A broader alliance expected between Ford Motor Co. and Volkswagen AG has the potential to transform the global automotive industry and increase pressure on other carmakers in areas including electric and autonomous vehicles, analysts said.
If VW agrees to allow Ford to license its electric-vehicle platform, it will help the German automaker hit 2020 earnings estimates by "guaranteeing" some profit from EVs next year, and also would likely provide VW with "an unassailable scale advantage in the market," said Angus Tweedie, a Citigroup analyst. Such a deal could boost VW's output of battery-electric vehicles in Europe next year to 400,000 units, he wrote in a report.
Ford may leverage its access to VW's electric-car architecture to comply with stricter European emissions rules. The U.S. automaker may make "cost-plus" payments to VW on the order of €400 million ($450 million) in 2020 alone, Tweedie estimated.
Credit Suisse said an an expanded alliance between the two companies could combine VW's strength in EVs with Ford's in autonomous vehicles, allowing both to "address these challenges in a more capital-efficient manner." Broader cooperation will force other mass-market carmakers to "seek more synergies" to remain competitive, analysts led by Daniel Schwarz wrote in a report.
"A VW investment in Ford's AV business would provide a crucial public validation data point (similar to SoftBank's investment in GM Cruise), and could be just the start of external capital for Ford's AV business," Schwarz said. VW and Ford are the Credit Suisse analysts' top auto stock picks in Europe and the U.S.