In what seemed to be a long anticipated plan and rumored partnership, Ford and Volkswagen made a significant announcement in January 2018, one that is certainly a landmark deal between two competitors. The automakers announced that they had signed an agreement to develop both commercial vans and mid-sized pickup vehicles beginning in 2022. They also unveiled potential plans to collaborate on electric and self-driving vehicles.
In what is certainly far from a traditional move in the automobile industry, this partnership makes Ford and Volkswagen not only stronger together but also stronger as individual companies.
Why Develop a Partnership?
There is no doubt that the automobile landscape is changing. The increase in electric vehicles on the road makes it necessary for companies to invest in this new trend to stay aligned with the new consumer landscape. Between 2018 and 2025, the electric vehicle market is expected to grow at a compound annual growth rate of 22.3 percent. As such, the industry is racing not only to develop new technologies but also to produce a consumer vehicle that is accessible to mass markets. This has been seen through competitors of Ford and Volkswagen, with Tesla unveiling the new $35,000 Model 3 in February.
So, if this is the anticipated future of automobiles and self-driving cars, why develop a partnership?
Ford has stated that the company expects to spend $11 billion on restructuring the business, with Volkswagen planning on spending $50 billion. Much of this, undoubtedly, circles back to investments made in electric vehicles, self-driving cars, and other new, potentially unanticipated technologies.
Pooling and collaborating on such investments can not only make these two businesses stronger but also set the partnership on track to become a powerhouse in the electric vehicle and transformation market, competing in an innovative space for both businesses.
This partnership is far from new, and both Ford and Volkswagen have been transparent over the last year as conversations were developing. Back in June 2018, the companies announced that they were exploring how they could work together to advance both of their technological capabilities, though they will not pursue cross-ownership or stock arrangements at this time.
Timing Coincides with Executive Change
Throughout these conversations, both Ford’s and Volkswagen’s executive teams held mighty seats at the table. During this time, Ford Motor Company announced an executive change, one that would drive customer experience for the business. Elena Ford was announced as chief customer experience officer in October 2018.
The timing of this change could not be more appropriate. Amid a global restructure, along with ongoing discussions with Volkswagen, it was important to place a new position focused on the customer and including innovation and ease of service. She visited Dallas and spent the day on the service line at Sam Pack Ford. She experienced first-hand how integral Ford dealers are in their communities and how that translates to the customer.
Elena Ford is the great-great-granddaughter of Henry Ford and has grown alongside the business. She joined Ford in 1995 and has served as vice president of global dealer and customer experience since 2013. Seeing the business shift, as well as the evolution of the automobile industry overall, positions her well not only for this position but also for the key partnerships in store for Ford and Volkswagen.
Future Automobile Company Partnerships
As the industry changes and businesses transform, investments must be made in the future of driving. While Ford and Volkswagen are innovators in their own rights through the respective history of their businesses and the evolution of this landmark deal, this could pave the way for other automobile companies to follow suit.
In Elena Ford’s words, “We have a very clear picture about things that go well and things we can improve,” which perhaps indicates that this is not the final transformation that the business will go through in 2019.”
The future of Ford is in great hands with Elena as part of the core team leading the way.