The long-awaited autonomous-vehicle development tie-up between Ford’s Argo unit and the No. 1 automaker by volume, Volkswagen, is official, the companies said Friday. The outline of the deal was disclosed half a year ago. What’s new today is a paper valuation for the self-driving car effort, which will keep the name Argo, and in which Ford and VW now have equal minority stakes.
Pittsburgh-based Argo, one of about 10 major developers of self-driving vehicle prototypes for city streets, now values itself at $7 billion—roughly the same as Uber’s self-driving car unit and less than GM’s Cruise subsidiary, which was valued at $19 billion after taking cash from outside investors. Argo’s valuation includes $1 billion in cash from VW, though the parties didn’t say when the full amount would be transferred.
The valuation also includes the value of engineers who will join Argo from VW-owned Audi, which has a separate self-driving car unit that VW values on paper at $1.6 billion. In other words, valuations in this industry continue to mean little, and we can expect the Ford-VW JV to take further outside investment as the marathon R&D effort continues to burn cash.