Ford, Volkswagen team up for autonomous autos

An electric-car platform developed by Volkswagen is displayed Friday in New York. Volkswagen and Ford said their joint venture plans to put autonomous vehicles on the road as early as 2021.
An electric-car platform developed by Volkswagen is displayed Friday in New York. Volkswagen and Ford said their joint venture plans to put autonomous vehicles on the road as early as 2021.

NEW YORK -- Volkswagen will invest $2.6 billion in 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 increasingly competitive 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 spread out the enormous costs of developing self-driving and electric vehicles. Ford Chief Executive Officer 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 upfront costs to change plants to produce electric vehicles.

Founded in 2016, Argo has 500 employees and is operating test vehicles in Pittsburgh, where it is based, and Miami. Its chief executive, Bryan Salesky, was formerly part of the Google team working on self-driving cars. In 2017, Ford agreed to take an undisclosed stake in the company and invest $1 billion over five years.

Argo is trying to develop technology that, within a few years, would allow cars to drive themselves without human help, but only in a contained area where conditions are more predictable. Cars that can drive autonomously anywhere are "way in the future," Salesky said.

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. "Partnerships will continue to ramp up in coming years, crossing boundaries most would not have envisioned even 10 years ago."

With electric vehicles, manufacturers are under pressure to release zero-emission cars in markets such as China and Europe to meet tougher pollution limits. Ford already has its own platform which it will continue to use for the majority of its electric vehicles, but the relationship with Volkswagen will help Ford develop smaller electric vehicles that are desired in the European market.

Information for this article was contributed by Neal E. Boudette and Jack Ewing of The New York Times.

Business on 07/13/2019

Upcoming Events