Ford and Volkswagen announce they are disbanding a joint venture, Argo AI, which the companies had invested in to develop fully automated vehicles. Ford is citing the longer-than-expected wait for profitability coming from AVs.
In announcing its third-quarter earnings, Ford reported it was writing down a $2.7 billion investment. The automaker reported an overall third-quarter loss of $827 million.
The folding of Pittsburgh-based Argo AI, which was valued at $7.25 billion just two years ago, according to website Pitchbook.com, throws a broom-handle in the spokes of the whole notion of fully automated vehicles – an idea industry players have been touting for five years.
Ford officials say they can develop semi-autonomous technology that benefits drivers without sinking more funding into Argo AI. Ford, for example, already offers BlueCruise, which builds upon its Adaptive Cruise Control with Stop-and-Go, Lane Centering and Speed Sign Recognition features. It allows a driver to operate a vehicle hands-free while a driver-facing camera monitors them to make sure they are keeping eyes on the road.
The Dearborn, MI, automaker is facing high costs of making good on its plans and promises 40% to 50% of its global vehicle sales will be fully electric by 2030, as well as a continued build-up of undelivered, unfinished vehicles waiting for semiconductor chips, which have been in short supply for the past two years.
Ford’s decision to abandon Argo AI led VW to walk away as well, according to Ford officials. Ford and VW continue to cooperate on developing electric and commercial vehicles on shared architectures in the U.S. and Europe.
“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.
Argo AI was co-founded in late 2016 by Brian Salesky, who previously helped start the Google self-driving car project that became Waymo, and Peter Rander, who had worked on Uber Technologies’ autonomous-vehicle operations.
Enthusiasm for so-called robocars has waned in recent months. Shares in companies developing autonomous vehicles, such as Aurora Innovation, have plunged about 80% this year, while Intel listed the value of its Mobileye autonomous-driving business at less than half of the $50 billion it reportedly targeted less than a year ago.
The business model for automated driving has always seemed elusive, bordering on fanciful. The idea has been to escalate automated driving through a series of levels ending with Level 5, defined as “The vehicle performs driving tasks under specific circumstances. Geofencing is required. Human override is still an option.”
When Ford made its investment in Argo in 2017, it said it would need to see Level 4 vehicles (Vehicle does not require any human interaction in the vehicle's operation because it is programmed to stop itself in the event of system failure) on the road by 2021. Without a need for human intervention, the thought has been that Level 4 and Level 5 vehicles may not even require a steering wheel or pedals.
The idea has been laden with projections that ride-hailing companies such as Uber and Lyft would deploy driverless cars to cart people around smart cities outfitted with an electronic infrastructure of sensors and cameras that interact with the car’s sensors. The plan also anticipated hundreds of thousands of sales a year to commercial fleets.
Other AV operations and schemes are still operating – Cruise, Zoox, Waymo and May Mobility to name a few. Their progress and viability will be closely watched.
The development of autonomous driving has been done hand-in-hand with the commercialization of electric vehicles, which would make deployment easier to perfect.
But the horizon for delivering vehicles that would meet government approvals and make a profit, however, is unknown and hardly guaranteed. It’s also technology that governments have not mandated – unlike the deployment of zero-emission vehicles – nor is it something being demanded by any critical mass of customers.
There have been signs that Argo AI was having issues of viability and that Ford’s support was cracking. It cut 150 employees in August, including disbanding an entire editorial-content operation meant to create a communication/explanation platform of how Argo AI’s system works and the benefits to fleets, businesses and consumers.
Engineers and other employees will be reabsorbed into the two companies, Ford says.
