Fiat has done all the development. And Ford has paid for it in return for Fiat agreeing to build the Ka for them at a modest cost. Final honing of the Ka; spring and damper rates, detail electrical spec etc. is being carried out by Ford, so that the driving experience of the Ka is Fordy and not Fiaty. Apart from structural development so much is carried over from the Panda that the development was not hugely expensive, in car terms, anyway.
The same was true of the new Bravo, which is really a Stilo in drag, and therefore not too expensive to bring to market. And the soon to arrive Lancia Delta is built on an extended Bravo floorpan, incorporating an identical windscreen and dashboard - and so it goes on...they all do it.
The present Ka is built on an old Fiesta floorpan, but the 2008 Fiesta is too big to shrink down to a tiny car and anyway they probably haven't got the manufacturing capacity any more. Ford doesn't want its new small car to encroach on new Fiesta sales, and it wants it to be cheap. The deal should suit everybody as the 500 is mechanically simple, and therefore inexpensive to make, but if Ford uses Fiat's twin engine, and sticks a Ford badge on it, then Ford will get the kudos. We already have GM and Suzuki (GM too)using various Fiat Diesels and the public is none the wiser. It's just that Fiat engines are good, and to give them away cheaply would, in my opinion, be a terrible mistake.
