Ford borrows Volkswagen's EV

The bromance between Ford and Volkswagen keeps growing closer, with the announcement that the Blue Oval will use the German car-making group’s MEB electric vehicle (EV) architecture.

Ford Motor confirmed late Friday in New York that it will leap out of its EV vacuum by borrowing the modular electric platform (MEB), as Volkswagen tips $US2.6 billion into autonomous vehicle (AV) startup, Argo AI, to become an equal partner in the operation with Ford.

While Ford is slashing its passenger-car portfolio in the US, it confirmed it will build MEB-based zero-emission cars in Cologne, Germany, in a deal signed in Wolfsburg.

Volkswagen CEO Herbert Diess and his Ford equivalent, Jim Hackett, announced the deal to investors in New York, with Ford slated to build 100,000 MEB-based EVs for Europe every year for six years, starting from 2023.

The confirmation is for one MEB model, with another model “under consideration”. The timing would give Ford a chance to jump on the cycle of either a next-generation compact SUV, the next Focus or to edge up in size towards the Mondeo.

Volkswagen will supply all the parts and components, including the chassis architecture, suspensions, cabin electronics, electric motors and batteries for the Ford machine.

The German giant has long insisted the only way the MEB could work is with economies of scale not possible even with its own Volkswagen, Seat, Skoda and Audi brands.

It opened up the MEB for other brands to use and its first external MEB customer was a German ride-sharing startup; now Ford is the second.

Volkswagen has spent more than $US7 billion on developing the architecture, which it plans to use as the basis for at least 15 million of its own cars in the next decade, starting with the ID.3 that will be shown at September’s Frankfurt motor show.

Diess has said in the past that Volkswagen viewed the MEB in the same way it views the current MQB (modular transverse architecture) that sits behind basically all of the Volkwagen Group’s four-cylinder cars, from Audi to Skoda and from the Polo all the way up to the five-metre Atlas SUV.

It has tipped a billion US dollars directly into Argo AI and its Munich-based Autonomous Intelligent Driving (AID) offshoot will become Argo AI’s European head office. It will also buy $US500 million of Ford’s shares in Argo AI, giving it an equal share of the operation.

Pittsburgh-based Argo AI has 500 staff, which will combine with the Audi-based AID’s 200 engineers, to develop Level 4 self-driving technology.

“Thanks to Ford and Volkswagen, Argo AI technology could one day reach nearly every market in North America and Europe, applied across multiple brands and to a multitude of vehicle architectures," Argo AI CEO Bryan Salesky said in a statement.

Ford, however, refuted accusations that it was in danger of being absorbed by Volkswagen because it lacked the technology to compete in a changing automotive scene.

"[Ford will remain] Fiercely competitive in the marketplace, teaming up and working with Argo AI on this important technology allows us to deliver unmatched capability, scale and geographic reach,” Hackett insisted.

“Unlocking the synergies across a range of areas allows us to showcase the power of our global alliance in this era of smart vehicles for a smart world."

For his part, Diess reiterated that only scale could drive down the cost of EVs to the point of making them accessible to every current car owner, which is why it licensed the MEB architecture to Ford.

"Looking ahead, even more customers and the environment will benefit from Volkswagen’s industry-leading EV architecture,” he said.

“Our global alliance is beginning to demonstrate even greater promise, and we are continuing to look at other areas on which we might collaborate.

"Scaling our MEB drives down development costs for zero-emissions vehicles, allowing for a broader and faster global adoption of electric vehicles. This improves the positions of both companies through greater capital efficiency, further growth and improved competitiveness," Diess said.

The move to Ford sharing the architecture seemed inevitable from the moment the two companies agreed in January to join forces on mid-size pick-ups and commercial vans.

The initial move from Volkswagen was to ask for Ford’s help in sourcing architecture to replace the aging (and expensive) Amarok -- Volkswagen’s only body-on-frame vehicle in the world.

Ford has a lot more experience in making body-on-frame machines at scale and at profit, with F-Series income anchoring the company’s operations for decades and the Australian-engineered T6/T7 ladder frame of the new 2021 Ranger providing the perfect basis for VW’s next Amarok.

The two companies will also share commercial van operations, with Ford building a large van for both brands from 2022 in Europe and Volkswagen doing the honours on a smaller city van.