By Jeremy Schneider | NJ Advance Media for NJ.com | Posted July 12, 2019 at 09:30 AM | Updated July 12, 2019 at 11:02 AM
What was once rumored is now official: Ford is going to use VW's electric car platform, called MEB, for some of its own battery-powered vehicles. The announcement builds on the "global alliance" that the pair announced back in January. Ford says it will use VW's MEB to build "at least one high-volume fully electric vehicle" in Europe "starting in 2023." The MEB framework is already being used in a variety of yet-to-be-released EVs by Volkswagen and its subsidiary brands. Ford is the first external company beyond e.GO Mobile AG, a German EV startup, to use MEB, however.
Ford hopes to sell more than 600,000 vehicles using the MEB framework over a six-year period. A second model -- again, designed for Europe -- is under discussion at the company. "This supports Ford's European strategy, which involves continuing to play on its strengths – including commercial vehicles, compelling crossovers and imported iconic vehicles such as Mustang and Explorer," the company said in a press release. VW, meanwhile, has been working on MEB since 2016 and expects to build 15 million cars using the platform in the next decade. These include the camper-inspired I.D. Buzz and the still-under-wraps ID.3 hatchback.
In addition, VW is pouring $2.6 billion into Argo AI, a self-driving startup based in Pittsburgh. Ford has already invested in the company -- today's announcement means both automakers have an equal stake and, combined, a "substantial majority." Both companies plan to implement Argo AI's system into some of their future cars. Together, that should give Argo AI plenty of data to finesse its system and attract more automaker customers. Ford and VW say they will independently design "purpose-built vehicles to support the distinct people and goods movement initiatives of both companies." The specifics are unclear, but "purpose-built" suggests both companies are interested in driverless delivery and taxi vehicles.
Watch out, Tesla?
Ford Motor and Volkswagen officially announced the expansion of their global "collaboration" Friday morning, adding autonomous and electrified vehicles to the list of projects that began with January's announcement of a joint venture covering commercial vehicles.
The expanded alliance now will add two of the most significant, albeit costly, technologies expected to dramatically reshape the global auto industry over the coming decades. The high costs involved in the development of self-driving and battery-electric vehicles already have fostered a series of joint ventures and other collaborations across the auto industry, often involving traditional competitors like General Motors and Honda, as well as BMW and Daimler.
Ford and VW will remain "independent and fiercely competitive in the marketplace," the Detroit automaker's CEO Jim Hackett said in a statement released ahead of a joint Friday morning news conference in New York City. However, Hackett added, "Unlocking the synergies across a range of areas allows us to showcase the power of our global alliance in this era of smart vehicles for a smart world."
What one Ford official described as "the big deal" involves the development of autonomous vehicles, a technology proving more difficult to bring to market than many experts anticipated just a few years ago, said Sam Abuelsamid, a principle researcher with Navigant Research, a high-tech consulting company. It's also proving far more costly than expected, according to a study by AlixPartners released last month that estimated industry-wide spending on self-driving vehicles will climb to $85 billion annually by 2025.
Ford has already invested billions by, among other things, setting up an outpost in Silicon Valley to tap that region's know-how. In February 2017, it announced an investment of $1 billion in Pittsburgh-based Argo AI, a self-driving vehicle start-up.
Argo, which operates as an independent enterprise, focuses on what is known as "Level 4" autonomy, vehicles capable of operating without a driver, albeit in "geo-fenced" areas with well-marked roads and in reasonably good weather conditions. Argo already has test fleets operating in five U.S. cities, including Pittsburgh, Palo Alto, Detroit, Miami and Washington, D.C.
Volkswagen, according to a joint statement outlining the details of the expanded VW-Ford collaboration, "will invest $2.6 billion in Argo AI by committing $1 billion in funding and contributing its $1.6 billion Autonomous Intelligent Driving (AID) company." That's the automaker's in-house autonomous vehicle development unit which currently has 200 employees. VW will also purchase $500 million in Argo shares over the next three years.
In turn, Argo will now set up operations in Europe that will include localized testing.
"This is a real validation of what Argo is doing," said analyst Abuelsamid, since VW could have continued focusing on in-house development efforts. The German automaker recently ended its relationship with another self-driving start-up, Aurora.
Several senior executives who have discussed the Ford-VW plans in recent days said there were a number of potential advantages to the collaboration. Sharing costs is seen as a major plus, as is the scale of their combined operations which, in 2018, sold about 18 million vehicles worldwide.
There's also the global footprint of the two companies, noted Argo CEO Bryan Salesky, who said in the joint statement his company's "technology could one day reach nearly every market in North America and Europe, applied across multiple brands and to a multitude of vehicle architectures."
Friday's announcement also highlights the way Ford and Volkswagen plan to work together on the development of battery-electric vehicles, an area in which global automakers are expected to invest $225 billion from 2019 to 2023, according to the AlixPartners study.
VW so far has committed 9 billion euros, about $10 billion, to EV development. CEO Herbert Diess earlier this year upped his sales forecast for the coming decade from 15 million to 22 million battery-electric vehicles (BEV). The German company plans to have about 50 BEVs in production by 2025.
Ford, meanwhile, plans to invest $11 billion over the next five years, launching its first long-range BEV, a high-performance SUV, later this year. A mix of plug-in hybrids and all-electric models will follow. That now will include "at least one high-volume fully electric vehicle in Europe by 2023," the joint statement noted, based on the modular MEB platform VW developed to underpin the majority of its future battery cars.
Abuelsamid said he believes that is "just the beginning," and expects Ford will use the MEB "architecture" for still more products moving forward to gain even further economies of scale.
As is the case with so many of the current wave of auto industry joint ventures, alliances and other collaborations, the ones pairing Ford and VW won't be monogamous. Ford, for one thing, will move forward with a separate partnership with Rivian, a suburban Detroit battery-electric vehicle start-up in which it announced in April a $500 million investment.
(Bloomberg) -- Stocks in Europe climbed alongside U.S. equity futures as investors clung to their cautious optimism on the prospect of easier monetary policy. The euro edged higher for a third day.
The Stoxx Europe 600 rose as mining and chemicals shares rebounded. U.S. equity futures extended their advance after the S&P 500 index closed Thursday at a record high. Shares dipped in Australia and Japan and posted modest gains in Hong Kong, China and South Korea.
Government bonds extended their decline in Europe, heading for their worst week since at least October, after industrial output data for the euro region beat expectations. Treasury 10-year yields were steady near a one-month high.
The rally in risk assets is continuing to benefit from Federal Reserve Chairman Jerome Powell’s dovish comments this week, even after strong U.S. inflation data on Thursday offered a potential complication to policy makers when they set rates at the end of the month.
Meanwhile, weak data from both Singapore and China sent another warning shot to the world economy on the impact of trade tensions. The reports came after President Donald Trump complained that China hasn’t increased its purchases of American farm products, a promise he said he had secured at his G-20 meeting with the country’s president Xi Jinping last month.
Elsewhere, WTI oil headed for its sixth advance in seven sessions as operators in the Gulf of Mexico braced for Tropical Storm Barry.
Here are some key events coming up:
U.S. producer prices are due on Friday.
Here are the main moves in markets:
Stocks
Futures on the S&P 500 Index advanced 0.2% as of 10:14 a.m. London time to the highest on record.The Stoxx Europe 600 Index gained 0.2%, the first advance in more than a week.The U.K.’s FTSE 100 Index jumped 0.3%, the first advance in more than a week.The MSCI Asia Pacific Index dipped 0.1%.The MSCI Emerging Market Index decreased 0.2%.
Currencies
The Bloomberg Dollar Spot Index dipped 0.1%, the lowest in more than a week.The British pound climbed 0.1% to $1.2536, the strongest in more than a week.The Japanese yen advanced 0.1% to 108.39 per dollar, the strongest in more than a week.The euro gained 0.1% to $1.1265, the strongest in more than a week.
Bonds
The yield on 10-year Treasuries increased one basis point to 2.14% to the highest in a month.Germany’s 10-year yield advanced three basis points to -0.19% to the highest in six weeks.Britain’s 10-year yield gained one basis point to 0.845% to the highest in more than three weeks.
Commodities
Gold increased 0.2% to $1,407.28 an ounce.West Texas Intermediate crude gained 0.8% to $60.70 a barrel to the highest in more than seven weeks.
--With assistance from Adam Haigh.
To contact the reporter on this story: Laura Curtis in London at lcurtis7@bloomberg.net
To contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net, Todd White
For more articles like this, please visit us at bloomberg.com
©2019 Bloomberg L.P.
© Reuters. Passerbys walk past an electric screen showing Asian markets indices outside a brokerage in Tokyo
By Andrew Galbraith
SHANGHAI (Reuters) - Asian shares shuttled between small losses and gains on Friday as investors awaited China trade, lending and growth data, and as worries over Sino-U.S. trade tensions deflated optimism rooted in expectations of a Federal Reserve rate cut this month.
But while an anticipated Fed cut did little to spur gains in Asian markets, European equities were expected to open higher.
Pan-region Euro Stoxx 50 futures () were up 0.29% at 3,500, German DAX futures () were up 0.36% at 12,367 and futures () were up 0.34% at 7,475. Financial spreadbetters expect Paris' CAC () to open 0.38% higher.
Later on Friday, China will release June trade data, with analysts expecting exports to have fallen as weakening global demand and a sharp hike in U.S. tariffs took a heavier toll on the world's largest trading nation.
China is also due to release lending data on Friday, while second-quarter GDP figures are scheduled for Monday. The world's second-largest economy is expected to have slowed to its weakest pace in at least 27 years, raising hopes for more stimulus to fend off a sharper slowdown.
"You've got key data coming out, and I don't see why anyone would want to take a position until you've got that data," said Michael Every, head of Asia-Pacific financial markets research at Rabobank in Hong Kong.
MSCI's broadest index of Asia-Pacific shares outside Japan (), which moved in a narrow range through the day, was flat in the afternoon. Chinese shares rose, with the CSI300 () adding 0.85%.
Australian shares () dipped 0.3% and Japan's Nikkei stock index () started the day with small losses, but ended 0.2% ahead.
Underscoring the economic impact of global trade tensions, Singapore's economy grew at its slowest pace in a decade in the second quarter as electronics manufacturing output declined for a sixth consecutive month in May, and as exports saw their biggest decline in more than three years.
Amid the global slowdown, U.S. Federal Reserve Chairman Jerome Powell indicated on Thursday that a rate cut is likely at the Fed's next meeting.
Bets for such a cut remained strong despite a rise in U.S. consumer inflation in June, and helped to lift the on Thursday by 0.23% to end at a record closing high of 2,999.91 points.
While the Nasdaq Composite () fell 0.08%, the Dow Jones Industrial Average () also hit a record high close of 27,088.08 points, rising 0.85% on the day.
S&P 500 e-mini futures () were last up 0.23% at 3,011.
But a tweet by U.S. President Donald Trump on Thursday in which he said that China was not living up to promises it made on buying agricultural products from American farmers threatened to revive worries over trade.
"Markets have enjoyed a bit of a calm spot in the U.S.-China trade war saga since the announcement of a truce and restarting of trade talks at the G20 meeting. Unfortunately, headlines are once again beginning to emerge," ANZ analysts wrote in a morning note.
"While this wasn't a big market mover, it does serve as a reminder that things could flare up again," they said.
WEAK TREASURY AUCTION
U.S. Treasury yields had jumped on Thursday after demand was weak for a $16 billion 30-year bond auction and after the U.S. Labor Department said its consumer price index excluding food and energy rose 0.3% in June, the biggest increase since January 2018.
The poorly received auction had pushed the 30-year yield as high as 2.672% on Thursday, according to Refinitiv data.
Yields continued to rise on Friday. Benchmark 10-year Treasury notes () last yielded 2.1359%, up from a U.S. close of 2.12% on Thursday, while the 30-year yield touched 2.6511%, up from a close of 2.639%.
"The CPI report will have no material impact on Fed guidance nor have a significant influence on the great Fed debate around 25 or 50," said Stephen Innes, managing partner at Vanguard Markets Pte, referring to expectations of the size of a July rate cut.
"After all, the FOMC is unquestionably willing to let inflation run hotter after spending the better part of a decade trying to ignite those flames," he said.
The dollar fell 0.15% against the yen to 108.32
The (), which tracks the greenback against a basket of six major rivals, was down 0.15% at 96.900.
Oil prices picked up as U.S. oil producers in the Gulf of Mexico cut by output by more than half, in the face of a tropical storm and as tensions in the Middle East remained.
Global benchmark Brent crude () gained 0.68% to $66.97 per barrel. U.S. West Texas Intermediate (WTI) crude () was up 0.61% to $60.57 a barrel.
Gold prices, dulled by the stronger-than-expected U.S. consumer inflation data, regained their shine thanks to renewed trade worries and rate cut expectations.
