Volkswagen AG and Ford Motor Co on Tuesday set an alliance that combines forces on commercial vans and pickups. Photo: AP

INTERNATIONAL – Volkswagen and Ford Motor on Tuesday set an alliance that combined forces on commercial vans and pickups and said they were exploring expanding into joint development of electric and self-driving technology, actions meant to save the automakers billions of dollars.

Ford and VW announced their partnership against the backdrop of the Detroit auto show. The partnership, which starts with sales of vans and medium-sized pickups in 2022, will not involve a merger or equity stakes, the companies said.

VW and Ford said they also are exploring potential collaboration on electric vehicles, autonomous vehicles and mobility services.

The two automakers explored closer co-operation as trade frictions force carmakers to rethink where they build vehicles for Europe, the US and China.

The expanding alliance highlights the growing pressure on all global automakers to manage the costs of developing electric and self-driving vehicles, as well as technology required to meet tougher emissions standards for millions of internal combustion vehicles they will sell in the years to come.

Slowdowns in the world’s largest auto markets – China and the US – have ratcheted up the pressure to cut costs.

In June 2018, Ford and VW revealed talks about an alliance in commercial vehicles and added they were looking at other joint projects.

Executives with both companies have talked about the potential savings of a deeper alliance, and VW officials have talked openly about building their vehicles in Ford plants, and Ford using the German automaker’s electric vehicle platform.

The tie-up with VW serves as a big bet for Ford chief executive Jim Hackett since he took over in May 2017 from the ousted Mark Fields with the mandate to speed up decision-making and cut costs. Some analysts and investors have been frustrated by Ford’s laggard stock price and a perceived lack of details from Hackett about the Dearborn, Michigan-based automaker’s $11 billion restructuring.

Last week, Ford said it would cut thousands of jobs, discontinue building money-losing vehicles and look at closing plants as part of a turnaround effort for its unprofitable European business.

On Monday, VW said it would invest $800 million to build an electric vehicle plant in Chattanooga, Tennessee, prompting US President Donald Trump to congratulate the city and state in a post on Twitter the following day.

But the White House has been pushing to end subsidies on electric vehicles that would help the plant and the alliance.

Reuters