VW, Ford team up to make autonomous, electric vehicles

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Ford President and CEO Jim Hackett, Argo AI co-founder Bryan Salesky and VW CEO Herbert Diess. (Reuters)
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A Ford Argo AI test vehicle, being tested, drives through the downtown area in Detroit, Michigan on Friday. (AFP)
Updated 14 July 2019

VW, Ford team up to make autonomous, electric vehicles

  • Volkswagen will contribute its Autonomous Intelligent Driving (AID) company to Argo, which will boost the self-driving unit’s employees to 700 from 500

NEW YORK: Ford Motor Co. and Volkswagen AG said they will spend billions of dollars to jointly develop electric and self-driving vehicles, deepening a global alliance to slash development and manufacturing costs while positioning VW as the initial winner.
How soon those investments will pay for themselves is an open question across the global auto industry.
Ford and VW executives said the latest collaborations could save hundreds of millions of dollars for each company. But the projects would take time to develop, and the size and timing of the payoffs were unclear.
The latest iteration of the Ford-VW alliance suggests the German automaker may hold the more lucrative cards — for now.
VW has agreed to plow $3.1 billion into Ford’s Argo AI self-driving unit, but estimates it could realize up to $20 billion in revenue by sharing its MEB electric vehicle architecture with Ford in Europe.
The two sides are still discussing additional deals, including an extension of the EV sharing arrangement to other Ford vehicles, which could further boost VW’s take.
Ford and VW have already started cooperating in the area of commercial vehicles and mid-size pickup trucks as part of the auto industry’s broader effort to redraw production and sales footprints to cope with more stringent regulation and fragmented markets.
Executives, meanwhile, declined to put a value on the potential revenue generated by the data to and from their respective self-driving vehicles.
Ford Chief Executive Jim Hackett said at a news briefing on Friday in New York he expects “chimneys of data that will be spewing from the vehicles” that will use Argo’s self-driving technology.
VW will invest $2.6 billion in Argo AI, Ford’s self-driving cars venture, and will buy $500 million worth of Argo shares from Ford, giving the two automakers equal stakes in the startup. Evercore ISI analysts said the deal’s structure suggested each automaker will own about 40 percent, with Argo owning the rest.
VW CEO Herbert Diess said at the briefing the Argo platform was “the best solution for Volkswagen” to speed self-driving vehicles to market, and that Ford and VW together intend to make that platform “a global industry standard.”
Any partnerships added in the future “will probably be outside of the auto industry,” Ford’s president of new businesses, technology and strategy, Jim Farley, told Reuters when asked if this was a possibility.
Ford and Argo officials said moving goods was as much a focus as moving people, with Ford focused on offering services to consumers. Ford officials said they remained committed to launching autonomous vehicles by 2021, but Farley said large-scale commercialization would occur many years after that.

HIGHLIGHTS

• VW has agreed to plow $3.1 billion into Ford’s Argo AI self-driving unit.

• The German automaker estimates it could realize up to $20 billion in revenue by sharing its MEB electric vehicle architecture with Ford in Europe.

Ford, whose shares were up about 1 percent, also will build an electric car in Europe, starting in 2023, using VW’s MEB electric vehicle platform, the companies 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,” Diess said.
Ford expects to build more than 600,000 electric vehicles in Europe over six years, sourcing components and the vehicle underpinnings from VW, helping both to cut costs.
Ford Automotive President Joe Hinrichs said it would take four years to design Ford’s electric car around VW’s MEB architecture, and retool a Ford of Europe plant to build the vehicle.
VW said it had committed $7 billion to its MEB platform, which is expected to underpin 15 million vehicles worldwide from the VW group over the next decade. Much of the MEB’s development cost could be recovered from the revenues generated from Ford.
Diess said Ford would pay VW “set by set” for the use of VW’s electric vehicle components.
It was not clear if some of those future Ford EVs could migrate to VW’s MEB platform, versions of which the German automaker will build in Europe, China and North America.
The broader Ford-VW alliance, which covers collaboration beyond joint investments in Argo AI, does not entail cross-ownership between the two companies.
Ford created Ford Autonomous Vehicles LLC in 2018, pledging to invest $4 billion until 2023 and has sought outside investors to help share the spiraling cost of developing autonomous vehicles.
Volkswagen will contribute its Autonomous Intelligent Driving (AID) company to Argo, which will boost the self-driving unit’s employees to 700 from 500.


Indonesia hails ‘historic’ $22.9bn mega-investment deal with UAE

Updated 17 January 2020

Indonesia hails ‘historic’ $22.9bn mega-investment deal with UAE

  • Leaders agree initial $6.8bn projects plan, including initiative to build a replica of Abu Dhabi grand mosque in Java

JAKARTA: Indonesia’s business community on Thursday welcomed the UAE’s pledge to pump tens of billions of dollars into a wide range of key sector projects.

President Joko Widodo and his entourage secured an overall $22.9 billion deal during an official two-day visit to Abu Dhabi earlier this week covering the fields of energy, logistics, port construction, mining, and agriculture.

It was also revealed that the delegation brokered a UAE commitment to assist in establishing an Indonesian sovereign wealth fund.

At a bilateral meeting, the Indonesian leader and the Crown Prince of Abu Dhabi Sheikh Mohammed bin Zayed Al-Nahyan witnessed the signing of 11 business accords between the two countries. Indonesia’s Minister for Foreign Affairs Retno Marsudi said the UAE had committed to investing $6.8 billion out of the total agreed spending package into the initiatives.

Luhut Pandjaitan, Indonesia’s chief minister for maritime affairs and investment, described the UAE’s pledges as possibly being “the biggest deals in Indonesia’s history, secured with the UAE within only six months,” referring to the crown prince’s visit to Indonesia last July.

While most lauded the deal, some Indonesian business leaders remained cautious over the long-term prospects for the projects.

Fachry Thaib, head of the Middle East Committee and OIC at the Indonesian Chamber of Commerce, said the schemes could trigger a wide-ranging domino effect through job creation and other business ventures.

“The government needs to have a strong lobbying team that can follow up these deals and push them into investment realizations. We have had such commitments from other Gulf countries, but there was no further lobbying and the pledges were hardly realized,” he told Arab News.

Zaini Alawi, a businessman who exports and imports between Indonesia and the Middle East, said: “It would set a good precedent to attract other Gulf countries to invest here if Indonesia shows it could aptly manage these investment deals.”

Director for Middle East affairs at Indonesia’s Foreign Ministry, Achmad Rizal Purnama, told Arab News that the $6.8 billion commitment from the UAE was only the first phase of a long-term program.

Widodo and the crown prince also witnessed the signing of five government cooperation agreements in health, agriculture, Islamic affairs, and counterterrorism.

Indonesian Minister of Religious Affairs Fachrul Razi said one of the main aspects of the cooperation agreement would be the promotion of religious moderation and raising awareness of the dangers of extremism.

FASTFACT

The UAE has pledged to assist in establishing an Indonesian sovereign wealth fund.

Noting that the UAE had pledged to fund the construction of a replica of the Abu Dhabi grand mosque in Solo, the president’s hometown in Java, the minister pointed out that the grant was part of a commitment by the two countries to establish a mosque that welcomed all people and served a pivotal role in promoting the middle path of Islam.

Riza Widyarsa, a Middle East expert at the University of Indonesia, told Arab News that the cooperation deal could help more Indonesians to understand that not all countries in the Middle East observed conservative Islam. “They are also very active in countering religious extremism and radicalism,” he said.

In addition to the multi-billion-dollar projects, Purnama said Indonesia had also secured the UAE’s commitment to assist in establishing an Indonesian sovereign wealth fund into which the UAE, the US International Development Finance Corporation, and Japan’s SoftBank would inject funding.

And according to Pandjaitan, the UAE had pledged to be “the biggest contributor” to the fund.

The fund would be used to finance Indonesia’s ambitious infrastructure development projects and the construction of its proposed new capital in East Kalimantan, a relocation that has been estimated to cost $33 billion and of which Indonesia could only afford 19 percent.

He said all parties involved would meet in Tokyo soon to set up the structure of the fund and to finalize the plan, which the government expected to launch by mid-2020, a year after the crown prince proposed the idea to Widodo.

“This could be the first time that big capitalists work together in a single project,” Pandjaitan added.