A blow to the autonomous vehicle. The autonomous driving specialist Argo AI, supported with billions of dollars by Ford and Volkswagen, ceases its activity. The information was spotted by TechCrunch before an earnings report from Ford noted that Argo AI is in liquidation. The manufacturer wants to hire engineers from the start-up to accelerate the development of its advanced driver assistance systems (ADAS) corresponding to levels of autonomy 2 and 3 SAE.
A lack of investors?
The automaker said it recorded a $2.7 billion non-cash, pre-tax writedown on its investment in Argo AI. This resulted in net losses of $827 million for the third quarter. Argo AI was unable to attract new investors. The start-up, founded in 2016, initially thought to widely commercialize self-driving technology by 2021. It has raised more than $2.6 billion, mainly from Ford and Volkswagen to develop, test and commercialize its technology. Ford had injected a billion dollars in 2017 and Volkswagen had announced in 2019 to invest up to 2.6 billion dollars in the nugget (including 1 billion in capital and 1.6 billion in assets).
“In coordination with our shareholders, the decision has been made that Argo AI will not continue its mission as a company. Many employees will receive an offer from Ford or Volkswagen to continue working on self-driving technology , while the others will unfortunately be made redundant”, Argo AI wrote in a press release. The number of employees to whom the manufacturers will offer positions is not specified.
Lyft had also taken a 2.5% stake in Argo AI. The VTC company wants to deploy at least 1,000 autonomous vehicles on its network over the next five years. She told TechCrunch that the announcement of Argo’s liquidation had no bearing on her own strategy. Note that Lyft is also a partner of Motional, the joint venture of Hyundai and Aptiv, and Waymo.
Ford Focuses on ADAS
On this occasion, Ford clarifies its strategy in autonomous driving. The manufacturer wants to focus on advanced driver assistance systems and refocus its spending on these technologies that it is developing in-house and no longer on an autonomous driving system that can be used as part of the deployment of a fleet of robot taxis. It ensures that these features are acclaimed by customers. “It is estimated that over a hundred billion has been invested in the promise of SAE Level 4 autonomyexplained Jim Farley, in remarks taken up by Engadget, and yet no one has defined a profitable business model on a large scale.”
However, he still seems confident in the development of autonomous driving technology and even envisages that the manufacturer could buy such technology when it sees the light of day: “We’re optimistic about the future of SAE Level 4 ADAS, but large-scale, cost-effective, fully autonomous vehicles are still a long way off and we won’t necessarily have to create this technology ourselves.”
He also highlighted the benefits of internal developments regarding ADAS. Being the owner of the software allows you to collect a lot of data that is valuable for continuing to improve it.
Very long and costly developments
For a few years, the autonomous driving sector has largely attracted investors. Start-ups have been able to raise substantial sums, starting with Argo AI, which rose to prominence in 2017 when Ford announced a billion-dollar investment over five years. Startups were often founded by industry pioneers who had transitioned into Google’s self-driving program, now known as Waymo. A series of acquisitions followed: General Motors bought Cruise for $1 billion in 2016; Aptiv, ex-Delphi, acquired nuTonomy for $450 million in 2017; and Amazon bought Zoox in 2020 for what is believed to be over $1 billion.
But the initial promise is still not realized. The development of this technology is taking much longer than originally announced. Research is extremely expensive and it is nearly impossible for companies to make money developing this technology. TuSimple made the choice of an IPO when Aurora decided to merge with a Spac. Uber and Lyft have sold off their divisions developing such technology.
Argo ran several test programs in the United States (Austin, Detroit, Miami, Palo Alto and Pittsburgh) and in Germany (Hamburg and Munich). Last month, the startup unveiled an ecosystem of products and services (fleet management software, data analytics, HD mapping, communication tools) designed to support robot taxi delivery and operations. The idea behind seemed to diversify its sources of income somewhat and open up to other economic partners. A decision that probably came too late.
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