Volkswagen and Ford will join forces with regard to electric and self-propelled cars, says Bloomberg. Volkswagen will invest $2.6 billion in Argo AI, Ford’s partner in self-propelled car technology.

The deal attributes a value of 7 billion to Argo AI, the two car manufacturers said in a joint statement on Friday. Volkswagen’s investment includes $1 billion in funding and $1.6 billion in the form of Audi Autonomous Intelligent Driving, which is part of Volkswagen AG.

“While Ford and Volkswagen remain independent and competitive, the partnership with Argo AI on this key technology allows us to deliver unparalleled capabilities, scale and geographic reach,” said Ford Chief Executive Officer Jim Hackett. The value of Ford shares rose by 2.1 percent in New York after the announcement. Preference shares in Volkswagen increased in value by 1.6 percent in Frankfurt.

Clear plans

For Volkswagen, the investment in Argo AI offers an opportunity to catch up with, for example, Alphabet’s Waymo and General Motors’ Cruise division. Road testing and the collection of large amounts of data are crucial for the further development of self-propelled vehicles, and the collaboration between Volkswagen and Ford offers opportunities to achieve these goals. It took some time for this deal to come about, but that’s because we solved many of the big problems, says Bryan Salesky, co-founder and CEO of Argo AI. We have a clear picture of the production and delivery of vehicles and we have a clear picture of where and how we want to enter the market.

In addition to sharing costs for the development of self-propelled cars, Ford will be using Volkswagen’s electric cars. These vehicles should form the backbone of the most extensive roll-out of electric cars in the industry to date. Volkswagen will spend about 30 billion euros on this. By adding more vehicles to production lines, both economies of scale and cost savings can be achieved. It will also give Ford a platform to better comply with the stricter rules on CO2 emissions in the EU. Ford will build at least one electric car in Europe from 2023, and will produce more than 600,000 European vehicles based on the Volkswagen platform, over a period of six years. A second electric car model for Europe is currently under discussion.

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