VW is investing $2.6 billion in ArgoAI following a cash infusion from Ford, valuing the self-driving-car startup at more than $7 billion
- Volkswagen on Friday announced a $2.6 billion total investment in ArgoAI, a self-driving-vehicle startup that spun out of Carnegie Mellon University in 2016 and that had earlier attracted $1 billion in funding from Ford.
- VW's investment is $1 billion in cash, with the additional contribution of its $1.6-billion, Munich-based Autonomous Intelligent Driving division.
- ArgoAI would remain an independent company post-deal, which would allow it to seek additional investment from other partners.
- Also on Friday, VW and Ford revealed additional details of their ongoing alliance, which commenced earlier this year. Ford will use a VW electric-vehicle platform to launch a new European EV by 2023.
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The race to fund promising self-driving-car startups is intensifying.
On Friday, Volkswagen announced that it would invest $2.6 billion in the autonomous-driving tech startup ArgoAI. The stake consists of $1 billion in cash plus the contribution of the VW Group's $1.6-billion Autonomous Intelligent Driving (AID) division, headquartered in Munich, Germany.The deal would value ArgoAI at more than $7 billion and transform AID into the startup's European headquarters.
"Our agreement with Volkswagen positions us as a technology platform company, expands the potential geography for deployment and will further fuel our product development," ArgoAI Bryan Salesky said in a blog post published Friday. "In fact, we're the first self-driving company with definitive deployment plans in both the United States and Europe."
He added: "We are excited to welcome the AID employees to Argo AI....With this move, our company will expand by 200 employees to reach a total of over 700."
ArgoAI formed in 2016 and, according to Salesky, planned to join with a major automaker from the beginning. It's now joined with two. And the investments from VW and from Ford, which committed $1 billion in 2017, don't exclude other companies from funding ArgoAI's growing platform.
Ford was ahead of the curve. "Bill Ford saw a lot of this before others did," Salesky said of Ford's chairman, a longtime advocate of new-mobility ideas, in a 2018 interview with Business Insider. "He knew it would be a game-changer."
Ford and VW will hold equal stakes in ArgoAI as a result of the deal.
Since early 2019, Ford and VW have been establishing a collaborative alliance (but not a formal tie-up, like the Renault-Nissan-Mitsubishi alliance), so there's clear logic in VW CEO Herbert Diess following Ford CEO Jim Hackett's lead in making a bet on ArgoAI.
ArgoAI now has investment from the world's biggest car maker
And so does the VW Group, the world's biggest automaker.
VW's ArgoAI investment is a pure technology play, as the Pittsburgh startup - now operating in the Detroit area, Silicon Valley, Washington, DC, New Jersey, and Miami - spun out of Carnegie Mellon University in 2016 and is now focused on developing its robotics-based tech rather than bringing it to market. That task falls to partners who elect to use it in their vehicles.
Ford's stated goal is to launch a fully self-driving vehicle by 2021. The No. 2 US car maker has been perceived as lagging behind Alphabet's Waymo and General Motors-owned Cruise, the latter of which has scored investments from SoftBank's Vision Fund and Honda, as well as institutional investors, taking its valuation to $19 billion.
Prior to Friday's ArgoAI-VW announcement, the startup's value had been pegged at around $4 billion, but the VW investment indicated that number was too low - and further indicates that a peer-group of well-funded autonomous companies has emerged to compete with each other as the incipient market takes shape.
Cruise intends to launch an autonomous ride-hailing service this year, and Waymo brought its service, dubbed "Waymo One," to Arizona late in 2018. Tesla CEO Elon Musk has said that his company could produce a robo-taxi fleet by 2020.
Also on Friday, Ford and VW announced that they would expand their global alliance. Ford will use a VW electric- vehicle platform to launch a European EV by 2023 and continue their collaboration on delivery vans and pickup trucks.Get the latest Ford stock price here.