DETROIT -- An expanded alliance between Ford and Volkswagen Group that includes a partnership in Ford's self-driving unit Argo AI could redraw the balance of power in autonomous vehicles.
A Ford-VW collaboration with Argo, the Pittsburgh-based start-up that has spearheaded Ford's self-driving development since 2017, could help reduce the engineering and financial burdens on each automaker. It could also accelerate the deployment timetables of both, which have said they plan to put autonomous vehicles into operation in 2021.
Argo has been overlooked as Waymo, Alphabet's self-driving subsidiary, has deployed its robovans, and General Motors' Cruise Automation subsidiary has raked in billions of dollars in investments.
With VW, the world's biggest automaker by sales volume last year, Argo would be aligned with a partner with substantial scale and resources.
Ford and VW said on Friday that VW will invest $2.6 billion in cash into Argo and contributing its European self-driving unit, valued at $1.6 billion. The investment deal gives Argo a valuation of just over $7 billion, one of the highest in the autonomous vehicles sector.
VW is buying the Argo shares for another $500 million from Ford, which acquired a majority stake in the startup in 2017. VW and Ford then will each have a minority stake, as will Argo founders Bryan Salesky and Peter Rander and a pool of Argo employees.
VW, whose Audi unit heads the German automaker's Automated Intelligence Driving (AID) unit in Munich, reportedly considered a $13.7 billion investment last year in Waymo for a 10 percent stake that would have valued Waymo at $137 billion.
VW recently concluded a development agreement with Aurora, the Silicon Valley self-driving start-up that includes Hyundai and Fiat Chrysler Automobiles among its customers. Fiat Chrysler also supplies vehicles to Waymo.
Aurora is valued at $2.5 billion. Investors include Hyundai and Amazon.
Argo, which is majority-owned by the No. 2 U.S. automaker, is part of Ford Autonomous Vehicles. Ford set up the unit in 2018, pledging to invest $4 billion until 2023.
