Ford-VW

On Friday, Ford and Volkswagen announced their partnership and plans to expand the seven-month-old alliance to include autonomous and electric vehicles. As a part of the deal, Ford-VW will invest a whopping $2.6 billion in Argo AI. It is the autonomous vehicle startup based in Pittsburgh that practically no one had heard until Ford’s own $1 Billion investment in 2017.

Ford-VW will invest $1 billion in cash as well as $1.6 billion in assets that will include the auto giant’s Munich-based Autonomous Intelligent Driving team. After the deal is done Argo’s post-money valuation is going to be over $7 billion. In January, the two auto industry powerhouses announced they would join forces to build pickup trucks and commercial vehicles. But today’s announcement is much of a riskier step as it expands the partnership to include two technologies autonomy and electrification.

The deal also gives Argo a global reach, the company was founded by former Uber engineers with ties to Carnegie Melon University’s famed robotics lab. Since then, they have been testing its cars with Ford’s backing in Pittsburgh, Detroit, Miami, and Washington, DC. Now it can also deploy its vehicles on European roads under VW’s guidance.

Also, Ford will gain access to VW’s electric-vehicle MEB platform, or “Modulare E-Antriebs-Baukasten” German for “modular electric drive matrix.” The automaker aims to deliver more than 600,000 European vehicles using the MEB architecture over six years, along with a second all-new Ford model for European customers under discussion. This move would help Ford to comply with European government mandates that push electrified vehicles and strict emissions standards.

Both the companies have been in talks for months regarding how to share the enormous costs associated with electric and self-driving vehicles. All the small and big companies are racing to build on Tesla’s success in electric vehicles by mass-producing battery-powered SUVs and sedans. To be honest, both Ford and Volkswagen are not going to merge. The two automakers would have separate autonomous-vehicle businesses under the deal and unique go-to-market strategies, but both will use Argo software.

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By sharing technology and data as well as cost, Ford-VW hopes to speed up the deployment of electric and self-driving cars onto public roads. Both companies are focusing on complementary approaches to these new technologies that are changing the industry. On the other hand, Ford has teased its first serious EV which will launch in 2020 as part of a more modest rollout. The company has said it plans to spend $11.5 billion on electric car development and production over the next few years.

Ford is putting efforts and trying to make a name in the “mobility” space, investing in ride-sharing, bike-sharing, and even scooter-sharing programs. As for today’s announcement, this is an important step for both the companies but mostly for Argo.

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