Ford and Volkswagen Shut Down Self-Driving Startup Argo AI Due To Costs

Technology / 4 Comments

The two auto giants shutter Argo AI.

The road to full self-driving (FSD) was always expected to be challenging, but things have been more difficult than anticipated. Now, in yet another blow to society's FSD hopes and dreams, Ford and VW have announced they are shuttering Pittsburgh-based Argo AI as they restructure their plans and temper their expectations regarding self-driving technology. We're probably not going to see a self-driving ID.Buzz anytime soon, then.

As reported by TechCrunch, during a company-wide meeting on Wednesday, Argo AI told its 2,000+ employees that the company would be shutting down. The company cited the pulling of investments by Ford and VW and told the employees that many of them would receive offers to work for the two automakers, though not all. The severance package includes insurance and two separate bonuses that all Argo employees will receive. Those who are not retained by Ford or VW will additionally receive termination and severance pay, including health insurance.

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Argo AI was founded in 2016 by Bryan Salesky and Peter Rander and, soon after, saw investment in the form of $1 billion when the company was bought by Ford in 2017. Fast forward to 2019, VW invested $2.6 billion in the form of $1 billion in cash, the infusion of its $1.6 billion European self-driving arm into Argo, and the purchase of $500 million worth of shares from Ford. Argo was working on Level 4 self-driving software, which is the next step on the road to fully autonomous driving.

Ford announced yesterday during its third-quarter earnings report that it "concluded that the auto industry's large-scale profitable commercialization of Level 4 advanced driver assistance systems will be further out than originally anticipated." It then said the company is making the strategic decision to instead focus on L2+ and L3 driver assistance software, and this meant shifting investment from Argo to internally developed systems. Due to this, Ford recorded a $2.7 billion non-cash, pre-tax impairment on its investment in Argo AI, resulting in an $827 million net loss for Q3.

VW then announced that Cariad will be propelling forward its automated future with the continued help of Bosch. Its goal is to implement L2 and L3 software on its vehicles by 2023. VW also plans to partner with Horizon Robotics in China to develop automated driving there and has already partnered with Qualcomm for high-performance chips for automated driving.

Lyft, a minor partner, stated state that it "will continue working with [its] other partners to advance the safety and commercialization of AV technology." Lyft currently has partnerships with Motional and Waymo.

Ford and VW will now absorb Argo AI's parts, but it's unclear how many employees will be retained and which of the two automakers will get Argo's technology. Ford CEO Jim Farley specifically mentioned that "profitable, fully autonomous vehicles at scale are a long way off," adding that the Dearborn-based automaker would not necessarily have to create that tech itself. It looks like true full self-driving will be shelved, because it's too much of a money pit right now.

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In its earnings report, Ford cited a lack of new investment as one of the reasons for pulling out of the company, and with FSD being much further out than expected, the Blue Oval didn't see a point in being invested this heavily in a separate entity. VW most likely realized the same thing, and this realization lead it to close the company that was once valued at $7.5 billion. At the end of the day, it comes down to the money autonomous subscriptions will earn, and automakers are going to get it, whether we like it or not.

In a final statement from the cofounders of Argo, "We are incredibly grateful for the dedication of the Argo AI team and so proud of our achievements together. The team consistently delivered above and beyond, and we expect to see success for everyone in whatever comes next, including the opportunities presented by Ford and VW to continue their work on automated driving technology."

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Source Credits: TechCrunch

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