General Motors and Ford Motor Company may be on the road to collaboration on new engine and powertrain development, according to a report by the Detroit News. With gas prices reaching unprecedented heights and pick-up and SUV sales hitting new lows, the collaboration could be the one bright spot in both companies’ dismal financial outlook.
Neither company confirmed or denied the report, but insiders from both are providing information on the joint meetings and possible discussion points.
If the rumors play out, it won’t be the first time the two ailing giants have successfully shared technology. GM and Ford worked together two years ago on a fuel-saving, six-speed transmission that is now an integral part of both companies’ powertrain line up. This joint venture saved each company nearly half a billion dollars in R&D. In that light, the advantages of working together to develop an engine are obvious. New engine development costs can run as high as $1 billion – splitting the check makes a lot of sense.
When you consider that GM has already cut back on product development and R&D in order to cut costs, and it’s a near certainty that GM is going to work with someone to design and develop a new engine. But arch-nemesis Ford? Hard to imagine.
Evidently, GM is so desperate to get help with development, they’re willing to offer share their current four-cylinder engine development research as well as the desgins for the upcomming Volt plug-in hybrid, scheduled to go into production in 2010. The Volt, designed to run entirely off batteries for up to 40 miles, is going to be the next big thing in new vehicles. Clearly, GM is in dire straights to consider any plan that involves sharing the Volt’s technology.
Best guesses are that Ford would share their EcoBoost technology, which combines turbo-charging and direct injection, with GM. While Ford execs are rumored to be grumbling that GM benefits more from collaboration, it can’t be denied that Ford needs a plug-in hybrid soon. Toyota is rumored to be producing a plug-in Prius as soon as 2011, and upstart automaker Tesla is said to be offering an all electric sedan at about the same time.
If all the rumors play out, collobaration between Ford and GM would look like this: Ford shares their exciting EcoBoost engine technology in exchange for the Volt’s plugin hybrid technology. GM will be able to drop their per unit cost on Volt components (assuming Ford builds a plug-in electric of their own) and get an influx of revenue from Volt sales. Ford would get a jump-start on its own true plugin, and both companies would save money developing a new powertrain.
With the heart of today’s vehicles tucked into their onboard computers, both GM and Ford could share technology and still produce unique models programmed for distinctive markets. The collaboration won’t necessarily result in cookie-cutter cars, or clones of GM models popping up in Ford showrooms, or vice-versa.
The chain of events leading up to the reports of collaboration is fairly well documented. GM made the first move in June. Ford responded with a board of director’s approval of negotiations in July. The heads of both companies’ powertrain operations have reportedly met at least three times with talks described as “promising”—a word not often heard in connection with either.
In our minds, this all boils down to one thing: The differences between buying a GM and a Ford are getting smaller by the minute.
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