Detroit - Volkswagen and Ford will announce a deeper alliance next week, one which goes beyond just collaborating on commercial vehicles, in a move meant to save both car companies billions of dollars as they develop new technologies, two people familiar with the plan said on Wednesday.
Ford and VW have been exploring closer cooperation as trade frictions force carmakers to rethink where they build vehicles for Europe, the United States and China, and as software companies prepare to launch their own self-driving cars.
“A global alliance is expected to be announced,” one person said, adding that the pact will be unveiled next Tuesday during the Detroit Motor Show. The companies previously said that any alliance would not involve a merger or equity stakes.
The expanding alliance highlights the growing pressure on all global carmakers to manage the costs of developing electric and self-driving vehicles, as well as technology required to meet tougher emissions standards for the millions of internal combustion vehicles that they will sell in the years to come.
Slowdowns in the world's largest car markets - China and the United States - have ratcheted up the pressure to cut costs.
The scope of the alliance is still being determined, the people said, as talks about cooperation in the area of electric and autonomous cars continue. The sources asked not to be identified because the negotiations are ongoing.
"Talks are going well," the second person said.
The framework of the alliance would include the pooling of resources in autonomous technology and VW investing in that Ford business, and Ford licensing Volkswagen's MEB electric vehicles platform, the person added.
When the commercial vehicle alliance is announced next week, the companies will also say they are close on deals covering the autonomous and electric vehicle businesses, the person said.
VW officials have talked about gaining access to Ford's Transit commercial van and the Ranger midsized pickup truck (for an Amarok replacement), as well as building their vehicles in Ford plants.
Speaking at an event in downtown Detroit, Ford's president of global markets Jim Farley said he had no news to share with reporters about the status of talks with VW, but said that they are "progressing well."
"We see real value in working together," Farley said. "The discussions have been very specific."
He added that over the coming weeks Ford will share details on how it will restructure its global operations, including in South America and Europe.
Big bet
The alliance with Volkswagen serves as a big bet for Ford CEO 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.
Ford officials had called the commercial vehicle program a "quick win" and discussed how a broader tie-up would allow the No. 2 US carmaker to reduce the number of different vehicles it builds and shrink manufacturing, engineering and purchasing costs.