Ford and Volkswagen to announce partnership

The automakers are in talks to collaborate.

US flag and Ford sign Source: Bloomberg

Two car rivals are becoming partners. Ford and Volkswagen are planning an alliance to collaborate on new technologies.

Why Ford and Volkswagen are possibly working together

The automakers are probably collaborating to do more than manufacture vehicles. In this age of electric and self-driving cars, the two corporations are working together to work on technology that would help them compete with upstarts like Tesla and incoming self-driving projects like Google’s Waymo. The partnership could help both companies overcome its individual weaknesses.

How both sides would benefit from partnership

Ford and Volkswagen's potential teamwork could be a boon to both carmakers, according to economist, Jon Gabrielsen. Ford is struggling with $1 billion in losses in after the US tariffs on Chinese steel were imposed. Volkswagen is trying to overcome a scandal in which it violated emissions standards. Gabrielsen noted that both companies need each other to compete in the global automobile business.

‘The global auto industry is rapidly becoming one in which major scale is critical. Ford’s scale is not large enough and VW has insufficient presence in the US. In addition, they each have significant challenges in China and in trying to be the most competitive in electric vehicles and autonomous vehicles for the future,’ said Gabrielsen.

Jim Farley, Ford’s president of global markets, also said that the merger of the corporations would help the carmaker expand worldwide.

‘This potential alliance with the Volkswagen Group is another example of how we can become more fit as a business, while creating a winning global product portfolio and extending our capabilities,' said Farley.

When deal could be announced

Though there are reports that the Ford-Volkswagen partnership could be announced next week, Ford spokeswoman, Jennifer Flake, still won’t confirm the exact date of the union between the automakers.

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

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