Ford and VW Deepen Ties, with Focus on Europe

NEW YORK – Ford Motor Co.’s expanded alliance with Volkswagen AG will give the US auto maker an important corporate ally in Europe, where tougher emissions rules are raising costs significantly for the auto industry.

The two global car-manufacturing giants agreed Friday to jointly develop an electric car for the European market, using VW’s existing technology for battery-powered vehicles.

Ford said it would build about 100,000 vehicles a year with VW’s electric-car tool kit, starting in 2023.

Separately, VW also will invest $2.6 billion in Ford’s self-driving car partner, Argo AI, valuing the Pittsburgh-based startup at $7 billion.

Argo will work with both car companies to develop self-driving technology that each can use once they roll out autonomous vehicles in a few years.

Car manufacturers are rushing to bring hundreds of new hybrid and battery-electric cars to market in Europe by next year to meet the continent’s new targets on greenhouse-gas emissions, which sharply limit tailpipe pollutants.

Analysts say a number of car companies are already at risk of failing to meet the targets and could face hefty fines.

In working with VW, Ford hopes it can develop an electric car for Europe faster and at a lower cost than it could on its own.

“Given the upcoming European regulation shifts, this should help Ford avoid emission fines,” said Colin Langan, an auto analyst for UBS Group AG.

Auto makers are pouring billions into electric-car development, even though most executives and analysts say they lose money on each one sold.

The technology isn’t cheap enough to sell at mass-market prices, largely because of the high battery costs.

Producing an electric car costs $12,000 more than making a comparable gasoline vehicle, and parity is likely still five years off, according to consulting firm McKinsey & Co.

Europe has proved challenging for Ford, which last month laid out plans to close factories on the

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