Volkswagen, Ford set alliance centered on vans, pickups

[January 15, 2019]   By Ben Klayman and Jan Schwartz

DETROIT (Reuters) - Volkswagen AG <VOWG_p.DE> and Ford Motor Co on Tuesday set an alliance that combines forces on commercial vans and pickups and said they were exploring expanding into joint development of electric and self-driving technology, actions meant to save the automakers billions of dollars.

Ford and VW announced their partnership against the backdrop of the Detroit auto show. The partnership, which starts with sales of vans and medium-sized pickups in 2022, will not involve a merger or equity stakes, the companies said.

Volkswagen and Ford said they also are exploring potential collaboration on electric vehicles, autonomous vehicles and mobility services.

The two automakers explored closer cooperation as trade frictions force carmakers to rethink where they build vehicles for Europe, the United States and China.

The expanding alliance highlights the growing pressure on all global automakers to manage the costs of developing electric and self-driving vehicles, as well as technology required to meet tougher emissions standards for millions of internal combustion vehicles they will sell in the years to come.

Slowdowns in the world's largest auto markets - China and the United States - have ratcheted up the pressure to cut costs.

In June 2018, Ford and VW revealed talks about an alliance in commercial vehicles and added they were looking at other joint projects.

Executives with both companies have talked about the potential savings of a deeper alliance, and VW officials have talked openly about building their vehicles in Ford plants, and Ford using the German automaker's electric vehicle platform.

The President and CEO of Ford Motor Company Jim Hackett, poses with Volkswagen CEO Herbert Diess at the North American International Auto Show in Detroit, Michigan, U.S., January 14, 2019. REUTERS/Ben Klayman

The tie-up with Volkswagen serves as a big bet for Ford Chief Executive Jim Hackett since he took over in May 2017 from the ousted Mark Fields with the mandate to speed up decision-making and cut costs. Some analysts and investors have been frustrated by Ford's laggard stock price and a perceived lack of details from Hackett about the Dearborn, Michigan-based automaker's $11 billion restructuring.

Last week, Ford said it would cut thousands of jobs, discontinue building money-losing vehicles and look at closing plants as part of a turnaround effort for its unprofitable European business.

On Monday, Volkswagen said it would invest $800 million to build an electric vehicle plant in Chattanooga, Tennessee, prompting U.S. President Donald Trump to congratulate the city and state in a post on Twitter the following day.

But the White House has been pushing to end subsidies on electric vehicles that would help the plant and the alliance.

(Reporting by Ben Klayman in Detroit and Jan Schwartz in Detroit; Additional reporting by Makini Brice in Washington; Editing by Steve Orlofsky and Matthew Lewis)

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