing 16 battery-electric vehicles globally by 2022. It will start with a new, fully electric Mustang-inspired utility vehicle that will be shown in November and be available in 2020.
Ford’s Hackett described the collaboration as giving the two automakers “a significant competitive edge” in developing higher-level autonomous-driving capabilities. He emphasized that the U.S. and German car rivals would “remain independent and fiercely competitive in the marketplace.”
VW’s Diess said scaling the company’s EV design and manufacturing architecture “drives down development costs for zero-emissions vehicles, allowing for a broader and faster global adoption of electric vehicles.”
He added, “Looking ahead, even more customers and the environment will benefit from Volkswagen’s industry-leading EV architecture. This improves the positions of both companies through greater capital efficiency, further growth, and improved competitiveness.”
The 12-brand VW group, which includes Audi, Porsche, and Bentley, plans to launch 70 fully electric models over the next decade, accounting for 22 million battery-powered vehicles.
During the same press event that announced the Ford-VW partnership, Argo AI CEO Bryan Salesky revealed Volkswagen is joining Ford in investing in Argo AI, an autonomous-vehicle technology platform company. Volkswagen will invest $2.6 billion in Argo AI by committing $1 billion in funding and contributing its Autonomous Intelligent Driving (AID) company, valued at $1.6 billion. This new partnership builds on a $1 billion investment from Ford Motor Company.
Ford and Volkswagen will hold equal stakes in Argo, while the remainder of the company’s equity has been set aside for employees. As part of the transaction, Volkswagen also will purchase Argo AI shares from Ford for $500 million over three years. Volkswagen said it will make use of the Argo SDS platform by commercializing it in a vehicle in the early 2020s.
Argo AI’s focus remains on delivering SAE Level 4-capable SDS platforms to be applied for ride sharing and delivery services in urban areas. SAE “Level 4” automation calls for a system that can drive a vehicle under specific conditions and doesn’t require passenger supervision.
Collaborating with Ford, Argo AI is testing its technology in Miami and Washington, D.C., where together they plan deployment of commercial services.
VW’s Diess said the Argo platform was the best solution for Volkswagen to speed self-driving vehicles to market, and that Ford and VW together intend to make that platform “a global industry standard.”
Pending regulatory approval, VW will fold 200 employees of its Munich-based Autonomous Intelligent Driving (AID) company into Argo AI. That gives Argo a new European headquarters based in Munich. The new group will be led by AID’s current CEO Karlheinz Wurm. With the addition of AID employees, Argo AI will grow from 500 to over 700 employees globally. Argo AI’s global headquarters will remain in Pittsburgh, Pa.
In the self-driving car arena, this collaboration effectively pits Ford, VW, and Argo against GM and Honda (as well as technology companies like Alphabet’s Waymo). Going forward, we can expect additional alliances as the auto industry seeks to bring development costs down to where EVs and autonomous cars are profitable to build and sell.