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Ford Motor Co. and autonomous-driving software company Argo AI are nearing agreements with Volkswagen AG to partner on electric and self-driving vehicles that would bind two of the world's largest automakers in a transatlantic alliance on two of the most expensive pieces of a rapidly changing global auto industry.

The proposed alliance would also tie VW to Argo as the Pittsburgh-based start-up company's second investor and the second company to use its software to deploy self-driving vehicles. Argo would be able to test and launch in Europe through VW.

If approved by Ford's board this week and Volkswagen's board Thursday, the companies are expected to officially announce the new partnership details Friday. The deal could create one of the largest and most robust alliances on electric and autonomous vehicles seen yet from major automakers; Ford and Volkswagen sold roughly a combined 17 million vehicles globally last year, roughly 21% of the market.

"Both companies get scale, both get savings," said Sam Abuelsamid, an automotive technology analyst for Navigant Research, adding that the partnership indicated VW saw progress in Argo that it likely didn't see in other companies. "If you can start to combine some of that cost and share some of that technology, you can get more volume out of fewer platforms. You have the potential to save an enormous amount of money in development costs."

Two sources with knowledge of the deal said the companies have negotiated for VW to share its MEB electric-vehicle platform with Ford.Meanwhile, VW would get access to Argo's self-driving software and the data and learning Ford and Argo have gathered to-date, along with a minority stake in the start-up, and a seat on Argo's board. Ford currently has a majority stake in Argo and two seats on the board.

Argo would absorb VW's Munich-based Autonomous Intelligent Driving team, called AID, which has acted as an urban autonomous-driving technology supplier for the Volkswagen Group, sources said. Collaboration there would effectively create a new autonomous vehicle powerhouse as Ford, Argo and VW share data, expertise and geographic reach as the auto companies ready to deploy their first autonomous vehicles.

VW had been partnered with self-driving startup company Aurora until June. If VW's board approves the new partnership, the automaker would use Argo's technology to deploy its own self-driving vehicles, the first of which are likely to launch in Europe, two sources said. 

The move would be a boon for Argo, a company hardly anyone had heard of when it got its first major investment from Ford in early 2017. The deal with Ford and VW would give those automakers minority stakes in the company, with VW getting a seat on Argo's board. 

Not only would the partnership spread costs for Ford and VW, it also proves that Argo and Ford, companies relatively quiet in the ongoing autonomous vehicle race, are building something other companies want to be a part of, according to Abuelsamid.

"VW probably decided that Argo was further along toward a production-ready system than Aurora is," he said. "I'm sure VW has taken a close look at all of them, and they've probably decided that Argo has something that is really strong and is moving in the right direction."

VW spokesman Peik von Bestenbostel told The Detroit News that VW doesn't make the agenda of its board meetings public but "generally the cooperation with Ford is on the cooperate agenda in these days."

Ford spokeswoman Jennifer Flake said, "Our talks with Volkswagen continue. Discussions have been productive across a number of areas. We’ll share updates as details become more firm."

Argo officials declined to comment on the pending deal.

More:  Hackett's Ford finally coming into focus

The automakers began broad partnership discussions in early 2018 that evolved into sharing more future-oriented technology like electric and autonomous vehicles. The companies announced in January plans to partner outside of North American on commercial trucks and vans. 

Ford CEO Jim Hackett said then in a note to employees that the alliance would not involve cross-ownership, and that VW and Ford would continue to function as two separate companies. Ford officials have stressed for more than a year that the automakers would not merge.

The automakers plan to share investments on the commercial truck and van platforms. They would be marketed under either the Ford or VW badge depending on the region in which they are sold, Jim Farley, Ford president of global markets, said in January.

Argo and Ford have yet to deploy anything more than test vehicles in several U.S. cities where Argo tests Ford Fusion Hybrid vehicles. The companies are targeting a 2021 launch for the first iteration of their autonomous vehicles. The vehicles VW would develop with Argo would likely launch after Ford's, one source said. 

The two automakers would have separate autonomous-vehicle businesses under the deal if approved Thursday, three sources said. Those businesses would have unique go-to-market strategies, but both would use Argo's software.  Although they would share Argo's technology and likely VW's EV architecture, Ford and VW don't plan to share revenue generated by the separate businesses.

Ford would likely use Volkswagen's EV platform in its European business, where it plans to lean on the Transit commercial vehicle to boost profits there. Ted Cannis, Ford's head of electrification, told The Detroit News recently that electrifying the Transit line in Europe is a big goal for the Dearborn automaker. 

The move would help Ford comply with European government mandates that push electrified vehicles and strict emissions standards. Ford would likely used VW's EV platform to supplement its other electrification efforts, including a forthcoming electric F-150, and an all-new speedy crossover debuting later this year.

Hackett and other automotive industry executives have said recently that big companies will need to partner and share costs in order to be successful in a changing industry faced with plateauing or declining sales, bigger expenses and hefty bets on technology like electrification that consumers around the world aren't willing to buy just yet.

The pending partnership could show how automakers can partner to share commodities like autonomous-vehicle software, or the battery technology that underpins an electric vehicle, yet still offer products that look different or offer different capabilities.

"It may be that Ford is kind of spreading its bets across a couple of options to give them more flexibility," Abuelsamid said. "My guess is that combining some aspects of the vehicle that might not be product differentiators may be a better solution. I expect more people to go that way."

ithibodeau@detroitnews.com

Twitter: @Ian_Thibodeau

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