VW and Ford expand partnership on AVs, EVs

Dive Brief:

Volkswagen (VW) will invest around $2.6 billion in Ford-backed autonomous vehicle (AV) startup Argo AI, an expansion of a partnership that will help the two auto giants collaborate on AVs and electrification.
VW will fold its existing Autonomous Intelligent Driving (AID) company and its more than 200 employees into Argo AI, in addition to making a cash investment, according to a press release. The full valuation of Argo AI, which has been testing its technology on public roads in the U.S., will be more than $7 billion.
Ford will also use VW technology to develop an electric vehicle (EV) for the European market, which it hopes to release in 2023.

Dive Insight:

Ford and VW first announced their partnership in January with a memorandum of understanding to "harness our collective resources, innovation capabilities and complementary market positions" to work on AVs, EVs and other mobility services. The companies' combined resources are meant to help Argo AI recruit and retain the best talent and dip into a deep finance well to accelerate AV technology.

With backing from Ford, Argo AI has ramped up testing of its self-driving cars in Detroit; Pittsburgh; Palo Alto, CA; Miami; and Washington, DC, with an eye towards supporting a Ford self-driving taxi outfit. Argo AI recently announced its third-generation vehicle with upgraded sensor capability, and said last month that it would invest $15 million for a new AV center at Carnegie Mellon University. The existing AID staff will form Argo’s new European office, according to a VW spokesman, although there are no details about the plans for that office.

In a statement, Ford President and CEO Jim Hackett said Ford and VW will "remain independent and fiercely competitive in the marketplace." Still, it’s the latest partnership between major automakers as they seek to adapt to new technology and mobility trends. Daimler AG and BMW Group announced in March they were teaming up on AV technology. While General Motors and Honda have partnered to build a self-driving car and Toyota has joined forces with SoftBank, one of the country's biggest tech companies.

A McKinsey & Company analysis found that, in order to hold a "defensible position" in autonomy, connected infrastructure, electrification and shared mobility, an automaker would need to invest nearly $75 billion. "No single player," the analysts wrote, "will have the resources or capabilities to capture, defend and win in manufacturing, designing, mechanical engineering, software development, artificial intelligence, and all the other areas associated with the mobility changes," making partnerships a necessity going forward.