Argo AI, a promising developer of self-driving car technology that raised billions of dollars from Ford and Volkswagen, is shutting down and being dissolved, Ford said on Wednesday, blaming the venture for its quarterly loss.
The startup, led by former Google and Waymo engineer Bryan Salesky, informed its 2,000 employees about the development on Wednesday and said some would be offered jobs at the automakers, Ford said.
Argo was unable to find additional funding from new investors so Ford decided to stop funding it and focus instead on its own driver-assistance technology. The automaker said it recorded a $2.7 billion non-cash, pretax impairment on its Argo investment, resulting in Ford’s $827 million net loss in the third quarter.
“In 2017, when Ford invested in Argo AI and autonomous vehicles, the company anticipated being able to bring Level 4 ADAS technology broadly to market by 2021, “but things have changed,” Ford CEO Jim Farley said in the company’s quarterly results announcement. “We’re optimistic about a future for L4 ADAS, but profitable, fully autonomous vehicles at scale are a long way off and we won’t necessarily have to create that technology ourselves.”
ADAS is an industry-wide term that stands for advanced driver assistance system, and Level 4 autonomy refers to a vehicle that does not require a human at the wheel.
“It looks like a two-horse race now between Waymo and Cruise.”
Argo began as an ambitious effort by Ford to catch up to Alphabet’s Waymo and General Motors-backed Cruise in developing the software and components needed to commercialize self-driving cars and trucks. Volkswagen joined the venture by investing $2.6 billion into Argo in 2019. Given that the startup, which has tested vehicles in Miami, Austin and Pittsburgh, was among the better-funded AV companies, its dissolution comes as a surprise.
“We are incredibly grateful for the dedication of the Argo AI team, and so proud of our achievements together,” Salesky and cofounder and president Peter Rande said in an emailed statement. “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.”
Prior to Ford’s announcement, TechCrunch reported that the unit was closing, citing people familiar with the matter. Forbes also had sought to confirm that Argo’s automotive partners planned to pull funding, though neither Argo nor Volkswagen responded to requests for comment.
“It looks like a two-horse race now between Waymo and Cruise,” said Grayson Brulte, whose consultancy Brulte & Co. advises companies on autonomous technology and mobility. “At this point, it’s healthy that the industry is consolidating.”
The challenge of creating commercially viable autonomous vehicles has turned out to be far more complex than advocates for the technology anticipated.
Currently, Waymo and Cruise are the only companies with revenue-generating autonomous services. Waymo runs an around-the-clock robotaxi service in parts of suburban Phoenix. Cruise has launched a limited public robotaxi service in San Francisco, which operates mainly at night when traffic is light, and an autonomous delivery service with Walmart. Waymo is also preparing to offer its ride service in San Francisco and last week said it’s coming to Los Angeles. Zoox, a startup owned by Amazon, is also developing an electric robotaxi but hasn’t said when its service will launch.
Notably, the death of Argo AI follows the public listing of Intel-backed Mobileye on Tuesday in New York, one of the few autonomous technology companies to IPO this year. The news also coincides with a report that the U.S Justice Department opened a criminal investigation into Tesla over claims that it misled customers into thinking its electric vehicles can drive themselves, according to Reuters.
Ford shares were little changed on Wednesday, closing at $12.82 in New York prior to its results announcement.