Ford-Volkswagen alliance’s joint power pressurizing Other car makers

Ford’s in autonomous vehicles, allowing both to “address these challenges in a more capital-efficient manner.” Broader cooperation will force other mass-market carmakers to “seek more synergies” to remain competitive, analysts led by Daniel Schwarz wrote in a report.

By: | Published: July 12, 2019 12:04 PM

The soon-to-expand alliance between Ford Motor Co. and Volkswagen AG has the potential to transform the global auto industry and increase pressure on other manufacturers developing electric and self-driving cars, analysts said.
By potentially licensing its electric-vehicle platform to Ford, VW could guarantee some profit from electric vehicles next year and gain “an unassailable scale advantage in the market,” said Angus Tweedie, a Citigroup analyst. In return, Credit Suisse analysts said VW may provide “crucial public validation” for Ford’s autonomous-vehicle business, including partner Argo AI.

Ford and VW have scheduled a press conference for 8 a.m. Friday in New York to update investors on the alliance they first formalized in January. The two are expected to extend existing cooperation on commercial vehicles and mid-size trucks to also include joint work on self-driving and electric-car technology, people familiar with the talks have said.

Representatives for Ford and VW declined to comment ahead of Friday’s press conference with chief executive officers Jim Hackett and Herbert Diess. Ford shares were up 0.4% to $10.15 as of 1:25 p.m. Thursday in New York.

Ford may leverage its access to VW’s electric-car architecture to comply with stricter European emissions rules, Citi’s Tweedie said. The U.S. automaker may make “cost-plus” payments to VW on the order of 400 million euros ($450 million) in 2020 alone, he estimated.

Credit Suisse said an expanded alliance between the two companies could combine VW’s strength in EVs with Ford’s in autonomous vehicles, allowing both to “address these challenges in a more capital-efficient manner.” Broader cooperation will force other mass-market carmakers to “seek more synergies” to remain competitive, analysts led by Daniel Schwarz wrote in a report.

“A VW investment in Ford’s AV business would provide a crucial public validation data point (similar to SoftBank’s investment in GM Cruise), and could be just the start of external capital for Ford’s AV business,” Schwarz said. VW and Ford are the Credit Suisse analysts’ top auto stock picks in Europe and the U.S.

Do you know What is Automated Manual Transmission (AMT), Electronic Brakeforce Distribution (EBD), Anti-Lock Braking System, Power Steering? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Get the latest cars price and upcoming bikes price in India exclusively at Financial Express. Stay tuned for new cars and bikes reviews, follow us on twitter, Facebook and subscribe us on YouTube for latest auto news.

Next Stories
1How every MG Hector sold will now contribute to girl education
2Mahindra XUV500 gets Apple CarPlay: Here’s which variant gets the feature
3Bentley EXP 100 GT: A grand touring vision electric concept celebrating 100 years