Ford, VW expand global collaboration to AVs and EVs
In addition to commercial vans and medium pickups announced earlier, VW will join Ford in investing in Argo AI for AVs, and Ford will use VW’s Modular Electric Toolkit for at least one high-volume fully electric vehicle for Europe in 2023.
Ford Motor Co. and Volkswagen AG announced they are expanding their global alliance to include electric vehicles (EVs) and autonomous vehicles (AVs) in the hopes of positioning both companies to better serve customers and improve their competitiveness and cost/capital efficiencies.
On July 12th in New York City on Wall St., Ford President and CEO Jim Hackett and VW CEO Dr. Herbert Diess, along with Argo AI CEO Bryan Salesky, detailed the AV news, with VW joining Ford in investing in Argo AI, the Pittsburgh-based autonomous vehicle technology platform company. Ford and VW will have equal stakes, and combined will own a substantial majority, in Argo AI. The remainder will be used as an incentive pool for Argo AI employees.
Specifically, VW will invest $2.6 billion in Argo AI, with $1 billion in funding and the other $1.6 billion by “contributing” its Autonomous Intelligent Driving (AID) company, which includes more than 200 employees, most of whom have been developing self-driving technology for the Volkswagen Group. 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.
AID will become Argo AI’s new European headquarters based in Munich, Germany, and will be led by AID’s current CEO Karlheinz Wurm. With the addition of AID employees, Argo AI will grow from 500 to over 700 employees globally. The new location marks Argo AI’s first engineering center in Europe and the fifth globally in addition to its global headquarters in Pittsburgh, PA, and others in Dearborn, MI; Cranbury, NJ; and Palo Alto, CA. The company is also testing its technology in Miami and Washington, D.C., where together with Ford they plan deployment of commercial services.
Argo AI says its self-driving system (SDS) is the first with commercial deployment plans for Europe and the U.S., and the automakers’ global reach means the platform has the largest geographic deployment potential of any autonomous driving technology to date.
Both automakers see significant potential and profitable growth by tapping new business areas tied to autonomous technology and delivering fully integrated self-driving vehicles that can be manufactured at scale for safe, reliable, and durable deployment. They intend to integrate the SDS into vehicles to support people and goods movement, which aligns with Argo AI’s focus on delivering a SAE Level 4-capable SDS for ride sharing and goods delivery services in dense urban areas.
“With Ford and Volkswagen, we're deploying in a more thoughtful way by ensuring that we're lifting up cities, being a problem solver, and making communities safer,” said Salesky. “We believe that Argo offers a unique value proposition and delivering on this vision.”
Argo is building for scale: “Everybody says this, but few are actually doing it from the beginning,” he added. “We have architected our software to be production quality, which facilitates speed of development. We're developing automotive grade sensors and compute. We're tightly collaborating with our partners for a fully integrated product.”
Working hand-in-hand with the product development teams at OEM partners “was one of the most important aspects of the approach that Pete [Rander] and I, when we cofounded Argo, decided from the beginning,” said Salesky.
Argo is embracing a multi-city testing approach.
“Every city is different,” he said. “We want our product to deliver on the needs of the community. These deployments will be city-by-city, street-by-street. We're now testing in five very different urban locations—Pittsburgh, Detroit, Palo Alto, Miami, and Washington DC. We hope next year to do some to do something in Europe.”
Argo also has an eye on the future, with a focus on finding and retaining the best people. It is working with leading universities to continue to train its staff and conduct the cutting-edge advanced research that's necessary to build out a pipeline of talent.
“We have three faculty members on our team serving as principal scientists who are leaders in their fields--two from Carnegie Mellon and one from Georgia Tech,” said Salesky. “Plus, we recently announced the formation of the Carnegie Mellon Argo AI Center for Autonomous Vehicle Research.” (See https://bit.ly/32AiaxJ for more on that collaboration.)
Another key investment for Argo is its LiDAR development efforts based on its acquisition of Princeton Lightwave in 2017: “Our in-house LiDAR team is working on advanced sensing capabilities that will go far beyond what is on the market today and is necessary to build a safe driving system in the complex areas that we're operating in,” boasted Salesky.
On the EV side, Ford will become the first automaker to use Volkswagen’s dedicated electric-vehicle modular electric toolkit (MEB) for a high-volume vehicle in Europe starting in 2023. Ford plans to design its MEB-based EV in Köln-Merkenich, Germany, with VW supplying MEB components as part of the collaboration.
Ford expects to deliver more than 600,000 European vehicles using the MEB architecture over six years, with a second all-new Ford model for European customers under discussion. This supports Ford’s European strategy, allowing it to focus on its strengths, including commercial vehicles, crossovers, and imported iconic vehicles such as the Mustang and Explorer.
Volkswagen started MEB development in 2016, investing about $7 billion. It is planning to build 15 million cars on the component set for the Volkswagen Group in the next decade. Use of MEB is part of Ford’s more than $11.5 billion investment in EVs worldwide.
“Scaling our MEB drives down development costs for zero-emissions vehicles, allowing for a broader and faster global adoption of electric vehicles,” said Diess. “This improves the positions of both companies through greater capital efficiency, further growth and improved competitiveness.”
Ford and VW also remain on track with their previously announced cooperation plan in commercial vans and medium-duty pickups in key global markets. Current models include Ford’s Transit and Ranger as well as VW’s Transporter, Caddy, and Amarok. Ford will engineer, source, and build pickups for both companies for customers in Europe, Africa, the Middle East, Asia Pacific, and South America as early as 2022. It will also engineer, source, and build larger commercial vans for European customers starting in 2022. Volkswagen will develop, source, and build a city van for sale in Europe and other select global markets.