Volkswagen AG discontinued a self-driving technology partnership with Silicon Valley startup Aurora Innovation Inc. as it draws closer to a broader collaboration on autonomous cars with Ford Motor Co (F.N).
“The activities under our partnership have been concluded,” a VW spokesman said of its alliance with Aurora in a statement issued Tuesday. The German manufacturer announced the tie-up with Aurora to develop autonomous-car technology at the Consumer Electronics Show in Las Vegas last year to help boost its own activities spearheaded by the Audi premium-car unit.
Meanwhile, months of negotiations with Ford and its autonomous affiliate Argo AI are near fruition and a deal could be announced as early as July, people familiar with the situation said. Most of the thorniest issues have been resolved and the two companies envision a comprehensive collaboration creating a global colossus in the self-driving space, these people said. The partnership would rival Alphabet Inc.’s (GOOGL.O) Waymo and General Motors Co.’s (GM.N) Cruise unit in ambition and scope, according to one of the people, who asked not to be identified revealing internal discussions.
Self-driving cars have emerged as key battleground between automakers and technology giants in the race to develop robo-taxis and driverless delivery vehicles. These programs require investments in the billions of dollars, while regulatory frameworks vary across the globe, complicating testing and deployment. A payoff for the huge sums that need to be spent is difficult to predict as a broader rollout in the passenger-car space might take years longer than initially anticipated. Ford Chief Executive Officer Jim Hackett has said autonomous cars and other emerging mobility services could grow to a US$10 trillion market.
Volkswagen and Ford, which agreed to co-produce vans and pickups earlier this year, have been discussing an investment in Argo AI, the Ford-backed autonomous vehicle startup, people familiar with the talks have said. The automakers discussed an approximate valuation for Argo of US$4 billion, one of the people said.
Ford said its talks with Volkswagen are ongoing but did not provide specifics on the extent of progress. “Discussions have been productive across a number of areas. We’ll share updates as details become more firm,” it said in a statement on Tuesday. VW declined to comment on the status of the talks.
Aurora, which raised over half a billion dollars in February from backers including Sequoia Capital and Amazon.com Inc., announced on Monday it will partner with Fiat Chrysler Automobiles NV to develop and deploy a fleet of self-driving commercial vehicles. The company is the brainchild of Sterling Anderson, the former director of autonomy for Tesla Inc.; Drew Bagnell from Uber Technologies Inc.; and Chris Urmson, who headed Alphabet’s self-driving car project before it was named Waymo.
“Volkswagen Group has been a wonderful partner to Aurora since the early days of development of the Aurora Driver,” Aurora said in a statement. “As the Driver matures and our platform grows in strength, we continue to work with a growing array of partners who complement our expertise and expand the reach of our product.”
Volkswagen, the world’s largest automaker, and U.S. peer Ford announced their cooperation on light commercial vehicles in January. Officials from both sides, including VW CEO Herbert Diess and Ford Chairman Bill Ford, have stressed the strategic fit between the two manufacturers.
“We fit together geographically really well, product line-wise, we fit together well,” Ford, the great-grandson of founder Henry Ford, said at a conference in Houston in March. “We both came to the same realization that as big as our balance sheets are, no company can do this alone.”