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Volkswagen and Ford Are Teaming Up Massively on Electric and Autonomous Cars

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The game of catch-up gets going for real, Daimler isn’t doing so hot, and diesels are definitely not having a moment. All that and more in the Morning Shift for July 12, 2019.

1st Gear: Nobody Said ‘Tesla’ But You Hear It Rustling on the Wind

Ford and Volkswagen announced today that they’ll be teaming up on both electric and autonomous vehicles, with Ford using VW’s upcoming MEB platform for electric cars, and VW investing a total of $2.6 billion in Ford’s Argo AI autonomous division, including a purchase of $500 million worth of shares in Argo. But if the sums of money being thrown around aren’t enough (not to mention the approximately $7 billion VW has invested already in the MEB platform), what you should really be noting here is the scale of what Ford’s buying into, according to a company press release:

Company leaders also announced Ford will become the first additional automaker to use Volkswagen’s dedicated electric vehicle architecture and Modular Electric Toolkit – or MEB – to deliver a high-volume zero-emission vehicle in Europe starting in 2023.

Ford expects to deliver more than 600,000 European vehicles using the MEB architecture over six years, with a second all-new Ford model for European customers under discussion. This supports Ford’s European strategy, which involves continuing to play on its strengths – including commercial vehicles, compelling crossovers and imported iconic vehicles such as Mustang and Explorer.


“More than 600,000" cars is nothing to sneeze at, even if they are apparently entirely devoted to Europe (Ford’s first real electric vehicle in the U.S. will be some large family-hauler SUV thing with a light-up badge, because minivans are out of style, and who doesn’t love a tacky badge). It’s still a sizable number, and way more electric cars than both Ford and VW combined have ever built. And it’s not just one car, either, as Peter Campbell of the Financial Times notes VW exec Herbert Diess saying:


And I have a sneaking suspicion that tying the announcement of the Argo investment isn’t a coincidence, either:

Volkswagen will invest $2.6 billion in Argo AI by committing $1 billion in funding and contributing its $1.6 billion Autonomous Intelligent Driving (AID) company, which includes more than 200 employees – most of whom have been developing self-driving technology for the Volkswagen Group.

As part of the transaction, Volkswagen also will purchase Argo AI shares from Ford for $500 million over three years. Ford will invest the remaining $600 million of its previously announced $1 billion cash commitment in Argo AI.

The full transaction represents a valuation for Argo AI that totals more than $7 billion.

There’s only one company that makes SUCH a big stink about both electric cars and autonomy, and that’s Tesla. Pretty much every major car company these days has an electric car division and autonomous research division, sure, but not many are out here talking about 600,000 electric cars and billions upon billions of dollars being invested in autonomy, and combining them into one vehicle. Without explicitly saying it, VW and Ford definitely have one company in their crosshairs.

All that being said, it’s one thing to say you’re committed to selling hundreds of thousands, if not millions, of electric cars. It’s another thing to actually do it, entirely, as Tesla itself has proven. And I’m not seeing one peep out of VW and Ford about the real advantage Tesla has.


No, not a “gigafactory” and scale. I’m talking about a vast, international fast-charging network. Sure, electric cars are great, but they’re even greater (and people will likely want them more) when you know you could easily take your car on a road trip any time you want. 

VW’s already started building “hundreds” of stations, but for all of us to be driving electric cars, they’re going to need to start building thousands, and fast.


2nd Gear: No Diesel Transit Connect Because You Don’t Want It

Please cue up the sad trombone noise for the diesel Ford Transit Connect, Automotive News:

Ford Motor Co. has canceled plans to add a diesel engine option to its Transit Connect small van, citing lack of demand.

The automaker had made the new 1.5-liter EcoBlue diesel, available on vehicles overseas, a highlight of the freshened 2019 cargo and wagon versions of the Transit Connect. It was to have gone on sale last fall but never materialized.


A little diesel Transit Connect would’ve possibly been the most European car sold in the United States, but I get it. Most Transit Connects I’ve seen are used for local deliveries within cities. Cities are polluted enough, and it tends to be a little more difficult to find diesel at filling stations there.

If there’s every a case for an electric vehicle to be made, it’s a small electric panel van, not a diesel one.


3rd Gear: The Maker of Mercedes-Benz Isn’t Doing Too Hot

Daimler is taking a big hit lately, blaming both diesels and Takata, Reuters reports:

Luxury carmaker Daimler cut its profit forecast for the fourth time in 13 months on Friday, as it set aside more money to cover a regulatory crackdown on diesel emissions and vehicle recalls related to Takata airbags.

The German automaker is among a raft of blue-chip firms to issue a profit warning this week, adding to concerns about the severity of an economic slowdown, particularly in China where confidence has been hit by an ongoing trade war.

The maker of Mercedes-Benz cars said it would post a second-quarter operating loss and that 2019 results would be “significantly” lower than last year, compared with its previous forecast for a broadly unchanged performance.


Mercedes will survive, though I’m not sure we can say for the same for all of us in the looming recession.

4th Gear: Or Is it a German Thing?

Daimler seems to be socking away money for an impending global recession, but the Wall Street Journal has a take today saying that it might be a specifically German problem:

In the past week, Deutsche Bank AG abandoned its global ambitions and initiated layoffs, the chief executive of BMW AG said he would step down. Sharp profit warnings from BASF SE and Daimler AG—which issued its second in less than a month on Friday—have rattled markets.

That news followed the continuing legal woes facing Bayer AG for its acquisition of Monsanto, the maker of weedkiller Roundup, and continued fallout for auto makers from the diesel-emissions scandal and depressed global new car sales. Meanwhile, German blue chips from software maker SAP SE to industrial giant Thyssenkrupp AG have announced a combined tens of thousands of job cuts this year.


German companies tend to be very large, extremely efficient, and wildly hard to change. Things move fast nowadays, basically.

5th Gear: Iacocca Goes Out as He Lived

The Detroit News reports that before Lee Iacocca, who died last week at age 94, was buried, he was driven once last time in a Chrysler, the Detroit News said:

Hundreds of family members and friends watched Wednesday as Lee Iacocca’s casket slid into a Chrysler hearse — a fitting final chariot for the automaker’s former CEO.


I’m honestly shocked it wasn’t a giant tub of margarine.

Reverse: Happy Collector Car Appreciation Day

I drive a Lexus IS300 Sportcross. It is rare, in the United States. I officially declare it a “collector car.” It is apparently Collector Car Appreciation Day, which is definitely a real holiday. Feel free to appreciate my car in the comments.


Neutral: Will Ford and VW Pull It Off?

Or are they both too big and moribund to move quickly enough?