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UPDATE 1-A Ford-VW alliance with Argo could redesign the self-driving sector

(Adds details on the estimated valuation of Argo with VW's investment)

By Paul Lienert

DETROIT, July 11 (Reuters) – An expanded alliance between Ford Motor Co and Volkswagen AG, which includes a partnership with the Ford Argo AI autonomous driving system, could redraw the balance of power in autonomous vehicles.

A Ford-VW collaboration with Argo, the Pittsburgh-based start-up that has spearheaded Ford's autonomous development since 2017, could help reduce the engineering and financial costs of each manufacturer. It could also speed up deployment times for both countries, which have announced plans to launch autonomous vehicles in 2021.

Argo was neglected because Waymo, Alphabet Inc.'s arm's-length subsidiary, deployed its robotic vehicles, and General Motors Co's Cruise Automation subsidiary made multi-billion dollar investments.

With VW, the world's largest automaker in sales volume last year, Argo would be aligned with a partner with significant scale and resources.

Ford and VW announced Thursday that they were expanding their global alliance and that the leaders of both companies would hold a press conference in New York on Friday, where they should announce the details of a technology sharing agreement.

An agreement between Ford and VW involving Argo could also have broader implications for similar alliances, as well as for assessments of related start-ups.

Previous estimates of the value of Argo ranged from $ 2 billion to $ 4 billion. According to a source close to the Ford-VW talks, this valuation could reach $ 7 billion, depending on the size of a VW investment.

In comparison, the Cruise value climbed to $ 19 billion earlier this year after attracting more than $ 6 billion in investments from the SoftBank Group, Honda Motor Co. and T. Rowe Price.

The value of Uber Technologies' state-of-the-art technology group in transportation services has soared to more than $ 7 billion earlier this year after SoftBank, Toyota Motor Corp and Denso Corp. invested $ 1 billion.

These ratings are outweighed by the estimates of Waymo, which is widely recognized as the industry leader. Morgan Stanley estimates that Waymo can reach $ 175 billion, while Jefferies estimates the company up to $ 250 billion.

Both estimates take into account the incipient activity of Waymo robotaxi and potential future revenue streams from a delivery service and vehicle-integrated services, including e-commerce and the system. ; infotainment.

VW, whose Audi unit heads the German automaker's Automated Intelligence Driving Driver (AID) unit in Munich, would have considered a $ 13.7 billion investment last year in Waymo for a 10% stake that would have been worth to Waymo 137 billion dollars.

VW has recently signed a development agreement with Aurora, Silicon Valley's autonomous start-up, which includes Hyundai Motor Co and Fiat Chrysler Automobiles among its customers. Fiat Chrysler also supplies vehicles to Waymo.

Aurora is valued at $ 2.5 billion. Investors include Hyundai and Amazon Inc.

Argo, majority owned by US automaker No. 2, is part of Ford Autonomous Vehicles LLC. Ford created the unit in 2018, pledging to invest $ 4 billion until 2023. (Report from Paul Lienert to Detroit, edited by Dan Grebler and Leslie Adler)

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