VW, Ford team to develop new project
NEW YORK — Volkswagen will invest $2.6 billion into a Pittsburgh autonomous vehicle company that's mostly owned by Ford as the automakers who were once rivals deepen their partnership to develop driverless and electric vehicles in an ultracompetitive landscape.
The two automakers will become equal owners of Argo AI, and they plan to put autonomous vehicles on the roads in the U.S. and Europe as early as 2021, the companies said Friday.
The deal also includes a plan for Ford to use VW's electric vehicle platform to build zero-emissions cars for the European market starting in 2023.
Auto companies have been teaming up with each other as well as with big technology firms over the past few years to try to spread out the enormous costs of developing self-driving and electric vehicles. Ford CEO Jim Hackett expects the large crowd of players to be narrowed down.
“The stakes are high here,” Hackett said at a news conference Friday. “There's only going to be a few winners who create the leading platforms for the future. We cannot be late, Ford can't be late, and we have to be great.”
The decision to team up helps Ford and Volkswagen share the steep costs — and risks — of developing technology for driverless vehicles, and gives Argo AI more cash to attract talented engineers, crucial to success. It also will help the automakers pivot from cars that compete on engine performance to those where the unique characteristics of the driver experience will be driven by software.
“The auto industry, in the past we've been criticized for a lack of interest in working together, and what you're seeing with Volkswagen and Ford is a commitment to doing that on a number of projects,” said Joe Hinrichs, president of automotive for Ford.
What it comes down to for both the auto and technology companies is time and money. Driverless cars may not become commercially viable or generate revenue for years. There are also enormous up-front costs to change plants to produce electric vehicles.
Among the combinations announced in recent years:
-In May, a group of investors poured $1.15 billion into GM Cruise LLC, the autonomous vehicle unit of Ford's main competitor, General Motors. Cruise already had attracted investments from Honda and Japan's SoftBank and is valued by the companies at around $19 billion.
-Ride-hailing company Uber joined with Toyota to build autonomous vehicles last year.
-Chip maker Intel bought Israeli self-driving technology firm Mobileye for about $15 billion in 2017.
-In April, Ford said it would invest $500 million in electric vehicle startup Rivian to build a Ford vehicle on Rivian's underpinnings.
Auto and tech industry experts say partnerships like Ford and VW will become more common.
“One company cannot bankroll the development alone,” said Akshay Anand, executive analyst for Kelley Blue Book.
