Ford and Volkswagen team up on self-driving and electric cars

Volkswagen and Ford announced plans Friday to work closely to develop electric- and self-driving vehicles, the latest automakers to partner in the face of massive changes rocking the auto industry.

Ford CEO Jim Hackett and Volkswagen CEO Herbert Diess appeared together on Wall Street Friday, building on a growing alliance between the two automakers first announced a year ago.

With this latest investment, Volkswagen has agreed to join Ford in investing in Argo AI, the autonomous vehicle platform company now valued at $7 billion. The company is working on developing self-driving technology for ride sharing and goods delivery services in dense urban areas.

Ford said it will become the first additional automaker to use Volkswagen’s electric vehicle architecture to build electric vehicles for the European market starting in 2023.

Ford does not currently sell any pure-electric vehicles. Volkswagen, still trying to overcome damage to its reputation from the diesel emissions cheating scandal, has announced ambitious electric vehicle goals: It pledged to make 40% of its fleet electric by 2030 and to be CO2 neutral by 2050.

Despite talking for months, joint efforts between the automakers had been modest until now. In January, they said they would develop commercial vans and medium-sized pickups beginning as early as 2022. But they said at the time they were investigating how to develop the next generation of vehicles, such as electric and self-driving cars.

The companies, two of the world’s major automakers, are racing to develop electric- and self-driving cars on their own while at the same time penning deals with rivals to help defray the cost of high-tech R&D.

Traditional automakers are worried they could be left behind by changes in the market brought about by tougher environmental regulations in Europe and elsewhere, as well as new players such as Uber and Tesla and potentially deep-pocketed tech companies such as Google parent Alphabet and Amazon.

The alliance follows a similar tie-up between German carmakers BMW and Daimler, which formed a joint venture that will develop driverless technology. Honda, for its part, has invested in General Motors’ self-driving car unit.

Fiat Chrysler and Renault recently held unsuccessful merger talks motivated by this same desire to share costs. Renault is already a part of an alliance with Nissan and Mitsubishi.