Ford and Volkswagen Expand Partnership
Ford and Volkswagen expand on their global collaboration to improve autonomous driving and electrification.
Ford Motor Company and Volkswagen AG Group are expanding their global alliance to include electric vehicles and will work with, and invest in, Argo AI to introduce autonomous vehicle technology in the U.S. and Europe. This move will help both companies serve their customers better while simultaneously improving their competitiveness, cost, and capital efficiencies.
Argo AI has plans for commercial deployment of its self-driving system (SDS) in Europe and the U.S. By working with Ford and Volkswagen, it can tap into their global reach to develop a sizeable geographic deployment potential. The autonomous platform company will focus on delivering an SAE Level 4 capable SDS that will be applied to ride-sharing and goods delivery services in dense urban areas.
“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,” Ford President and CEO Jim Hackett said. “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.”
The Volkswagen-Ford global alliance will not involve cross-ownership between companies and is governed by a joint committee led by the CEOs and senior executives of both companies.
Equal shareholders in Argo AI
Volkswagen will join Ford in investing Argo AI at a valuation of more than $7 billion, so they could independently integrate Argo AI’s self-driving system into their own vehicles. Volkswagen will invest $2.6 billion in Argo AI, with $1 billion in funding and $1.6 billion in its Autonomous Intelligent Driving (AID) company. Volkswagen will further purchase Argo AI shares from Ford for $500 million over three years. At the same time, Ford will invest the remaining $600 million from its original $1 billion cash commitment in Argo AI.
AID will become Argo AI’s new European headquarters in Munich, Germany, and will be Argo AI’s first engineering centre in Europe, and fifth globally. Its global headquarters will remain in Pittsburgh. Other engineering offices are in Dearborn, Mich.; Cranbury, NJ; and Palo Alto, Calif.
Collaborating with Ford, Argo AI is testing its new technology in Miami and Washington D.C., where they want to deploy commercial services.
“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 CEO and co-founder, Bryan 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.”
The remainder of the investment will be used as an incentive pool for Argo AI employees.
Ford to use Volkswagen MEB architecture
Ford will use Volkswagen’s Modular Electric Toolkit and electric vehicle architecture (MEB) for around 600,000 vehicles that will be in European markets starting 2023 and as part of its European strategy. A second Ford model for Europe is still being discussed.
Both companies will continue to expand research and development of electric vehicles to support the transition to more sustainable and affordable mobility and reach the Paris 2050 Agreement.
“Looking ahead, even more customers and the environment will benefit from Volkswagen’s industry-leading EV architecture. 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 Volkswagen CEO Dr. Herbert Diess. “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.”
Commercial van and pickup collaboration
Ford and Volkswagen will continue to improve their lineups of commercial vans and medium pickups in key global markets, with Ford engineering, sourcing and building these vehicles for both companies. The trucks will be available in markets in Europe, Africa, the Middle East, Asia Pacific, and South America as early as 2022. Ford’s larger commercial van will be available in European markets starting in 2022, while Volkswagen develops a city van for sale in Europe and other global markets.
Both companies project their customer demand for these vehicles to grow in the next five years; collaborating will allow better technologies and more innovation to reach their respective customers more quickly and with better plant capacity utilization.