[ad_1]
- The emerging alliance between VW and Ford uses an interesting concept, which combines cooperation and competition.
- Ford chief executive Jim Hackett, who oversees a 154 billion rand restructuring, called the model "coopetition" after the two companies announced an extended partnership Friday in New York.
- Coopetition means that Ford and VW can save money on shared engineering while crossing the ranks later when they launch new vehicles and services in the market.
- For more stories, go to Business Insider SA.
Ford, Volkswagen and the self-driving start-up, ArgoAI, have produced an avalanche of news on Friday.
VW has announced its intention to invest 36 billion rand in ArgoAI, after a 14 billion rand financing by Ford in 2017 and a valuation of more than 97 billion rand.
Ford and VW also announced an extension of their alliance, first revealed in January. Ford will become the first manufacturer to use VW's MEB toolbox, a platform for electric vehicles. Ford has announced that it will launch a new electric vehicle by 2023 in Europe and that it will buy 600,000 vehicles over the next six years.
Herbert Diess, CEO of VW, and Jim Hackett, CEO of Ford, have developed what looks like a beautiful friendship at a time when automakers have more than ever need to reduce the multibillion dollar cost of developing electric vehicles and autonomous – and at a time when global automobile alliances are under stress.
The Renault-Nissan-Mitsubishi alliance has been put to the test while its architect and former president, Carlos Ghosn, is awaiting trial in Japan for mischief crimes. And a proposal for a Renault-Fiat Chrysler Automobiles merger collapsed last month; if that had been done, it would have created the world's third largest automaker.
The interesting alliance between Ford and VW is that it is very project-oriented. Initially, the companies said VW would gain resources from Ford to develop its pickup truck and commercial van capabilities. In January, they reported that autonomous and electric vehicles were on the table for further discussion. They have now outlined their strategy in this regard.
Ford Motor Company President and CEO Jim Hackett poses with Volkswagen CEO Herbert Diess at the North American International Auto Show in Detroit, Michigan, United States, on January 14, 2019.
For Ford, the gain lies in its European business, which could draw a considerable advantage from the use of the SEM platform while the continent is using it to reduce vehicle emissions.
It is interesting to note that Ford and VW have presented a highly collaborative framework on the development and manufacture of autonomous and electric vehicles, but they intend to diverge regarding the marketing of products.
The new era of coopetition
Hackett called this "coopetition" at the Friday press conference in New York, where the leaders announced the news.
"Herbert and I found an intellectual alignment," he said. "We are in agreement and that is why coopetition can occur."
In practical terms, this deal means that Ford is able to essentially buy electric vehicle engineering from VW and associate with VW to enhance ArgoAI 's prospects. However, later, Ford would sell its products and services as it would like, even in direct competition with VW.
"While Ford and Volkswagen remain independent and highly competitive in the market, teaming with ArgoAI on this important technology allows us to deliver unparalleled capacity, scale and geographic reach," Hackett said in a statement.
The same goes for electric vehicles, where VW hardly sits in the back. According to Diess, VW aims to produce 15 million vehicles using MEB over the next 10 years, with 27 models in the first wave and 70 models by 2028.
Alliances in the automotive industry have a turbulent history. The durability of the Renault-Nissan match was beautifully exotic. To a certain extent, only Ghosn's strength of will and personality cult kept her together. And while the Renault-FCA merger embodied a clear industrial logic (the two manufacturers with too much production capacity in Europe), it was based on politics.
The Ford-VW model of competition-collaboration could form the basis of these agreements between huge global companies. Each partner shares the initial savings without unnecessarily sacrificing its marketing potential. We will have to wait to see how that will happen, but the theory is that Ford and VW would be able to make good profits at the end of the day – enough to justify giving up some engineering autonomy.
"Ford makes sense for us," said Diess. "We share a lot of values."
Receive a single WhatsApp each morning with all our latest
news: click here.
Also by Business Insider South Africa:
[ad_2]
Source link