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.


S&P 500 inches closer to record high

Updated 12 August 2020

S&P 500 inches closer to record high

  • US stock market index returns to levels last seen before the onset of coronavirus crisis

NEW YORK: The S&P 500 on Tuesday closed in on its February record high, returning to levels last seen before the onset of the coronavirus crisis that caused one of Wall Street’s most dramatic crashes in history.

The benchmark index was about half a percent below its peak hit on Feb. 19, when investors started dumping shares in anticipation of what proved to be the biggest slump in the US economy since the Great Depression.

Ultra-low interest rates, trillions of dollars in stimulus and, more recently, a better-than-feared second quarter earnings season have allowed all three of Wall Street’s main indexes to recover.

The tech-heavy Nasdaq has led the charge, boosted by “stay-at-home winners” Amazon.com Inc., Netflix Inc. and Apple Inc. The index was down about 0.4 percent.

The blue chip Dow surged 1.2 percent, coming within 5 percent of its February peak.

“You’ve got to admit that this is a market that wants to go up, despite tensions between US-China, despite news of the coronavirus not being particularly encouraging,” said Andrea Cicione, a strategist at TS Lombard.

“We’re facing an emergency from the health, economy and employment point of view — the outlook is a lot less rosy. There’s a disconnect between valuation and the actual outlook even though lower rates to some degree justify high valuation.”

Aiding sentiment, President Vladimir Putin claimed Russia had become the first country in the world to grant regulatory approval to a COVID-19 vaccine. But the approval’s speed has concerned some experts as the vaccine still must complete final trials.

Investors are now hoping Republicans and Democrats will resolve their differences and agree on another relief program to support about 30 million unemployed Americans, as the battle with the virus outbreak was far from over with US cases surpassing 5 million last week.

Also in focus are Sino-US tensions ahead of high-stakes trade talks in the coming weekend.

“Certainly the rhetoric from Washington has been negative with regards to China ... there’s plenty of things to worry about, but markets are really focused more on the very easy fiscal and monetary policies at this point,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

Financials, energy and industrial sectors, that have lagged the benchmark index this year, provided the biggest boost to the S&P 500 on Tuesday.

The S&P 500 was set to rise for the eighth straight session, its longest streak of gains since April 2019.

The S&P 500 was up 15.39 points, or 0.46 percent, at 3,375.86, about 18 points shy of its high of 3,393.52. The Dow Jones Industrial Average was up 341.41 points, or 1.23 percent, at 28,132.85, and the Nasdaq Composite was down 48.37 points, or 0.44 percent, at 10,919.99.

Royal Caribbean Group jumped 4.6 percent after it hinted at new safety measures aimed at getting sailing going again after months of cancellations. Peers Norwegian Cruise Line Holdings Ltd. and Carnival Corp. also rose.

US mall owner Simon Property Group Inc. gained 4.1 percent despite posting a disappointing second quarter profit, as its CEO expressed some hope over a recovery in retail as lockdown measures in some regions eased.

Advancing issues outnumbered decliners 3.44-to-1 on the NYSE and 1.44-to-1 on the Nasdaq.

The S&P index recorded 35 new 52-week highs and no new low, while the Nasdaq recorded 50 new highs and four new lows.