German automaker Volkswagen AG and Big Three U.S. automaker Ford Motor are considering teaming up on a range of projects, including jointly developing commercial vehicles, that would help them better compete in a global market that’s demanding better tech and more efficient, lower emission vehicles.
The two companies announced Tuesday they had signed an agreement to explore a strategic alliance. Any alliance between VW and Ford will not involve the companies taking ownership stakes, Ford said in an announcement Tuesday. News of this possible alliance followed Ford’s announcement to build an electric and autonomous vehicle campus in one of Detroit’s oldest neighborhoods.
The two automakers contend this potential strategic alliance will making them more competitive and better serve customers globally. Executives from VW and Ford are focused on an alliance to develop commercial vehicles, not necessarily cars and trucks built for consumers.
Thomas Sedran, who heads up VW Group’s strategy division, noted that the companies have “strong and complementary positions in different commercial vehicle segments already.”
“To adapt to the challenging environment, it is of utmost importance to gain flexibility through alliances,” Sedran said in a statement. “This is a core element of our Volkswagen Group Strategy 2025. The potential industrial cooperation with Ford is seen as an opportunity to improve competitiveness of both companies globally.”
By commercial, this means vehicles in fleets, delivery vehicles, and those used for commercial applications. The details end there. It’s unclear, for example, if this commercial vehicle alliance—if they come to agreement—would involve autonomous shuttles.
This deal will mostly likely center on finding ways to efficiently build and sell commercial vans that must meet increasingly strict environmental rules. A number of cities such as London and Paris are tightening regulations for delivery vans and other commercial vehicles. Some European cities are banning diesel, a commercial vehicle staple.
These restrictions have forced automakers to pivot towards electric and hybrid vehicles.
This is the first step in what promises to be a long process. For example, Ford announced in September it was “exploring” a strategic partnership with Mahindra around car tech in India. Six months later, the companies agreed to jointly develop new SUVs, and a small electric vehicle together.