Ford and VW near self-driving deal, report says

Volkswagen Group's negotiations with Ford and its autonomous affiliate Argo AI over a collaboration on autonomous cars are near fruition and a deal could be announced as early as July, people familiar with the situation said.

Most of the thorniest issues have been resolved and the two companies envision a comprehensive collaboration creating a global colossus in the self-driving space, the people said.

The partnership would rival Alphabet's Waymo and General Motors' Cruise unit in ambition and scope, according to one of the people, who asked not to be identified revealing internal discussions.

Self-driving cars have emerged as key battleground between automakers and technology giants in the race to develop robo-taxis and driverless delivery vehicles. These programs require investments in the billions of dollars, while regulatory frameworks vary across the globe, complicating testing and deployment.

A payoff for the huge sums that need to be spent is difficult to predict as a broader rollout in the passenger-car space might take years longer than initially anticipated. Ford CEO Jim Hackett has said autonomous cars and other emerging mobility services could grow to a $10 trillion market.

Volkswagen and Ford, which agreed to co-produce vans and pickups earlier this year, have been discussing an investment in Argo AI, the Ford-backed autonomous vehicle startup, people familiar with the talks have said. The automakers discussed an approximate valuation for Argo of $4 billion, one of the people said.

Ford said its talks with Volkswagen are ongoing but did not provide specifics on the extent of progress.

"Discussions have been productive across a number of areas. We will share updates as details become more firm," it said in a statement. VW declined to comment on the status of the talks.

VW and Ford announced their cooperation on light commercial vehicles in January. Officials from both sides, including VW CEO Herbert Diess and Ford Chairman Bill Ford, have stressed the strategic fit between the two manufacturers.

"We fit together geographically really well, product line-wise, we fit together well,” Ford, the great-grandson of founder Henry Ford, said at a conference in Houston in March. "We both came to the same realization that as big as our balance sheets are, no company can do this alone."

Meanwhile, Argo launched its new fleet of self-driving test vehicles -- using Ford Fusion Hybrids -- in Detroit on Wednesday, expanding its presence to five U.S. cities.

The new cars are equipped with upgraded sensors, including radars and cameras with higher resolution and range, the company said. Argo already operates vehicles in Pittsburgh, Palo Alto, Miami and Washington D.C. 

Volkswagen said Tuesday that it has ended its partnership with self-driving car software firm Aurora, two days after the Silicon Valley startup said it would build autonomous platforms for commercial vehicles with Fiat Chrysler Automobiles.

Aurora, which raised over half a billion dollars in February from backers including Sequoia Capital and Amazon, announced on Monday it will partner with Fiat Chrysler to develop and deploy a fleet of self-driving commercial vehicles.

The company is the brainchild of Sterling Anderson, the former director of autonomy for Tesla; Drew Bagnell from Uber Technologies; and Chris Urmson, who headed Alphabet's self-driving car project before it was named Waymo.

Reuters contributed to this report.