"Ailing Ford, GM Look to Save Costs by Partnering on Powertrain Development" Green Car Advisor

Ailing Ford, GM Look to Save Costs by Partnering on Powertrain Development

Right, a "Ford Volt."

General Motors Corp. and Ford Motor Co. are discussing a possible collaboration on new engines and other powertrain technologies in an effort to split research and development costs, The Detroit News reported today, citing sources at both companies.

A deal could give Ford access to GM's Volt technology -- if it becomes commercially viable. It could also help GM offset cuts to its product development budget.

GM first approached Ford more than a month ago, two sources familiar with the situation told the newspaper. GM told Ford that it was willing to discuss a wide range of possible collaborations, including .

The matter went to Ford's board of directors last month, which voted to authorize negotiations with GM.

Since then, there have been at least three meetings between the two companies involving Barb Samardzich, Ford's head of powertrain operations, and her counterpart at GM, the News reported. No agreements have been reached, but the talks were characterized as promising.

Engines and transmissions represent a huge portion of the development cost of a new car or truck. Developing an entirely new engine can cost $1 billion. Splitting those costs with another car company can save an automaker $500 million. A new transmission can easily cost $800 million -- or $400 million if the development costs are split.

Ford and GM successfully collaborated on the development of a fuel-saving six-speed transmission that is rapidly becoming the backbone of both companies' powertrain lineup.

Analyst Jim Hall of 2953 Analytics LLP told the News that GM is ahead of Ford on four-cylinder engine development, but added that GM could learn a lot from Ford about combining turbo-charging and direct injection -- the technologies behind its EcoBoost technology, which promises to deliver more power and better fuel economy.

Then there is Volt, GM's promised vehicle that runs primarily on electricity.

While it remains to be seen whether GM will succeed in bringing it to market, Ford is reportedly keen on getting access to the technology if it does. And Hall told the newspaper that is something GM should welcome.

Doing so would provide GM with much needed revenue while at the same time reducing its own piece-cost for Volt components. It would be a way for GM to create economies of scale not possible with its own products alone, and would ultimately reduce the cost of such technology for consumers.

Scott Doggett, Contributor