Volkswagen is expected this week to discuss expanding its alliance with Ford to include electric car production and driverless car development.

Ford CEO Jim Hackett and Volkswagen AG CEO Herbert Diess said during the Detroit auto show in mid-January that cost-sharing is essential to automakers racing to harness new technologies for the future, and a partnership between the world’s largest automaker and America’s iconic carmaker made sense for everybody.

Sources in Germany recently told Bloomberg and Reuters that VW will share its modular car platform for electric cars with Ford, known as the MEB platform.

Ford disclosed in late June it is developing electric vehicles for Europe but did not say whether it would use the VW platform. Meanwhile, VW is scheduled to debut its ID3 battery-electric compact car at the Frankfurt auto show in September. VW hopes to sell as many as 150,000 electric vehicles on the MEB platform by the end of 2020, Bloomberg reported.

Also, Volkswagen may invest in Ford's autonomous affiliate Argo AI. Such a partnership would be intended to rival Google affiliate Waymo and General Motors' Cruise unit in ambition and scope, Bloomberg reported. Ford and VW have discussed an approximate valuation for Argo of $4 billion, a person familiar with their deliberations told Bloomberg in February.

A VW spokesman declined to comment to the Free Press on details of a potential alliance. Ford and VW officials have said privately talks are progressing.

Ford spokeswoman Jennifer Flake said: "Our talks with Volkswagen continue. Discussions have been productive across a number of areas. We will share updates as details become more firm."

VW's supervisory board is due to discuss expanding its relationship with Ford during a meeting Thursday, according to Reuters and Bloomberg.

'Automakers worry'

Industry observers are watching closely as things unfold.

“These kind of partnerships mean little to the average consumer,” said Karl Brauer, executive publisher of Kelley Blue Book. “Industry watchers and the media will follow it closely, but most of the public, when they hear it in the news, will be more interested in how or when this kind of partnership will impact them. And nobody knows the answer to that right now.”

He added, “The average consumer is interested in purchase price, range and recharge time" for electric vehicles. "Beyond that, consumers aren’t really paying attention except for a sliver of the population that represent green car enthusiasts, which so far makes up less than 2% of new vehicle sales. For now, these alliances are an R&D and cost-saving play manufacturers are hoping pay off over the next 10-plus years.”

But this preparation is essential to remain competitive.

“There’s an unprecedented level of disruption facing the industry, and brands like Ford and Volkswagen are better prepared to tackle it as allies,” he said. “The race to master self-driving and electric vehicle technology is far from over, and it’s going to require a lot of resources just to stay competitive, let alone win.”

Future technology costs are brutal and alliances between competitors illustrate the intensity, analysts said. GM's Cruise, for example, has partnered with Honda and Japan's SoftBank, which have invested billions.

“The auto industry knows that its survival depends on transitioning to electric and autonomous cars. No one knows how to make a profit on them — not even Tesla, which sells more EVs than anyone else, but constantly has to turn to the capital and equity markets to keep the lights on,” said longtime industry observer John McElroy, host of “Autoline After Hours” on autoline.tv.

“Automakers worry that tech companies like Google, Apple and Amazon can easily outspend them and so they're joining forces to pool resources and split costs. Ford and VW are just the latest to team together and they won't be the last.”

'The tricky part'

Everyone agreed that caution is necessary, no matter what announcements unfold in coming days. Things are just too uncertain in too many ways.

“Ford and VW partnering on electric vehicles is emblematic of what is happening in the industry,” said Michelle Krebs, executive analyst at Autotrader. “We know electric vehicles, autonomous vehicles and new forms of mobility are the future, but no one knows precisely when they will take hold or when they will make money. It makes sense for companies like Ford and Volkswagen to split the burden of investment. It’s possible the combined forces could find a break through on technology and costs … The tricky part is always how well will they work together.”

No question, a strong partner helps Ford, said Jessica Caldwell, executive director of industry analysis at Edmunds.

“Ford isn't necessarily playing catch-up, but partnering with VW certainly puts them on a faster track,” she said. “While there are some automakers who may seem to be further down the autonomous path, the truth is a lot of this technology is still years away from becoming mainstream. This is the time when forging partnerships is critical, before any single company has really gotten too far ahead.”

She added, “On paper, a partnership between Ford and VW makes a lot of sense. Ford and VW's strengths and weaknesses complement each other, and given how expensive research and development is for autonomy and electrification, collaborations like this between automakers are becoming essential. The catch is that Ford and VW are very different companies, so to make this work they're going to have to figure out how to work through the culture clashes that have made other automotive joint ventures go sideways.”

After an intense courtship that began in the summer of 2018, Ford and Volkswagen AG announced Jan. 15 that the car companies are moving ahead together on delivering medium pickups for global customers starting in 2022, with plans to follow up with commercial vans in Europe.

The agreement is expected to provide scale and efficiency savings for both companies starting in 2023.

More:Ford, VW form alliance to develop commercial vans, pickups globally for 2022

More:Ford and Volkswagen flirting with relationship possibilities

More:Ford was offered Volkswagen for free after WWII — and passed

Contact Phoebe Wall Howard: 313-222-6512 orphoward@freepress.com.Follow her on Twitter@phoebesaid. Read more on Ford and sign up for our autos newsletter.