Volkswagen, Ford team up on trucks, eye deals on EVs, self-driving cars

Volkswagen AG and Ford Motor Co said on Tuesday they will join forces on commercial vans and pickups and are exploring shared 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 tie-up, which starts with sales of vans and medium-sized pickups in 2022, will not involve a merger or equity stakes, the companies said.

The expanding alliance, which will be governed by a joint committee that includes the CEOs of both companies, highlights the growing pressure on global automakers to manage the costs of developing electric and self-driving vehicles, as well as technology to meet tougher emissions standards for millions of internal combustion vehicles they will sell in coming years.

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Ford will provide more details on how the alliance affects Ford`s regional operations in coming weeks, but does not expect any job cuts in Ford plants as a result of the alliance, Ford Chief Executive Officer Jim Hackett said.

Ford will engineer and build medium-sized pickups for both companies, Volkswagen said. Ford will also engineer and build larger commercial vans for European customers, while Volkswagen will develop and build a city van. Vans could be built in Ford`s plant in Turkey, VW said.

The companies estimate the commercial van and pickup cooperation will yield improved annual pretax operating results starting in 2023.

Ford and VW have signed a memorandum of understanding to jointly develop electric and self-driving vehicles, VW Chief Executive Officer Herbert Diess said.

VW shares were up 0.6 percent in Frankfurt. Ford gained 0.7 percent to $9.05 in pre-market U.S. trading.

U.S. AND CHINA SLOWDOWNS
Europe`s biggest automaker and the No. 2 U.S. automaker have been exploring closer cooperation as trade frictions force carmakers to rethink where they build vehicles for Europe, the United States and China.

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

The tie-up with Volkswagen is a big bet for Ford`s 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.

Last month, Volkswagen announced another 3 billion euros ($3.4 billion) of cost cuts as part of its effort to improve profit margins and fund its shift to electric cars and automated driving.

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.