Ranger pickup is part of the deal as Ford, VW announce alliance in Detroit

Volkswagen AG and Ford Motor Co unveiled an alliance on Tuesday that combines forces on commercial vehicles and is likely to expand into joint development of electric and self-driving technology, actions meant to save the automakers billions of dollars.

Ford and VW announced their partnership against the backdrop of the Detroit Auto Show, VW Chief Executive Herbert Diess told reporters on Monday. The companies in recent months have discussed cooperating in vans and other commercial vehicles, and have said that any expanded alliance would not involve a merger or equity stakes.

A joint conference call provided an update on the status of the proposed collaboration.

The two automakers have been exploring closer cooperation as trade frictions force carmakers to rethink where they build vehicles for Europe, the United States and China.

The expanding alliance highlights the growing pressure on all global automakers to manage the costs of developing electric and self-driving vehicles, as well as technology required to meet tougher emissions standards for millions of internal combustion vehicles they will sell in the years to come.

Slowdowns in the world's largest auto markets — China and the United States — have ratcheted up the pressure to cut costs. The scope of the VW-Ford alliance was still being determined ahead of the auto show as talks covered cooperation in the area of electric and autonomous cars.

The framework of the alliance is expected to include the pooling of resources in autonomous technology and VW investing in that Ford business, and Ford licensing Volkswagen's MEB electric vehicles platform, sources have said.

In the call, Ford President and CEO Jim Hackett announced that the two automakers would partner on commercial vans and medium-size pickups. Ford will provide truck platforms for both companies, starting in 2022. Come 2023, Ford will provide larger vans like the Transit, while VW will provide urban vans, like the Caddy, for both entities.

Additionally, Hackett and Diess said the automakers have signed a memorandum of understanding to explore co-developing technologies for electric vehicles, autonomous vehicles and mobility. The automakers didn't announce specifics for EVs, citing a competitive market and the need to work quietly, but Hackett said not to assume there hasn't been been an agreement.

Hackett said Ford doesn't expect this collaboration to lead to workforce reductions in any of its factories, and that the automakers hope to leverage existing facilities as much as possible. The partners emphasized the alliance does not involve any cross-ownership. Both companies, Hackett said, have "deep ties" to their home countries, and don't want that to change.

Volkswagen's Diess confirmed at the Detroit Auto Show on Monday that the alliance will include VW gaining access to Ford's midsized Ranger pickup truck platform. In the conference call, Diess confirmed that the next-generation VW Amarok would be based on this platform. The Amarok is still not intended for North America.

Hackett emphasized that Volkswagen and Ford vehicles built on shared platforms would maintain their own, separate brand identities, including driving dynamics and user interface. They would use the powertrains native to the platform, though, rather than expending additional resources to pair new powertrains to existing platforms.

In June 2018, Ford and VW revealed talks about an alliance in commercial vehicles and added they were looking at other joint projects.

Executives with both companies have talked about the potential savings of a deeper alliance, and VW officials have talked openly about building their vehicles in Ford plants, and Ford using the German automaker's electric vehicle platform.

The tie-up with Volkswagen serves as a big bet for Ford Chief Executive Jim Hackett since he took over in May 2017 from the ousted Mark Fields with the mandate to speed up decision-making and cut costs. Some analysts and investors have been frustrated by Ford's laggard stock price and a perceived lack of details from Hackett about the Dearborn, Michigan-based automaker's $11 billion restructuring.

Last week, Ford said it would cut thousands of jobs, discontinue building money-losing vehicles and look at closing plants as part of a turnaround effort for its unprofitable European business.

On Monday, Volkswagen said it would invest $800 million to build an electric vehicle plant in Chattanooga, Tennessee, prompting U.S. President Donald Trump to congratulate the city and state in a post on Twitter the following day.

But the White House has been pushing to end subsidies on electric vehicles that would help the plant and the alliance.