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Ford and VW confirm plans to collaborate on autonomous electric vehicles

Ford Motor and Volkswagen officially announced Friday morning the expansion of their global "collaboration", adding autonomous and electrified vehicles to the list of projects launched with the announcement, in January, of a company common covering commercial vehicles.

The enlarged alliance will now add two of the most important, albeit expensive, technologies that are expected to radically transform the global auto industry in the coming decades. The high costs associated with the development of autonomous and battery electric vehicles have already fostered a series of joint ventures and other collaborations in the automotive industry, often involving traditional competitors such as General Motors and Honda, as well as BMW and Daimler.

Ford and VW will remain "independent and extremely competitive in the market," said Jim Hackett, CEO of the Detroit automaker, in a statement issued in anticipation of the joint press conference scheduled for Friday morning in New York. Hackett added, however, "Unlocking synergies in many areas allows us to showcase the power of our global alliance in this era of smart vehicles for a smart world."

What a Ford official called a "close-up" is the development of autonomous vehicles, a technology that is proving harder to market than many experts predicted a few years ago. said Sam Abuelsamid, principal investigator at Navigant Research. technical consulting company. This is also much more expensive than expected, according to an AlixPartners study released last month, which estimates the sector 's self – driving spending will reach $ 85 billion a year by 2025.

Ford has already invested billions of dollars, including creating an outpost in Silicon Valley to tap the region's know-how. In February 2017, she announced a $ 1 billion investment in Argo AI, a Pittsburgh-based company that is an autonomous vehicle start-up.

Argo, which operates as an independent company, focuses on so-called "level 4" autonomy, vehicles capable of operating without drivers, although in "geo-fenced" areas with well-traced routes and relatively good weather conditions. Argo already has test fleets operating in five US cities, including Pittsburgh, Palo Alto, Detroit, Miami and Washington, D.C.

Volkswagen, according to a joint statement outlining the details of VW-Ford's expanded collaboration, "will invest $ 2.6 billion in Argo AI by committing $ 1 billion in funding and making a contribution from its company of 1 , $ 6 billion to autonomous driving (AID) ". It is the automaker's autonomous vehicle development unit, which currently has 200 employees. VW will also purchase $ 500 million worth of Argo shares over the next three years.

In turn, Argo will now set up operations in Europe that will include localized testing.

"It's a real validation of what Argo does," said analyst Abuelsamid, as VW could have continued to focus on internal development efforts. The German manufacturer has recently ended its relationship with another independent start-up, Aurora.

Several senior executives who have been discussing Ford-VW projects in recent days said the collaboration has a number of potential benefits. Cost sharing is considered a major asset, as is the scale of their combined operations, which in 2018 sold approximately 18 million vehicles worldwide.

Bryan Salesky, CEO of Argo, said in a joint statement that "his company's technology could someday reach almost every market in North America and Europe, applied to several brands and to a multitude of vehicle architectures ". . "

Friday's announcement also highlights how Ford and Volkswagen plan to work together on the development of electric battery vehicles, an area in which global automakers are expected to invest $ 225 billion from 2019 to 2023, according to the report. 39, study of AlixPartners.

Until now, VW has committed 9 billion euros, or about 10 billion dollars, in the development of electric vehicles. General Manager Herbert Diess has increased his sales forecast for the next decade from 15 million to 22 million battery-powered electric vehicles (BEV) earlier this year. The German company plans to produce around 50 BEVs by 2025.

At the same time, Ford plans to invest $ 11 billion over the next five years, launching its first long-range BEV, a high-performance SUV, later this year. A mix of plug-in hybrids and all-electric models will follow. This will now include "at least one all-electric high-volume vehicle in Europe by 2023," says the joint statement based on VW's modular MEB platform to support most of its future battery vehicles.

Abuelsamid said that he thought it was "only a beginning" and hoped that Ford would use the "architecture" of the SEM for even more products in order to achieve new savings from # 39; scale.

As is the case with most joint ventures, alliances and other collaborations of the automotive industry, those that associate Ford and VW will not be monogamous. For its part, Ford will enter into a separate partnership with Rivian, a start-up company for battery electric vehicles in the suburbs of Detroit, in which it announced in April a $ 500 million investment.

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