(Reuters) – ners Volkswagen and Ford Motor Co are at odds over how much the German automaker will be investing in the No. 2 U.S. automaker’s self-driving vehicle unit, with Ford seeking at least $500 million, people familiar with the negotiations said. Analysts and investors have focused on the potential benefits their alliance might produce, so a sign of problems in the negotiations is not good news.
FILE PHOTO: The President and CEO of Ford Motor Company Jim Hackett, poses with the Volkswagen CEO Herbert Diess at the North American International Auto Show in Detroit, Michigan, USA, 14 January 2019. REUTERS/Ben Klayman/File Photo
VW has resisted the agreement to invest in Ford’s autonomous vehicle unit, preferring instead to announce the companies will just work together in that area, according to the people familiar with the talks, who asked not to be identified. Some of the hesitation centers around questions about the Ford technology, an person said.
Ford, on the other hand, wants VW to invest at least $500 million, after previously looking for $1 billion, eyeing offers are larger competitor General Motors Co. reached with the japanese SoftBank Group Corp and Honda Motor Co Ltd, which raised $5 billion combined and valued GM’s Cruise self-driving vehicle unit to be $14.6 billion, the sources said.
VW and Ford have refused to discuss details of the talks.
“We are still in ongoing negotiations with Ford, which we are conducting a constructive and open,” VW said in a statement on Wednesday.
“Our talks with Volkswagen to continue,” Ford said in a statement. “The discussions are productive in a number of areas. We share updates of the details are firmer.”
In January, the companies announced that they would combine their efforts on commercial vehicles and pick-up trucks, and also signed a memorandum of understanding to work together on electric and self-driving vehicle technology, actions intended to give the automakers billions of dollars. The companies first revealed they were discussing such a deal in June 2018, and then said that it would be expanding beyond that.
VW Chief Executive Herbert Diess, and Ford CEO Jim Hackett both voiced optimism last month that the deal involving electric and autonomous vehicles would be completed, but on the condition that there is no timeline.
Another problem in the talks is how companies value VW’s autonomous technology assets that are added to the joint effort, the sources said.
Meanwhile, the companies have also negotiated Ford’s use of VW’s MEB EV platform, including the volume concerned, where VW would offer and how much Ford would pay for the use, the sources said. However, Ford does not use the platform until 2024 at the earliest, the people said.
Ford’s president of global markets, Jim Farley, who during the broadcast of the Detroit tv show “Autoline Detroit” on Monday, there were challenges around the use of VW’s EV platform, saying: the MEB is primarily designed for use in Europe and China, and for different consumer needs.
The discussions around together on EVs and AVs have advanced together so far, but are not necessarily linked, the sources said. Ford would walk away from a deal it felt unfair, a second person said.
The discussions have dragged on for months, but there is no deadline, and a third person said that they could be resolved shortly. The shares of both companies were each down less than 1 percent on Wednesday afternoon.
Sources earlier said the framework of a deal would VW invest in Ford’s AV operations, including the Argo AI business. VW, Europe’s largest carmaker, has earmarked $50 billion to develop electric cars, autonomous driving and new mobility by 2023.
The efforts of the VW and Ford on the enlargement of the alliance highlight the growing pressure on the global automobile manufacturers to manage the billions of dollars needed for the development of electric and self-driving cars, as well as the technology to meet the stricter emission requirements for millions of internal combustion vehicles that they will sell in the coming years.
There is significant investment activity in the industry in the past year around autonomous vehicles, a segment in which the Alphabet Inc Waymo self-driving-unit is considered to be the leader.
VW has been open about her desire to work with other companies around the self-driving cars and like the Ford alliance was announced Diess said in cooperation with an American company, it was logical, given the more advanced US regulations.
Interest in the sector remains high. On Tuesday, the sources said GM and Amazon.com Inc were in talks to take a minority interest in the electric automaker Rivian Automotive, potentially tapping at startup of the vehicle platform. The previous day, unmanned delivery startup Nuro said it raised $940 million from SoftBank.
On Feb. 7, startup, Aurora, of which the CEO earlier led Alphabet ‘ s self-driving program, brought more than $530 million in funding, including from Amazon. Aurora has contracts to help VW, Hyundai Motor Co Ltd China Byton develop AVs.
SoftBank bought the stake in GM’s Cruise unit for $2.25 billion in May 2018, and last October, SoftBank and Toyota Motor Corp said they would jointly develop self-driving car service. Honda followed SoftBank in October last year, agreeing to invest $2.75 billion in Cruise.
Reporting by Ben Klayman in Detroit, David Shepardson in Washington and Jan Schwartz in Hamburg, Germany; Editing by Nick Zieminski and Matthew Lewis