So What’s Up With Ford? And Possibly VW?

Ford is proud of their heritage, and their recent ads and company decisions seem to want to draw on the past to forge a way to the future. An alliance is also rumored.

You may have been noticing lately that Ford has been in the media a lot. They have their new “Built Ford Proud” ads out (a play on “Built Ford Tough”), meant to highlight 115 years of innovation and the road ahead, while also battling stock troubles. Depending on how you invest money and digest information, you could view right now as an opportunity for Ford, and you could also look a Ford and wonder “what’s going on?”

My best guess is that Ford somewhat harmed themselves by explicitly announcing they were going to quit making all cars. Simple fact is, the public is dumb, and that statement at first sounds ambiguous. Ford isn’t going to stop making CARS, just sedans really. But in that fact lies another issue, for investors and consumers alike: you’re leaving yourself exposed.

While SUVs and trucks are high-profit vehicles, not everyone wants OR needs them. I feel its a risky gamble to offer only one or two types of product, as it leaves your company susceptible to a change in consumer tastes. A spike in gas prices may also be an issue for an all-SUV/truck Ford. Currently, the company doesn’t have many hybrids/EVs to fall back on, and the ones they do have are being discontinued. This looks very odd to the analytical public eye - such as investors. But this is where a tie-in with another company may make sense.

A Perfect Paring?

What would a Ford-VW alliance produce in the long run?

Volkswagen and Ford have been in talks about a commercial vehicle tie up recently. However, this always stood out as somewhat odd to me... Because surely the two aren’t ONLY going to collaborate on commercial vehicles. For one, Ford is quite a heavy-hitter in the commercial vehicle arena already. VW wouldn’t want any of that. But other resources? Oh yeah, you bet.

VW's Atlas Tanoak concept

VW has a mostly car heavy lineup and could benefit from a partner that has more SUVs and trucks to offer, especially with upcoming products like the Atlas Tanoak. That would be Ford. Ford could also pull from some of VW’s car designs and platforms so they aren’t left without a car product. That’s a win-win scenario. However, I personally think it goes even deeper than that. Hang on.

Remember, VW is on an aggressive EV mission like Ford with their “Electrify America” plan. Ford needs more EVs in their lineup, and just purchased the Corktown Michigan Central Station in Detroit for future autonomous vehicle and technology development. I believe that this tie-up will surely lead to new EV vehicles and infrastructure sharing between the brands. They are supposedly going to collaborate on autonomous vehicle projects, too. Thus, a solid alliance will make development times much shorter.

What If...

Top: Tesla Model X, Bottom: Ford "Mach 1" SUV

With an abundance of resources, there’s another thought I’ve had on this potential alliance, which would be one of the world’s largest. What if VW and Ford tried to purchase or work in some way with Tesla? Tesla has self-driving capable “Autopilot” software in their cars, which would surely aid Ford in their autonomous vehicle development strategy. Also, Tesla is what I call a “high visibility” brand, which would lend some additional star power to a VW-Ford portfolio (as if Audi and Bugatti aren’t enough). Alone, the two brands may not have enough resources to make any sort of large investments in Tesla - Elon Musk probably wouldn’t have it. But by coming together, they just might. And with access to the Electrify America charging infrastructure and more manufacturing expertise, Tesla would have some benefit to collaborate in the alliance and continue its growth.

Just a thought. We’ll see how this whole scenario shakes out.

Bold Moves

Ford is definitely trying to think outside of the box. I think their plans could work, with a little bit of fine tuning. Clashes between company cultures may pose an issue in an alliance with VW, who desperately needs to improve its public image following Dieselgate while Ford is aggressively chasing profit. Also, Ford’s stock is a concern, and their product offerings slightly one-dimensional. Still, Ford is still a company worth watching and considering for future investment. Sometimes the only way to win is to take a chance - and Ford is boldly doing that.

For further alliance readings:

• https://www.usatoday.com/story/money/cars/2018/06/20/ford-volkswagen/717058002/
• https://www.bloomberg.com/news/articles/2018-10-26/ford-says-talks-with-vw-are-freewheeling-to-reverse-fortunes?srnd=hyperdrive

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