Ford, Volkswagen to broaden global alliance

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Business Insider reports that Ford and VW recently announced plans to strengthen the companies' alliance and work together to develop an electric vehicle by 2023.

The joint announcement focused more on the autonomous side of things but the two companies are not ignoring the electric vehicle side of the equation. The company also invested $500 million in EV pickup startup company Rivian in April, which Hackett says is created to accelerate the automaker's knowledge base on EVs and should be seen separately from product development.

The broader Ford-VW alliance, which covers collaboration beyond joint investments in Argo AI, does not entail cross-ownership between the two companies.

VW will invest $2.6 billion in Argo AI, Ford's self-driving cars venture, and will buy $500 million worth of Argo shares from Ford, giving the two automakers equal stakes in the startup.

In addition to its own efforts to build electric cars, Ford will build a new electric vehicle for the European market based on Volkswagen's mass-market MEB platform.

Ford may leverage its access to VW's electric-car architecture to comply with stricter European emissions rules.

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VW will invest US$2.6 billion in Argo AI, Ford's self-driving auto venture, and will buy $500 million worth of Argo shares from Ford, giving the two equal stakes in the startup.

VW will purchase Argo AI shares from Ford for $500m over three years.

"Our global alliance is beginning to demonstrate even greater promise, and we are continuing to look at other areas on which we might collaborate", said Diess. (Ford will still complete its billion-dollar investment in Argo AI).

By potentially licensing its electric-vehicle platform to Ford, VW could guarantee some profit from electric vehicles next year and gain "an unassailable scale advantage in the market", said Angus Tweedie, a Citigroup analyst. The company hopes to sell 600,000 of them over six years.

Both Ford President and CEO Jim Hackett and Volkswagen CEO Dr. Herbert Diess will be in attendance. "We will share updates as details become more firm", a Ford spokeswoman said in a statement.

It was not clear if some of those future Ford EVs could migrate to VW's MEB platform, versions of which the German automaker will build in Europe, China and North America. $1 billion will come from funding, while the remaining $1.6 billion will come in the form of VW's Autonomous Intelligent Driving (AID) company, which has more than 200 employees and has been responsible for self-driving-car development for the VW Group.

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