Ford, VW announce multibillion-dollar partnership for self-driving cars and electric cars

Ford and Volkswagen announced Friday a widening partnership between the two automakers and detailed a multibillion-dollar partnership to develop autonomous cars.

Ford CEO Jim Hackett and Volkswagen CEO Herbert Diess announced the deal in New York and said VW would invest $2.6 billion in Ford-backed startup Argo AI to develop self-driving cars. The money for self-driving cars is part of a broader, non-equity partnership that was first announced in January and includes joint commercial vehicle production, including small pickups sold outside the U.S.

The two automakers will use Argo AI to develop commercial self-driving cars in the U.S. and in Germany, where the Pittsburgh-based company will absorb VW’s self-driving operations in Munich. According to a statement by Volkswagen, $1.6 billion of VW’s investment includes folding its operations in Munich into Argo in addition to $1 billion in cash.

Hackett described Argo AI’s development for both automakers, including shuttles in cities to public transportation and commercial delivery services. Argo AI has said it aims for a Level 4 self-driving system used in cities for commercial purposes, such as ride-sharing.

Ford and VW follow other carmakers such as General Motors, Honda, Mercedes-Benz, and BMW that have merged multibillion-dollar self-driving operations to spread expenses for costly self-driving development. GM and Honda invested billions in GM-backed Cruise; Mercedes-Benz and BMW this month announced a partnership to develop self-driving cars in Germany. Alphabet-backed Waymo and others have invested billions in software and hardware, forcing automakers to scramble to compete.

“There’s only going to be a few winners (in technology)…we can’t be late. And we have to be great,” Hackett said.

On Friday, the automakers also detailed a partnership to use VW’s electric-car platform to build cars for Europe. Ford will use the VW toolkit to sell electric cars in Europe, including one new nameplate, by 2023. Ford says it will use the platform to sell more than 600,000 electric cars in Europe over six years. Neither company discussed any plans to bring VW-built, Ford-branded cars to the U.S., although Hackett and Diess acknowledged that mandates in Europe dictated rollout there first.

“Europe is moving faster in the mandate for zero emissions. This is strategic for us,” Hackett said. He added that development in a Mustang-inspired crossover and electric F-150 are already underway, with the crossover to be exported around the world in the next decade.

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