Ford and Volkswagen join hands to build automated and electric vehicles

Volkswagen AG and Ford Motor Co announced on Friday morning that two have formed a global alliance to create electric and automated cars. The alliance would help the automobile giants in bringing down developmental and manufacturing cost of the project.

Electric and self-driving car is the newest addition to the list of projects part of their joint venture, which was announced at the start of this year. They are focusing on developing self-driving technology to provide ride sharing and goods delivery services in densely populated urban areas.

The two automakers collaborated in January, to develop commercial vans and medium-sized pickups for global market, starting from 2022, as they expected their demand to go up in the next five years, all over the world. Both companies are looking forward to teaming up more joint projects in the future.

As part of the current alliance, Volkswagen plans to invest $2.6 billion in Argo AI, along with Ford. VW would split its investment in two parts, where invest $1 billion would be given in cash, and  $1.6 billion in terms of assets that include the Volkswagen’s Munich-based Autonomous Intelligent Driving team, which would assist Argo. Argo, a Pittsburgh based start-up which builds the self-driving vehicle, has a market value of $7 billion. Both the companies declared that together they would buy major stake in the start-up.

Ford has known Argo from before, as in 2017 it invested $1 billion in its products. Argo is known for manufacturing “Level 4” automatic vehicles capable of running without a driver, though only in specific areas, with well-marked roads and in decent weather conditions.

The Detroit automaker’s CEO Jim Hackett said that despite the alliance both the companies would remain “independent and fiercely competitive in the marketplace”. Hackett added, “Unlocking the synergies across a range of areas allows us to showcase the power of our global alliance in this era of smart vehicles for a smart world.”

The automakers plan to launch it in European market in 2023.

As per the current industry trend, collaboration is the most pragmatic way to go about building driverless and electric cars for these involve high cost technology. It has turned traditional competitors into partners. The latest ones to join the league are General Motors and Honda, and BMW and Daimler.

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