(Bloomberg) -- Volkswagen AG plans to offer a highly automated version of the hippie-era microbus it’s reviving as an electric van as the carmaker commercializes self-driving technology along with startup Argo AI.

VW is preparing an ID.Buzz with Level 4 autonomy -- meaning the vehicle can drive itself under certain conditions -- to be ready for commercial transport of people and goods for 2025. It’s testing Argo AI’s technology at six U.S. locations and will expand to a site in Munich this year to further refine the system.

The ultimate development focus will be on densely populated urban areas that pose “high complexity for the technology, but also offer the basis for intensive use of mobility offerings,” said Christian Senger, the head of autonomous driving at VW’s van unit.

VW and fellow Argo backer Ford Motor Co. are trying to catch up to leaders such as Waymo LLC on self-driving technology that has proven extremely expensive and challenging to bring to market safely. General Motors Co.’s self-driving unit Cruise backed off plans to deploy robotaxis in 2019 and has yet to roll any out. Uber Technologies Inc. and Lyft Inc. each reached deals in recent months to sell their driverless divisions.

Even Waymo’s technology has been subject to limitations. While the company started offering rides in vans with no humans behind the wheel late last year, the service is confined to suburbs in the Phoenix area.

VW stepped up its efforts in the space when it invested in and teamed with Argo while broadening an alliance with Ford in 2019. Europe’s largest automaker put its van unit in charge of the collaboration, as it’s betting self-driving technology can be rolled out for commercial use in designated areas faster than with passenger cars on public roads.

“We’re the leader in urban autonomy,” said Bryan Salesky, Argo’s chief executive officer and co-founder. “We are going where the demand is, where there is a great business to be built.”

VW’s efforts to develop robotic cars date back more than a decade ago to tests hosted by the U.S. Defense Advanced Research Projects Agency, or DARPA. But the industrial giant’s sprawling corporate structure comprising a dozen brands contributed to fragmented development that allowed quicker rivals to take the lead.

Ford has said it plans to roll out robotaxis and driverless delivery pods in multiple U.S. cities next year. Argo last week unveiled its own lidar it says is capable of seeing 400 meters down the road in the dark, about 100 meters beyond current state-of-the-art sensors. The startup is considering a public listing as soon as this year, people familiar with the matter said last month.

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