In July 2019, Ford CEO Jim Hackett (left), Argo AI CEO Bryan Salesky (middle) and Volkswagen CEO … [+]
Nearly a year after it was first announced in New York, the collaborative investment deal between Ford, Volkswagen and Argo AI officially closed today. Pittsburgh-based Argo AI now has a foothold in Europe as Volkswagen’s Autonomous Intelligent Driving (AID) group moves over to become part of Argo.
Under the terms of the deal, Volkswagen agreed to invest $1 billion in cash into Argo and contribute the Munich-based AID group. Under the terms of the deal, VW and Ford will each hold equal, minority stakes in Argo that combine to give the automakers majority control. The remainder of the equity belongs to the Argo founders and employees.
Founded in late-2016 by Bryan Salesky and Pete Rander, veterans of the Google GOOGL and Uber UBER automated driving programs as well as Carnegie Mellon University, Argo got an initial investment from Ford in early 2017. Since then Argo has been working to develop the automated driving system that Ford had planned to launch into production in 2021. During its first quarter 2020 earnings call, Ford announced that it was delaying the commercial launch of its automated vehicles (AV) until 2022 as it reconsiders its go-to-market strategy.
VW hasn’t given a firm date for a commercial AV launch but at the initial investment announcement in July 2019, it said it would come later than Ford’s launch, likely in 2022 or 2023. Like Ford, VW is developing vehicle platforms to integrate the Argo system into and the automaker will decide how to deploy the technology.
Given the technical and business model challenges of developing and deploying automated vehicles, this partnership makes sense for all three companies. By sharing the technology, Ford and VW can spread the development costs across both their fleets. Those fleets are expected to be significantly smaller in the first half of the 2020s than was anticipated just a few years ago so this will provide more scale. The latest Guidehouse Insights Automated Driving Vehicles forecast projects only about about 300,000 highly automated vehicles annually by 2025 and most of those are projected to be for goods delivery.
Annual LD Automated Vehicle Deployments by use case, 2020-2030
With the VW money coming into Argo, Ford won’t have to increase its investment anytime soon, leaving it free to focus on developing the business models and customer experience aspects. That’s going to be crucial in the coming years as the world hopefully emerges from the current pandemic. The way people get around and commute (or not if they shift to remote work on a permanent basis) will have a big impact on the types of vehicles that are needed and the services that are deployed. That’s why Ford delayed its launch plans.
It also benefits Argo which is now the first AD development company to have commercial partners across both North America and Europe. The addition of the AID team as Argo Munich, gives the company more than 1,000 staff across its engineering facilities in Munich, Detroit, Palo Alto, Pittsburgh and Cranburg, NJ. Ford and Argo currently have test fleets in Miami, Washington, DC and Austin, the three cities where Ford intends to launch commercial services.
With more financial and engineering resources at its disposal, Argo is likely to remain one of the leaders in the effort to make automated driving a reality in the coming decade. Ford-Volkswagen-Argo Investment Deal Closes, Argo AI Expands to Europe