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Argo AI, the self-driving startup that just sealed a $2.6 billion investment from the world’s biggest carmaker, says there’s room in its partnership with Volkswagen AG and Ford Motor Co. for another manufacturer to fill a void in its global footprint in Asia.
Argo, founded by veterans of Uber Technologies Inc. and Alphabet Inc.’s Waymo autonomous-driving unit, will count Ford and VW as its two biggest investors. Ford in 2016 pledged $1 billion in funding, while its German rival joined in with the deal announced on Friday.
The automakers will have equal stakes in Argo and together will own a substantial majority of the startup. Argo is open to partnering with another automaker, Chief Executive Officer Bryan Salesky said in an interview. He said Argo’s $7.25 billion valuation will attract outside investors, similar to the investment SoftBank Group made in General Motors Co.’s Cruise.
“We’ve got a strong global player, strong in Europe with VW and Ford being strong in the U.S. A third player is absolutely possible,” Salesky said. “And we would again look for the same thing. We’d want it to be a strategic relationship.”
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Ford generates more than 60% of its revenue in the Americas, and less than 10% in the Asia-Pacific region, based on data compiled by Bloomberg. VW relies on its home European market to a similar extent, with less than 20% of sales coming from Asia-Pacific.
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Ford and VW will have “a lot of influence” on Argo’s decision to potentially partner with another automaker, Joe Hinrichs, Ford’s automotive president, told reporters Friday in New York. Ford shares rose as much as 2.6% to $10.45, the highest intraday in more than two months.
Whether another manufacturer joins with Argo or not, Salesky contends the size and global scope of the deal to add VW to the mix catapults the startup he co-founded past Waymo, GM Cruise and all other self-driving companies.
“We saw the best talent, track record and technological road map,” VW CEO Herbert Diess said of why the carmaker chose to invest in and partner with Argo.
Argo will continue to focus on so-called Level 4 self-driving technology that can be used for ride-sharing and deliveries in city environments. The automakers said they will focus their autonomous efforts on “purpose-built vehicles to support the distinct people and goods movement initiatives of both companies.”
“It took a while to get this deal done, but it’s because we actually sorted out a lot of the hard problems,” Salesky said.
