Volkswagen AG today announced that it is expanding its partnership with Ford Motor Corp. to include electric and autonomous vehicles. As part of the partnership, Volkswagen plans to invest $1 billion in Argo AI and add its $1.6 billion Autonomous Intelligent Driving unit.

Demand for passenger vehicles has flattened, and automotive and high-tech rivals have invested billions of dollars in self-driving car research and development. The expansion of Volkswagen and Ford’s partnership is the latest doubling down of betting on autonomous vehicles as the next big thing.

“While Ford and Volkswagen remain independent and fiercely competitive in the marketplace, teaming up and working with Argo AI on this important technology allows us to deliver unmatched capability, scale and geographic reach,” stated Ford President and CEO Jim Hackett. “Unlocking the synergies across a range of areas allows us to showcase the power of our global alliance in this era of smart vehicles for a smart world.”

Volkswagen, Ford merge self-driving efforts

Dearborn, Mich.-based Ford and Wolfsburg, Germany-based Volkswagen Group said their combined efforts will lead to a valuation of more than $7 billion for Argo AI. Ford invested $1 billion in Argo AI in early 2017. Volkswagen’s investments over three years will make it an equal partner, and the deal is subject to regulatory approvals.

The partnership is intended to enable each automaker to integrate Argo AI’s Level 4 Self-Driving System (SDS) into its vehicles. Last month, Pittsburgh-based Argo AI announced that it had donated $15 million to Carnegie Mellon University for a new Center for Autonomous Vehicle Research.

“Argo AI’s focus remains on delivering a SAE Level 4-capable SDS to be applied for ride-sharing and goods-delivery services in dense urban areas,” the companies said. Argo AI recently offered to share its high-definition maps for free with other autonomous vehicle researchers.

Ford has also partnered with Agility Robotics on a prototype delivery van in which Agility’s Digit bipedal robot helps solve the so-called last-mile delivery problem.

Talent, funding race

The massive investment is also part of a global race for self-driving car talent and access to potential markets. Volkswagen’s former Autonomous Intelligent Driving GmbH (AID) group in Munich, Germany, will become Argo AI’s European headquarters. AID will continue to be led by CEO Karlheinz Wurm, and it will add 200 employees to Argo AI’s existing 500 headcount.

“Argo AI is fortunate to have a world-class team due to our clear mission and the commitment to deployment from our partners, and together with AID employees, we will have a global workforce to attract even more of the best talent,” said Argo AI co-founder and CEO Brian Salesky. “Plus, thanks to Ford and Volkswagen, Argo AI technology could one day reach nearly every market in North America and Europe, applied across multiple brands and to a multitude of vehicle architectures.”

 

Volkswagen recently ended its relationship with Aurora Innovation Inc., which subsequently received $600 million from Hyundai Motor Group and Kia Motors Corp. last month.

This week was a big one for self-driving cars, with Luminar raising $100 million for more affordable lidar for self-driving cars.

In other significant investments, Apple acquired troubled Drive.ai for an unspecified amount last month. Amazon.com Inc. joined Aurora Innovation Inc.’s $530 million Series B funding round back in February, and Uber’s Advanced Technologies Group received $1 billion in April.

Electrification on the roads

Ford announced that it will use Volkswagen’s electric vehicle architecture and Modular Electric Toolkit (MEB) to design and build at least one high-volume electric vehicle in and for the European market by 2023. The companies will also jointly develop commercial vans and medium pickups starting in 2022 to share costs and “generate significant synergies.”

As automotive profits have fluctuated with changing consumer demand and rising technological expectations, Ford and Volkswagen hope that the joint research and development into autonomous and electric vehicles will keep them competitive.

“Our global alliance is beginning to demonstrate even greater promise, and we are continuing to look at other areas on which we might collaborate,” said Dr. Herbert Diess, Volkswagen CEO. “Scaling our MEB drives down development costs for zero-emissions vehicles, allowing for a broader and faster global adoption of electric vehicles. This improves the positions of both companies through greater capital efficiency, further growth and improved competitiveness.”