FRANKFURT — Ford Motor Company and Volkswagen are expected to sign an agreement as soon as next week to share the cost of developing autonomous vehicles and producing electric cars, according to two people with knowledge of the discussions.
The agreement, likely to be approved by Volkswagen’s supervisory board on Thursday, would deepen an existing alliance between the companies to produce pickup trucks, but would be much more ambitious. It would be the latest example of how longtime rivals are joining forces during a period of extraordinary ferment in the auto industry.
Battery-powered, self-driving cars have the potential to eliminate tailpipe emissions and avoid accidents caused by human error. But a rapid shift toward these technologies could be perilous for established carmakers like Ford and Volkswagen.
They must invest hundreds of billions of dollars in coming years or risk becoming irrelevant. And they face new competitors like Google and Uber with access to enormous financial resources. Investors have been much more willing to back Silicon Valley companies than the dinosaurs of Detroit or Wolfsburg, where Volkswagen is based.
At the same time, car sales are slumping in all of the largest markets, pinching the companies financially.
The pressure provides a powerful incentive for companies to cooperate. On Thursday, the German carmakers BMW and Daimler signed an agreement, which they had previously announced, to jointly develop autonomous driving technology. Fiat Chrysler’s unsuccessful attempt to merge with Renault this year was also motivated by the need to find allies during a period of industry upheaval.
The turmoil is already claiming victims. BMW said Friday that Harald Krüger, its chief executive, would not seek reappointment. He will stay in the job at least until July 18, when BMW’s supervisory board discusses a replacement.
Mr. Krüger said in a statement he was leaving to “pursue new professional endeavors.” But his decision came after BMW reported in May that profit in the first quarter fell 74 percent to 588 million euros, or $660 million, in part because of increased spending on research and development.
In January, Volkswagen and Ford said they would cooperate on producing vans and pickup trucks, and dangled the possibility of working together on electric cars and autonomous vehicles.
Now they are close to formalizing a deal that would play to Ford’s investments in autonomous driving and Volkswagen’s lead in electric cars, said the people with knowledge of the talks, who spoke on the condition of anonymity because they were not authorized to discuss the agreement before a formal announcement.
Volkswagen, which sold more vehicles than any other carmaker in the world last year, has declared its intention to be the company that makes electric cars affordable for the masses. The company has begun taking orders for an electric model called the ID.3, which will go on sale next year for about the same price as a Golf diesel, or less than €30,000.
But Volkswagen is less advanced than Ford in autonomous driving. Under the proposed agreement, Volkswagen would invest in Argo AI, a firm in Pittsburgh that is developing self-driving technology with backing from Ford, the people with knowledge of the deal said. The agreement was first reported by the Frankfurter Allgemeine newspaper in Germany.
Ford, which is behind in electric vehicles, would use a platform that Volkswagen has developed for the new generation of cars. The platform consists of standardized components such as motors, chassis and batteries that can be used as the basis for a variety of vehicles, such as sedans or sport utility vehicles.
By using Volkswagen’s platform, Ford can avoid the cost of developing its own. The companies can also save money by purchasing components together.
Ford and Volkswagen declined to comment on reports of a deal, except to say talks were progressing.
“Our talks with Volkswagen continue,” Ford said in a statement. “Discussions have been productive across a number of areas. We’ll share updates as details become more firm.”
Jack Ewing reported from Frankfurt, and Neil E. Boudette from Ann Arbor, Mich.
Source: Read Full Article