Ford Motor and Volkswagen have recently announced that the companies will invest billions of dollars to jointly develop electric and self-driving vehicles, deepening a global alliance to slash development and manufacturing costs.
The two auto company’s executives have said the latest collaborations could save hundreds of millions of dollars for each company. But the projects would take time to develop, and the size and timing of the payoffs were unclear.
A report by Reuters had stated, Volkswagen has agreed to plow $3.1 billion into Ford’s Argo AI self-driving unit but estimates it could realize up to $20 billion in revenue by sharing its MEB electric vehicle architecture with Ford in Europe.
However, the two sides are still discussing additional deals, including an extension of the EV sharing arrangement to other Ford vehicles, which could further boost Volkswagen’s take.
Further, Volkswagen plans to invest $2.6 billion in Argo AI, Ford’s self-driving cars venture and will buy $500 million worth of Argo shares from Ford, giving the two automakers equal stakes in the startup.
Ford expects to build more than 600,000 electric vehicles in Europe over six years, sourcing components and the vehicle underpinnings from VW, helping both to cut costs.
Ford Automotive President Joe Hinrichs said it would take four years to design Ford’s electric car around VW’s MEB architecture, and retool a Ford of Europe plant to build the vehicle.
The cooperation with VW on electric vehicles in Europe is part of Ford’s previously disclosed $11.5 billion EV investment worldwide.