Ford Motor Company (F) and Volkswagen AG (VLKAF) have decided to join forces to make commercial vehicles for each other, observes Jim Powell, growth stock specialist and editor of Global Changes & Opportunities Report.
The deal is expected to be expanded soon to include electric cars that both companies expect will become the biggest part of their businesses. The companies are talking about long-term joint ventures, not a merger.
I think the Ford-Volkswagen deal will benefit both companies. The new technologies that are transforming the vehicle industry are too expensive for any single company — even one of the giants — to develop on their own.
In addition, no company is likely to create everything it will need to make the new vehicles possible. I think joining forces will prove to be the new trend in many industries that are being driven by advanced technologies.
Near-term, I think Ford has the most to gain from the alliance with VW because its stock declined the most during the stock market plunge — and after management’s decision to refocus the company on trucks and SUVs.
For patient investors, I think an investment in Ford at its current price will deliver excellent profits. Meanwhile, the company is paying an attractive 6.82% dividend.
Volkswagen AG is laying the groundwork for a major move into electric cars. The company recently created a universal chassis, called the MEB, that will be the platform for over a dozen electric vehicles to be introduced by 2025.
The efficiencies offered by building the MEB chassis for multiple uses should give VW’s vehicles significant price advantages in their markets.
VW has sold more vehicles globally than any other company for four straight years. The company’s ambitions for its electric vehicles are even greater. I think the company — that trades in the US — will remain very successful. Patient investors should see exceptional profits from Volkswagen.
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