Ford CEO Jim Hackett and VW CEO Herbert Diess raised the visibility of their negotiations last month at the Detroit auto show.
Volkswagen Group is preparing to invest up to $1.7 billion in a self-driving joint venture centered on Ford’s Argo AI unit, The Wall Street Journal reported Tuesday, citing sources with knowledge of the discussions.
VW is preparing to invest $600 million as an equity investment in Argo, the newspaper said, with each company owning half of the business. VW would invest $1.1 billion in working capital for the entity’s research and development, the report said.
Ford, in a statement, said talks with VW continue but declined to directly confirm or deny the details in the Journal’s story. Ford and VW last month announced the beginnings of what they called a global alliance that would include jointly developing midsize pickups and commercial vans for overseas markets. The two sides said they were also discussing collaborating on autonomous and electric vehicles.
“Discussions have been productive across a number of areas,” Ford said. “We’ll share updates as details become more firm.”
A person familiar with the talks told Automotive News that no announcement of further collaboration with VW was imminent.
Bloomberg this month reported that the two companies were discussing a $4 billion valuation for Argo. Ford invested $1 billion in the startup shortly after it was created in 2016.
A potential deal involving AV development would help both companies share costs in a rapidly growing segment.
The automaker is in the midst of a $4 billion investment in autonomous technology through 2023. Ford’s mobility business, which includes AV investments, lost $674 million last year.
In January, Ford CEO Jim Hackett said AVs and EVs were an “attractive area” to work with VW.
“Both the EV and AV are big costs for investment,” he said. “Both are really important to both companies’ future. That is part of the incentive to find ways to cooperate.”
Citing privacy for competitive reasons, Hackett had declined to say when Ford or VW may make further announcements related to AV or EV development, saying the memorandum of understanding “gives us the cover to do this work behind the scenes.”
“I would not make the assumption we haven’t reached any kinds of agreements,” Hackett said. “There’s more order to it than what’s coming through today.”