Details on Ford, VW possible at Detroit auto show

Ian Thibodeau
The Detroit News

Ford Motor Co. and Volkswagen AG are preparing to share details — perhaps as early as Tuesday at the Detroit auto show — on a potential global alliance the two automakers have been negotiating since at least June. 

Ford Motor Co. and Volkswagen AG are preparing to share details — perhaps as early as Tuesday at the Detroit auto show — on a potential global alliance the two automakers have been negotiating since at least June.

The terms of the partnership, which have expanded from the commercial vehicle discussions the automakers began last summer, might not be finalized by the time press-preview days wrap at the North American International Auto Show next week, two sources with knowledge of the negotiations told The Detroit News.

An announcement next week would be limited, one source said. The automakers are still finalizing the partnership, and the terms still need to go before boards of the respective companies, another source said. 

Reuters first reported Wednesday that Ford and Volkswagen would "unveil a deeper alliance during the Detroit auto show." Bloomberg reported Wednesday that Volkswagen's board will meet Friday to possibly approve the partnership with Ford.

An announcement, which could come as early as Tuesday, could be as simple an official update on the partnership discussions, a source said. The automakers have not yet made an official decision on whether they will announce anything in Detroit.

"Our memorandum of understanding with VW covers conversations about potential collaborations across a number of areas," said Ford spokeswoman Jennifer Flake. "It is premature to share additional details at this time. We look forward to sharing an update soon."

Volkswagen declined to comment.

The Detroit News reported in November that as part of the partnership talks, Volkswagen was considering a $1 billion-plus investment in Argo AI, the robotics and technology company majority-owned by Ford.

The potential investment in Argo was being considered as Ford and Volkswagen continue months-long talks on global partnerships, according to two sources with knowledge of the situation. Volkswagen also was considering a separate investment in Ford's in-house autonomous vehicle business, The Detroit News has previously reported.

The potential deals could result in both Ford and Volkswagen saving massive amounts of money as they invest in self-driving vehicles, aligning two of the world's largest automakers behind one of the biggest bets on the future of the auto industry. The companies could co-develop hardware and software for robotic vehicles, widen global market penetration and save money on software and licensing as a result of the partnership after the vehicles launch in 2021, the year Ford is targeting to put the vehicles on roads.

Ford and Volkswagen have also focused, among other things, on globally co-developing light-commercial vehicles. The two automakers and Argo hope to have some part of the autonomous vehicle deals finalized before the end of 2018, sources told The News in November.

Details remain thin, but any deal likely would be a critical piece of Ford CEO Jim Hackett's ongoing $11 billion global restructuring aimed at stemming losses in Europe and South America, growing market share in China, boosting profit margins in North America and cutting costs globally to free capital for investments in next-generation technology.

Volkswagen is the best-selling automaker in China, where Ford has struggled to enlarge its foothold. The German automaker, based in Wolfsburg west of Berlin, also has strong presences in South America and Europe, two markets where Ford has struggled in recent years. Through the third quarter of 2018, Ford had lost $479 million in South America, $199 million in Europe and $721 million in the Asia Pacific market.

Volkswagen, meantime, could piggyback on Dearborn-based Ford's market penetration in North America. A tie-up would enable the companies to offer a wider portfolio of vehicles for self-driving technology, to spread costs and to build the economies of scale thought necessary to profitably build battery-electric autonomous vehicles. Ford spent roughly $500 million on mobility through the third quarter of 2018.

VW CEO Herbert Diess said after a White House meeting in December that he might used Ford plant capacity in the U.S. to build cars. Ford executive chairman Bill Ford Jr. said then that the discussions were progressing well.

Twitter: @Ian_Thibodeau