Report: VW to Invest $1.7 Billion Into Ford’s Autonomous Arm

It appears that a presumed rough patch in Ford and Volkswagen’s relationship is over, now that The Wall Street Journal is reporting on VW preparing a nearly $2-billion investment into the Blue Oval’s autonomous development unit, Argo AI.

Earlier this month, claims arose that negotiations had reached an uncomfortable crossroad, with Volkswagen balking at Ford’s proposed admittance fee. Under the new deal, VW would set aside $600 million as an equity investment into Argo — acquiring half of the business in the process — followed by subsequent investments totaling $1.1 billion for the subsidiary’s research and development efforts. 

The duo officially announced the beginnings of a “global alliance” earlier this year, focusing on the joint production of midsize pickups and commercial vans intended for overseas markets. However, Ford and VW were also said to be in discussions over how to best collaborate on electric and autonomous vehicles. The presiding assumption had been that Volkswagen would make a good faith investment into Argo before Ford tried something similar to procure access to the German’s battery technology — potentially licensing itself VW’s modular EV architecture in the future.

As of now, Argo is a bit of a money pit. Ford poured $1 billion into the firm back in 2016 and lost nearly $674 million through Ford Smart Mobility in 2018. While automakers believe that mobility investments will pay off down the line, the cost of entry has proven to be rather high. By cooperating, VW and Ford can drastically soften the financial burden of their lofty technological goals — much like Honda did when it agreed to invest $2.75 billion into General Motors’ Cruise AV.

Bloomberg previously reported that the automakers discussed an approximate valuation for Argo of roughly $4 billion. While neither company confirmed this (or the $1.7-billion VW investment), both say discussions are ongoing. Ford said it will issue an announcement if any formal agreement is reached.

a version of this article first appeared on TTAC