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June 02, 2020 12:01 AM

VW finalizes investment in self-driving tech company Argo AI

Pete Bigelow
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    Jennifer Vuong

    Eleven months after Volkswagen Group announced a $2.6 billion investment in self-driving startup Argo AI, the deal has closed.

    Executives from the two companies and Ford Motor said a regulatory-review process had been completed and VW’s investment was finalized Monday.

    For companies large and small, the ongoing pandemic had brought economic uncertainty across the spectrum of investments in self-driving technology. While there had been no signs the pending deal had been threatened, Monday’s closing nonetheless helps the three companies push ahead their respective AV efforts.

    One of the linchpins in the deal is the transfer of Audi’s Autonomous Intelligent Driving division, valued at $1.6 billion, to Argo AI. Now that the deal has closed, Argo can begin integrating the division’s 200 employees and self-driving technology into their operations. That work begins this week, and will see AID become Argo’s Munich-based European hub.

    “Our self-driving system has the largest geographic deployment potential of any autonomous driving technology to date,” wrote Bryan Salesky, CEO of Argo AI.

    Munich becomes the company’s fifth engineering center, joining Pittsburgh, Detroit, Palo Alto, California, and Cranbury, New Jersey. The company maintains fleets in Miami, Washington D.C., and Austin, Texas, three cities where Ford is planning commercial launch of a taxi and delivery service underpinned by self-driving technology in 2022.

    Ford and Argo AI have been intertwined since February 2017, when the automaker announced a $1 billion investment in the startup that would be made over five years.

    Later, the company said that it would spend $4 billion in its overall autonomous-vehicle business efforts by 2023, which have included starting a subsidiary, Ford Autonomous Vehicles, which houses the company’s commercial efforts.

    Though there’s close collaboration between Ford and Volkswagen in a number of areas across their respective businesses, the companies are developing their own distinct businesses and vehicles based on the Argo self-driving system.

    Now that Argo has more cash in hand from the formal closing of its deal with Volkswagen and can forge ahead on its own efforts to develop its virtual driver, that may give Ford flexibility in how it earmarks its $4 billion allotted for AVs.

    John Lawler, the new CEO of Ford Autonomous Vehicles and a Ford vice president, writes the company is “reallocating” some portion of that figure toward designing customer-friendly user experiences, developing software and fleet operations.

    Ford did not disclose exactly how it would shift its AV spending.

    “We believe building the best overall customer experience will help differentiate us from our competitors in the self-driving space,” Lawler wrote in a Medium post. “… Now is the time for us to be thoughtful about the service we are building so it can remain relevant in a changing world and offer customers peace of mind knowing they, or their packages, are in a safe and protected environment inside our vehicles.”

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