Ford and Volkswagen consider an alliance
The American and German car manufacturing giants, Ford and Volkswagen are considering entering into an Alliance.
The traditional automakers have been increasingly facing pressure in recent years from changed driving habits and especially in the past few years with the swift development of technology and emerging rivals from Silicon Valley.
Manufacturers are concerned that they will be overtaken by the huge Tech Companies, like Google, Apple, Microsoft etc. so to avoid being left behind in the technological advancements which are rapidly happening in the autonomous world, many of the traditional car makers are teaming up.
Volkswagen and Ford are two of the world’s biggest car manufacturers and they are exploring a strategic alliance, possibly joining forces for an array of projects like the development of vans. Thomas Sedran, Volkswagen’s head of strategy, said in a statement last week:
“Markets and customer demand are changing at an incredible speed,”
“To adapt to the challenging environment, it is of utmost importance to gain flexibility through alliances.”
The deal does not involve any financial commitment from either Volkswagen or Ford for the moment but does it raise the specter of some form of a tie-up as the two companies face a series of issues. In March, BMW and Daimler, two longtime rival German automakers, said they would merge their car-sharing businesses.
The traditional carmakers are increasingly making investments in new technologies like electric cars and autonomous cars, as well as services like vehicle-sharing but they risk being left behind by the huge tech giants with huge financial resources and also startup tech companies join the fray.
When it comes to some of the new technologies, Ford has already been trying out hybrid vans in London. These hybrid vehicles can change settings based on their location, switching to electric mode when in a low-emissions area. They are being used by businesses as well as by the London Metropolitan Police. In May, Ford said that it would also run tests in Valencia, Spain. A spokesman for Ford in Europe, Michael Baumann, referring to cars’ energy sources said:
“We see evolving needs of customers globally, and those needs are in the areas of connected services and powertrain choices. Customers’ needs are “changing dramatically,”
A partnership between Ford and Volkswagen would give both companies the chance to take advantage of expected growth in demand for electric delivery vans, according to Peter Wells, a professor of business and sustainability at the Center for Automotive Industry Research at Cardiff University in Wales. Businesses like Ikea and DHL are already shifting to electric delivery vehicles, and others are expected to follow suit. Mr. Wells said:
“It’s a massive market; it’s growing quickly. It’s been almost entirely diesel, and many authorities are looking to exclude diesel.”
The partnership between Ford and Volkswagen is one of several undertaken by traditional carmakers, such as the alliance between Daimler and BMW and Volkswagen and Audi. These companies are dominating the global market in luxury vehicles, Fiat Chrysler is working with Google on self-driving cars; General Motors has invested in Lyft; and Volvo has made chassis for Uber.
Volkswagen has been particularly active in aligning itself with other carmakers. It agreed in April to work with Japanese car manufacturer, Hino Motors which is Toyota’s truck brand in the development of self-driving trucks. Volkswagen already owned a stake in Navistar in North America and has said it would consider a takeover of the company. It also holds a stake in the Chinese truck maker Sinotruk. And Audi said on Wednesday that it would work with Hyundai to share technology and components for electric cars.