American automaker Ford and German manufacturer Volkswagen are expanding their international alliance.
The two companies have announced plans to co-produce eight million commercial vehicles a year, starting in 2021. Production of the these cars is expected to continue through the respective life cycles of each vehicle. Commercial vehicles are defined as those sold to companies, fleet operators, and/or government. So you won’t be able to stroll into a dealer and buy one yourself.
There is a range of vehicles that Ford and Volkswagen will produce together. They include a city van created and built by Volkswagen and a one-tonne cargo van engineered by Ford. There’s also a VW medium-sized pick-up truck that will use the platform of the Ford Ranger.
“In light of the Covid 19 pandemic and its impacts on the global economy, more than ever it is vital to set up resilient alliances between strong companies,” Volkswagen CEO Herbert Diess said in a news release. “This collaboration will efficiently drive down development costs, allowing broader global distribution of electric and commercial vehicles, and enhance the positions of both companies.”
The Ford-Volkswagen alliance is centered on business operations outside of North America. It does not include any cross-ownership between the two companies. The deal is anticipated to drive billions of dollars in cost efficiency savings between the two companies.
Ford and Volkswagen announced plans to collaborate on the development of electric vehicles over a year ago. The alliance involves Ford using VW’s MEB architecture. That technology serves as a base for its ID.3 electric car, which is used in about 600,000 electric vehicles in Europe.
The latest announcement greatly expands the alliance between the automakers. Ford, as part of an $11 billion restructuring plan, is focusing on its commercial vehicle business to assist in driving profits. Those profits will help fund emerging technologies such as self-driving and electric vehicles.
Last week, Volkswagen closed a $2.6 billion investment in Argo AI, a Pittsburgh-based self-driving vehicle start-up company that Ford acquired a majority stake in during 2017.