Volkswagen snubs self-driving startup Aurora, eyes Ford partnership

Aurora reportedly rebuffed a Volkswagen acquisition offer last year.

Timothy B. Lee – Jun 11, 2019 2:33 pm | 42

Ford CEO Jim Hackett, left, talks to Volkswagen CEO Herbert Diess in January 2019. Credit: Boris Roessler/picture alliance via Getty Images

Aurora—a self-driving startup founded by former leaders of self-driving projects at Tesla, Uber, and Google’s Waymo—aims to make its self-driving technology an industry standard by licensing it to multiple car companies.

The company has made impressive progress securing automotive partners. On Monday, Aurora announced that it had scored a new partnership with Fiat Chrysler to develop self-driving commercial vehicles. That was in addition to existing deals with Volkswagen, Hyundai, and Chinese electric carmaker Byton.

On Tuesday, however, the Financial Times reported a significant setback: Volkswagen was ending its deal with Aurora.

“Volkswagen Group has been a wonderful partner to Aurora since the early days of development of the Aurora Driver,” an Aurora spokesperson told Ars. “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.”

Instead, the FT says, Volkswagen is expected to deepen its existing pact with Ford—possibly by investing in Argo AI, Ford’s self-driving subsidiary.

Ford may be a more attractive partner for VW

The news highlights the precarious nature of Aurora’s business model. Aurora hopes its technology will become an industry standard for self-driving cars the way Microsoft Windows became an industry standard for PCs a quarter-century ago.

That would obviously be a great business model if Aurora can make it work. But it’s not necessarily attractive for carmakers. Rather than licensing technology from a third party, carmakers would prefer to own self-driving technology outright. Indeed, according to Bloomberg, Volkswagen tried to buy Aurora last year, but its offer was rebuffed.

A deal like that would have followed in the footsteps of two American companies. GM acquired self-driving startup Cruise in 2016. And Ford invested $1 billion in Argo in 2017.

Then last year, Honda announced that it was buying into the Cruise project, investing $750 million in the company and pledging another $2 billion to develop self-driving cars based on Cruise technology.

The Financial Times suggests that Volkswagen is preparing to strike a similar deal with Ford. The obvious approach would be for Volkswagen to buy a stake in Argo. Then Volkswagen could design its cars to work with Argo’s technology stack.

This would be made easier by the fact that Ford and Volkswagen already have a technology-sharing alliance in place. Volkswagen is expected to sell trucks manufactured by Ford (but badged by Volkswagen). Ford may also adopt Volkswagen’s platform for electric vehicles. So an autonomy alliance between the two companies is a natural next step.