Dearborn’s Ford, Germany’s VW to Collaborate on Electric Vehicle Development

Dearborn’s Ford Motor Co. and Germany’s Volkswagen AG today announced they are expanding their global alliance to include electric vehicles. The companies will collaborate with Pennsylvania’s Argo AI to introduce autonomous vehicle technology in the U.S. and Europe.
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Herbert Diess, Jim Hackett, Bryan Salesky
Ford and VW are partnering and investing in Argo AI to better incorporate electric and autonomous vehicles. From left: VW CEO Herbert Diess, Ford president and CEO Jim Hackett, and Argo AI co-founder Bryan Salesky // Photograph by Sam VarnHagen, courtesy of Ford Motor Co.

Dearborn’s Ford Motor Co. and Germany’s Volkswagen AG today announced they are expanding their global alliance to include electric vehicles. The companies will collaborate with Pennsylvania’s Argo AI to introduce autonomous vehicle technology in the U.S. and Europe.

Argo AI’s self-driving system is the first with commercial deployment plans for Europe and the U.S. and has the largest geographic deployment potential of any autonomous driving technology to date. VW and Ford each will integrate Argo AI’s technology into purpose-built vehicles to support the people and goods movement of both companies.

Argo AI’s focus remains on delivering an SAE Level 4-capable self-driving system to be applied for ride sharing and goods delivery services in dense urban areas.

Ford and VW will have an equal stake in Argo AI, and combined, they will own a substantial majority. The remainder will be used as an incentive pool for Argo AI employees. The full transaction is subject to regulatory approvals and closing conditions.

“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,” says Jim Hackett, president and CEO of Ford. “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.”

Ford will become the first additional automaker to use VW’s dedicated electric vehicle architecture and Modular Electric Toolkit to deliver a high-volume zero-emission vehicle in Europe starting in 2023. Ford expects to deliver more than 600,000 European vehicles using the architecture over six years, with a second all-new Ford model for European customers under discussion.

VW started developing its Modular Electric Toolkit in 2016, investing about $7 billion in the platform. The car marker is planning to use this platform to build about 15 million cars for the VW Group in the next decade.

For Ford, using VW’s Modular Electric Toolkit architecture is part of its more-than $11.5 billion investment in electric vehicles worldwide and supports its commitment to offer its European customers a broad range of electric vehicles while meeting sustainability commitments. It plans to design an all-new toolkit platform-based electric vehicle to start arriving in Germany in 2023. VW will supply toolkit parts and components.

“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,” says Herbert Diess, CEO of VW. “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.”

The alliance covers collaborations outside of VW and Ford’s joint investments in Argo AI, does not entail cross-ownership between the two companies, and is independent from the investment into Argo AI. The alliance is governed by a joint committee that includes Hackett, Deiss, and senior executives from both companies.

The companies are also on track to deliver medium pickup trucks globally, aiming to start in 2022, followed by commercial vans. Each will develop their own, and trucks and vans are expected to see increased popularity.

VW will commit $1 billion in funding to Argo AI and contribute its $1.6 billion Autonomous Intelligent Driving company, which includes more than 200 employees. VW will also purchase Argo AI shares from Ford for $500 million over three years. Ford will invest the remaining $600 million of its previously announced $1 billion cash commitment in Argo AI. The full transaction represents a valuation for Argo AI that totals more than $7 billion.

Argo AI plans to work closely with Ford and VW to provide autonomous vehicle technology.

“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,” says Bryan Salesky, co-founder and CEO of Argo AI. “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.”

Autonomous Intelligent Driving in Germany will become Argo AI’s new European headquarters and will be led by its current CEO, Karlheinz Wurm. With the addition of these employees, Argo AI will grow from 500 to more than 700 employees globally. This marks Argo AI’s first engineering center in Europe.

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