VW, Ford join to make vans and explore work on electric cars

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A day after Volkswagen announced that it will bring production of its electric cars to its US factory in Chattanooga, Tennessee, the company announced that it plans to sign a memorandum of understanding to work with Ford to jointly develop electric cars and self-driving cars. The large van will be based off Ford's Transit Custom, which is not sold in North America, and will be built for the European market. "This was a problem to solve, and I think we found a solution ... that makes both companies future-proof in that segment". Both are investing billions in new technology including autonomous vehicles and electric cars. The payoff from joining forces to develop trucks and vans won't be peanuts: Ford sees the tie-up adding $500 million to its annual pretax profit.

This is not the first time Ford Motor Company and Volkswagen Group have collaborated, with previous projects including the late-1980s AutoLatina joint-venture in Brazil and Argentina, which involved model rebadging.

Ford will provide more details on how the alliance affects Ford's regional operations in coming weeks, but does not expect any job cuts in Ford plants as a result of the alliance, Ford Chief Executive Officer Jim Hackett said.

The alliance, which does not entail cross-ownership between the two companies, will be governed by a joint committee.

President and CEO of Ford Motor Company Jim Hackett, left, poses with Volkswagen CEO Herbert Diess at the North American International Auto Show in Detroit on January 14, 2019.

Diess said building vans in Ford plants in Turkey is an option.

Jessica Caldwell, executive director of industry analysis at vehicle shopping website Edmunds, said that the success of the partnership "could ultimately determine the long-term fate of two of the world's most iconic brands".

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This effectively means the next-generation Amarok will be based on the next-generation Ranger.

"Cutting costs by sharing vehicle architectures and manufacturing facilities is just table stakes in this new world and is a nice place to start", Caldwell said.

Each will also build vehicles for the other brand, something VW CEO Herbert Diess hinted at last month month following a meeting with White House officials, where he stated VW could share some of Ford's spare capacity in the United States.

"It fits into our overall strategy to join forces with strong partners for specific topics", Diess said on a conference call Tuesday.

It was unclear whether the site would become a USA focal point for a future tie-up with Ford on new technologies. Hackett said the companies would ensure that the vehicles have different driving dynamics and driver interfaces in line with their own brand images.

Volkswagen CEO Herbert Diess made the announcement at the Detroit auto show in the presence of the outgoing and the incoming Tennessee governors and other VIPs from Tennessee.

In a statement, BMW said the move would create an additional 1,000 jobs at the plant by 2021, bringing the total number of jobs in Spartanburg to approximately 11,000. The alliance was announced today, with the first fruits of the two automakers' handiwork expected to arrive in 2022.

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