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VW completes $2.6B self-driving deal connected with Ford

Eric D. Lawrence, Detroit Free Press on

Published in Business News

Volkswagen has finalized a deal that will see it invest the equivalent of $2.6 billion in Argo AI as part of a partnership with Ford to develop self-driving technology.

The news was announced Tuesday.

Ford, in a posting by executive John Lawler, said the arrangement finalized Monday involving the Pittsburgh-based startup would allow the Dearborn automaker to share the cost of self-driving technology development with Germany's VW.

"We've committed to spending more than $4 billion through 2023 on the development of our self-driving service. A large part of this investment is dedicated to developing the self-driving system. With Volkswagen's investment in Argo AI, we will now share the cost of developing Argo AI's technology," said Lawler, CEO of Ford Autonomous Vehicles and vice president of Ford's Mobility Partnerships.

Lawler's posting said sharing the costs won't reduce Ford's spending in the self-driving space but would allow it to reallocate money "toward our unique customer experience including transportation as a service, software development and fleet operations."

Ford and VW made their initial announcement of the plan last July.

The deal brings VW's Munich-based self-driving division into the Argo AI fold, upping its employment total to 1,000 people worldwide, according to a blog post on Argo AI's website. Munich becomes the company's fifth engineering center, adding to operations in Pittsburgh, the Detroit area, Palo Alto and Cranbury, N.J. The company said it has fleet operations in Miami, Washington, D.C., and Austin, Texas.

Dan Pierce, a spokesman for Ford Autonomous Vehicles, said the $2.6 billion VW investment breaks down as $1 billion in funding plus a $1.6 billion estimate for the value of the Munich-based self-driving division.

The Argo AI announcement noted that the deal "differentiates us as the only self-driving technology platform company with partnerships and commercial agreements for deployment across the U.S. and Europe."

 

Lawler referenced the impact of the coronavirus pandemic, which has hit automakers hard, but he stressed the rationale behind the deal.

"Working together with Argo AI positions both Ford and Volkswagen to better serve our future customers while improving cost and capital efficiencies. While the uncertainty of today's business environment has created challenges for partnerships and investments in the self-driving space, this collaboration remains on track and will be a positive development for everyone involved," Lawler said.

He noted that "Ford will remain independent and fiercely competitive in building its own self-driving service."

A VW news release last week also referenced a few other projects likely to come from the partnership with Ford, including the use by Ford of VW's Modular Electric Toolkit for an electric vehicle in Europe, a midsize pickup developed by Ford and adapted by VW and development of two vans.

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