Ford, VW will shut Argo AI self-driving joint venture

Ford, VW will shut Argo AI self-driving joint venture

Automotive News Europe — 2022-10-26

Automotive Industry

Ford decided it needed to invest in driver-assistance technology that was more achievable in the near term.

Argo AI, the autonomous vehicle technology company backed by Ford and Volkswagen Group, is shutting down as the automakers shift their strategies for self-driving cars. 

Ford decided it needed to invest in driver-assistance technology that was more achievable in the near term rather than Argo’s goal for driving with little human interaction, the automaker said in a statement.

"Profitable, fully autonomous vehicles at scale are a long way off and we won’t necessarily have to create that technology ourselves," Ford CEO Jim Farley said in a statement Wednesday 26 October. 

Ford’s decision led VW to walk away, too, according to people familiar with the matter.

VW said it is no longer investing in Argo AI and plans to focus its automated driving efforts on its existing partnerships with Bosch and Horizon Robotics in China.

"Especially in the development of future technologies, focus and speed count," VW Group CEO Oliver Blume said in a statement. "Our goal is to offer our customers the most powerful functions at the earliest possible time and to set up our development as cost-effectively as possible."

Ford and VW continue to cooperate on electric and commercial vehicles in the US and Europe.

Ford Chief Financial Officer John Lawler said Wednesday that the company determined it would take more than five years to see a return on its investment in full self-driving.  Farley said it also would require billions more in investment.

"It’s harder than putting a man on the moon" to create a robotaxi capable of navigating in a dense urban landscape, said Doug Field, Ford’s chief advanced product development and technology officer.

Ford will record a $2.7bn non-cash, pretax impairment on the Argo AI investment. Argo AI was unable to find other investors, Ford said. The automaker had backed Argo since 2017. The autonomous company had more than 2,000 workers as of July.

“Many of the employees will receive an opportunity to continue work on automated driving technology with either Ford or Volkswagen, while employment for others will unfortunately come to an end,” Argo AI said in a statement.

Started in 2016, Pittsburgh-based Argo AI was developing the technology behind driverless vehicles. It had raised at least $3.6bn in investments, mainly from Ford and VW.

VW commercial vehicles will pursue a partnership with a new, soon-to-be named partner, the carmaker said in its statement, with prototypes for its electric van, the ID. Buzz, already in test phase. The first outcomes from the partnership between VWs software unit Cariad and Bosch, announced in January this year, are planned for 2023, VW said.

"Volkswagen is working with Argo AI to enable further working opportunities for employees and continue developing the promising projects on autonomous driving. All further cooperations with Ford remain unchanged," VW said.

VW in 2020 finalized plans to partner with Argo AI with a $1 billion cash infusion and folding in its $1.6bn Autonomous Intelligent Driving unit, as part of a broader alliance between VW and Ford to jointly develop autonomous and electric vehicles. The CEOs that made that deal, VW's Herbert Diess and Ford's Jim Hackett, are no longer leading those companies.

Prior to Wednesday's announcement, Argo AI and VW had planned to introduce a self-driving ride-pooling service in Hamburg by 2025 and eventually provide ride hailing and goods delivery services in Europe and the US.

VW said its target for the German port city, where it already operates Moia-branded ride-hailing vans, remains unchanged with plans for the company's commercial vehicles arm to team up an unnamed existing partner.

Argo's demise shows how swiftly the fortunes of the autonomous driving industry have turned, just 18 months after it was eyeing an initial public offering to boost its funding.

The company was co-founded in late 2016 by Brian Salesky, who helped start the Google self-driving car project that became Waymo, and Peter Rander, an alumni of Uber Technologies' autonomous auto operations.

Expectations of an imminent rollout of robocars have deflated across the industry. Shares in companies spearheading development such as Aurora Innovation have plunged some 80% in 2022, while Intel listed its Mobileye autonomous-driving business at less than half of the $50bn it reportedly targeted less than in 2021.