The world of automobile manufacturing is in flux, driven by the winds of change created by Elon Musk and his band of merry pranksters. Some established companies may disappear in the next decade, consigned to the dustbin of history along with such former brands as Packard, Plymouth, and Pontiac. At the same time, there is a welter of new companies getting into the car business, from Uniti in Europe to Nio in China.
Ford Motor Company is one of the organizations standing at the precipice and staring down into possible oblivion. Like many German manufacturers, it is looking longingly back to the halcyon days of yore and wondering why things have to change. But change they will and no amount of wishing and hoping and planning and scheming can stop the parade that is carrying us all inexorably toward an uncertain future.
The costs associated with bringing electric, connected, and autonomous cars to market are enormous. Logically, it makes little sense for every car company to do its own R&D when it would be so much less expensive to join forces and collaborate. That appears to be precisely what Ford and Volkswagen have in mind these days.
According to Automotive News, the two companies are currently holding “exploratory talks” that could lead to jointly developing self-driving and electric vehicles. Such collaboration could save them both billions of dollars in avoided development costs, according to an unnamed source who said to expect an announcement about the prospects for working together before the end of the year.
Neither company is willing to speak on the record about their future plans except in the most general terms. “Our (memorandum of understanding) with VW covers conversations about potential collaborations across a number of areas. It is premature to share additional details at this time,” Ford spokesman Alan Hall said.
Frank Witter, chief financial officer at Volkswagen, said this week that his company is open to deeper alliances with outside companies, particularly in the area of autonomous driving. He added that VW could share its new MEB electric car platform with Ford as a way of driving down unit costs by spreading the costs of development over a larger number of vehicles, but not until it gets started building its own MEB-based electric cars. Both Ford and Volkswagen are under pressure to meet increasingly stringent emissions requirements in Europe. Ford is already partnering with Volkswagen, Mercedes, and BMW to build the Ionity fast charging network on the Continent.
Consolidation in the auto industry seems inevitable. Last month, Honda announced it is investing $2.5 billion in Cruise, the autonomous driving division of General Motors. No doubt it wouldn’t do so if it thought it could develop its own self-driving technology for less.
Where the talks between Ford and Volkswagen lead is anyone’s guess, and it is unlikely that any of those electric passenger cars will be in Ford showrooms in the US any time soon. The focus in North America is on pickup trucks, pickup trucks, and more pickup trucks. The whole pushback against the Obama-era fuel economy rules is about building more pickups and fewer passenger cars. Pretty soon it may be impossible to buy a family sedan from any of the legacy American automakers.
The real question is, if Volkswagen is able to build a competitive electric car that sells in the millions based on the MEB chassis, why does the world need Ford at all?
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