Ford, Volkswagen Expand Global Alliance: What Does The Partnership Mean For The Automakers?

Ford (F) and Volkswagen (VOW3.DE) have strengthened their partnership to produce midsized pickup trucks, commercial vehicles, and electric vehicles. The companies first entered into the alliance in July 2019, and are expanding their relationship globally.

“In light of the Covid 19 pandemic and its impacts on the global economy, more than ever it is vital to set up resilient alliances between strong companies,” Dr. Herbert Diess, Volkswagen Group CEO, said in a statement.

“This collaboration will efficiently drive down development costs, allowing broader global distribution of electric and commercial vehicles, and enhance the positions of both companies,” he added.

Under the agreement, Ford and VW will produce a medium-sized pickup truck, which will be built and engineered by Ford but sold by the German carmaker under the Amarok label starting in 2022.

Both companies’ commercial vehicle segments will get a boost under the venture in 2021 with a city delivery van built and developed by VW under its Commercial Vehicles segment and a 1-ton cargo van developed by Ford.

Together, the automakers expect to produce 8 million medium pickup trucks and commercial vans.

Ford will also introduce an electric vehicle for Europe by 2023, using VW’s Modular Electric Drive. Ford expects to deliver 600,000 electric vehicles on the MEB platform over several years, starting in 2023. Ford said it will develop the EV in Cologne-Merkenich, Germany, adding to its Mustang Mach-E in 2021.

“Commercial vehicles are fundamental to Ford today and an area where we will accelerate and grow, and working with Volkswagen on these platforms will provide both of us significant financial advantages in things like engineering, and plants and tooling,” Jim Farley, Ford chief operating officer, said in a statement.

Beyond the EV and commercial vehicle partnership, Ford and VW will also team up with Argo AI for autonomous vehicles. Ford has ownership and development interests in Argo AI, and VW has also invested in the self-driving technology company.

Shares of Fored stock were down 5.18% as of 10:50 a.m. EDT on Wednesday while shares of VW stock were down 2.03% at the same time.