Autonomous car startups have had a rough year as valuations have plummeted due to the slow progression of complete autonomy. This has been reflected in Intel’s IPO of MobilEye which has now gone public for a fraction of the expected value. But now comes to the biggest blow to the future of self-driving cars as Volkswagen and Ford-backed Argo AI which accrued an investment of $1 billion in 2017 is being shut down.
Techcrunch reports that in an all-hands meeting, Argo AI employees were told that some would receive offers from Volkswagen and Ford, respectively. They get a severance package that includes insurance and two separate bonuses. They would also get an annual award and a transaction bonus. Those who Volkswagen or Ford do not retain will further receive termination and severance pay including health insurance. The severance offers are said to be generous, and the founders have addressed the 2,000 employees themselves.
“In coordination with our shareholders, the decision has been made that Argo AI will not continue its mission as a company. 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 said in a statement.
What’s telling is that Ford revealed in its quarter three earnings that it has tilted its focus from developing a fully autonomous car system to an ADAS system which can be deployed on robotaxis. This is indicative of how faith in the development of truly driverless cars has withered.
Google which is a pioneer in the technology spun off its self-driving tech unit Waymo which still hasn’t achieved mass commercialisation and has lost valuation. Tesla has had its struggles which are well documented, and Apple has also struggled and not made much ground on project titan. Famously, Apple’s CEO Tim Cook has called the self-driving car the mother of all AI problems. In 2021, Uber also sold its self-driving car business to Aurora.
Ford for its part said it recorded a $2.7 billion noncash pre-tax impairment on its investment in Argo AI which has caused an $827 million loss in the quarter. It seems like Ford and Volkswagen hoped to attract more investors in Argo AI, something which Ford CEO Jim Farley hinted at, but the enthusiasm in the market has waned for the technology.
“But things have changed, and there’s a huge opportunity right now for Ford to give time — the most valuable commodity in modern life — back to millions of customers while they’re in their vehicles. It’s mission-critical for Ford to develop great and differentiated L2+ and L3 applications that at the same time make transportation even safer,” said Farley, in the Q3 earnings call for Ford.
In fact, Farley hinted that Ford was still bullish about autonomous cars and level 4 ADAS, but he hoped to buy the tech from a third party rather than further invest in it. Ford’s pivot could also have something to do with the arrival of Doug Field who joined last year as chief of advanced technologies and embedded systems. Field was the day-to-day boss of the Apple Car project since 2017 and dealt with problems with self-driving cars.
Volkswagen has also run out of steam to further invest in Argo AI. It is shifting focus on its software unit Cariad which is working on developing autonomous car technology with Bosch and Horizon Robotics in China.
Lyft, which owned 2.5 per cent of Argo, believes that its self-driving ambitions haven’t taken a hit from the closure of Argo AI. It will be launching 1,000 self-driving vehicles on its ride-hailing network, but it also has Hyundai-backed Motional as a partner. Lyft also counts Waymo as a partner, so its strategy has been diversified.
“We will continue working with our other partners to advance the safety and commercialization of AV technology. Lyft is the current leader in paid AV rides in North America with over 100,000 rides completed. We’re well positioned to win the AV transition through the combination of our hybrid network, marketplace engine and fleet management capabilities,” said a Lyft spokesperson.
Argo AI was backed by Ford and Volkswagen with an investment of $1 billion founded by Bryan Salesky and Pete Rander. The further raised another $2.6 billion most of which came from Ford and Volkswagen.
