Along with Volkswagen's investment in Argo AI, Ford CEO Jim Hackett and VW CEO Herbert Diess said Ford will use Volkswagen's modular electric toolkit, known as MEB, to design an all-new battery-electric vehicle for its European operations.
Volkswagen will supply MEB parts and components for the as-yet-undisclosed BEV, which will be built at a Ford plant beginning in 2023.
Ford said it plans to deliver more than 600,000 MEB-based vehicles in Europe over six years, and a second all-new Ford model for European customers is under discussion. Ford will pay Volkswagen a per-unit price for the MEB toolkit, which was not disclosed.
Hackett said the world now stands "at the precipice of the biggest shift in transportation" since Henry Ford's era, and that working with Volkswagen would give the two automakers a significant competitive edge, especially as it relates to the development of higher-level autonomous driving capabilities.
Diess said partnering with other automakers is "not the first thing we look at, because it adds complexity to business — it might make you slower — but the times we are facing, we will get into resource problems now because all of it becomes really, really expensive," including developing self-driving technologies while simultaneously working on electrification, mobility and reducing emissions. "It just makes sense to work together."
For North America, both automakers have their own electric vehicle plans that are likely to remain separate, with Diess conceding that the MEB platform — developed primarily for Europe and China — is probably too small to underpin the vehicles Ford would require for North America.
Volkswagen is ahead of Ford in terms of the rollout of its electric vehicle technology: The group's first BEV, the Audi e-tron, is on sale in the U.S., and its first Volkswagen-brand BEV, the ID3, goes on sale this year in Europe.
Prior to last week's announcement, Ford had already laid out an $11.5 billion electrification strategy that called for 16 battery-electric vehicles globally by 2022, starting with what Ford said would be a "Mustang-inspired" crossover that will be shown in November and be available in 2020, and later, a pickup. It plans to hybridize its most popular nameplates, including the Explorer and Escape.
But Volkswagen's electric ambitions are much more broad, much more global — and much more expensive.
The 12-brand group, which includes Audi, Porsche and Bentley, laid out enhanced plans in March to launch 70 full-electric models over the next decade, accounting for 22 million battery-powered vehicles. Previously, Volkswagen had said it planned to build up to 15 million battery-electric vehicles globally by 2025 across 50 models. In all, the group has pledged €80 billion ($90 billion) to its multiyear, multibrand electric push. In the U.S., that will mean electric vehicles in Audi, Porsche and Volkswagen showrooms, including the e-tron that's already on sale and the ID Crozz crossover coming to Volkswagen showrooms next year.
Michelle Krebs, senior analyst with Cox Automotive, said the agreement is smart "because developing electric vehicles and autonomous vehicles is expensive." She said automakers see value in being able to share development costs and reduce risk with technologically advanced products that don't yet have volumes necessary to support the investments required to start them.