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The soon-to-expand alliance between Ford Motor Co. and Volkswagen AG has the potential to transform the global auto industry and increase pressure on other manufacturers developing electric and self-driving cars, analysts said.
By potentially licensing its electric-vehicle platform to Ford, VW could guarantee some profit from electric vehicles next year and gain “an unassailable scale advantage in the market,” said Angus Tweedie, a Citigroup analyst. In return, Credit Suisse analysts said VW may provide “crucial public validation” for Ford’s autonomous-vehicle business, including partner Argo AI.
Ford and VW have scheduled a press conference for July 12 in New York to update investors on the alliance they first formalized in January. The two are expected to extend existing cooperation on commercial vehicles and midsize trucks to also include joint work on self-driving and electric-car technology, people familiar with the talks have said.
Representatives for Ford and VW declined to comment ahead of the press conference with CEOs Jim Hackett and Herbert Diess. Ford shares were up 0.4% to $10.15 on July 11 in New York.
Ford may leverage its access to VW’s electric-car architecture to comply with stricter European emissions rules, Citi’s Tweedie said. The U.S. automaker may make “cost-plus” payments to VW on the order of 400 million euros ($450 million) in 2020 alone, he estimated.
Credit Suisse said an expanded alliance between the two companies could combine VW’s strength in EVs with Ford’s in autonomous vehicles, allowing both to “address these challenges in a more capital-efficient manner.” Broader cooperation will force other mass-market carmakers to “seek more synergies” to remain competitive, analysts led by Daniel Schwarz wrote in a report.
“A VW investment in Ford’s AV business would provide a crucial public validation data point (similar to SoftBank’s investment in GM Cruise), and could be just the start of external capital for Ford’s AV business,” Schwarz said. VW and Ford are the Credit Suisse analysts’ top auto stock picks in Europe and the U.S.