German automaker Volkswagen is betting big on artificial intelligence and autonomous vehicle technology. It is reportedly planning to invest in Argo AI, a Ford-backed venture which is valued at $7 billion.
Volkswagen and Ford join hands
Two of the biggest auto manufacturing companies, Volkswagen and Ford, are throwing their weight behind Argo AI. Valued at a whopping $7 billion, Argo AI will be the next step in the alliance formed by VW and Ford, according to sources who spoke at the condition of non-identification. They decided to collaborate on a mid-size truck and a commercial van.
VW is also planning to fold its Autonomous Intelligent Driving unit (within Audi) into Argo. The CEOs of both firms have decided to meet on Friday morning in New York to discuss this initiative further. Representatives for both the firms as well as Argo have declined to comment on this development.
An unlikely partnership forced by the market
The auto industry is going through unprecedented shifts at the moment. There are issues with emission and carbon footprint of the industry, a shift towards EV and hybrid vehicles, and a strong push towards emerging technologies have changed the face of the auto sector. This means more ambitious plans, billions of dollars of investments and unlikely partnerships like we witnessed with Ford and VW.
For the German automaker, which is the largest car maker in the world, investing in Argo is a move to defend itself against the likes of American manufacturers. It is especially cautious of Google parent Alphabet’s Waymo and the Cruise unit at General Motors, which is partnering with Robert Bosch GmBh and Daimler AG. The most critical elements of the new age of cars will be self-driving vehicles which will need tons of data to function. Apart from Waymo, no other carmaker can do manage to use or collect data to this extent.
Gartner’s automotive analyst Mike Ramsey thinks that a big and well-financed effort from VW and Ford will help the two companies find equal footing with Waymo and GM. He called it a “long-term strategic play.” It is also important to note that VW has changed its views on Argo within just a few months. In February this year, the two companies valued Argo AI at $4 billion. Note that Argo’s co-founder is Bryan Salesky, who was one of the early leaders in Google’ autonomous vehicle program. Its second co-founder Peter Rander was one of the pioneers of Uber’s self-driving vehicle initiative.
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