Ford and Volkswagen pull the plug on robocar unit Argo AI in major setback to their self-driving plans

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 company said in a statement. Ford’s decision led VW to walk away, too, according to people familiar with the matter. Ford and VW continue to cooperate on electric and commercial vehicles in the US 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 Chief Executive Officer Jim Farley said in a statement Wednesday. 

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 Inc.’s autonomous auto operations. 

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

Ford will record a $2.7 billion non-cash, pretax impairment on the Argo AI investment. Argo AI was unable 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,” said Argo AI in a statement. 

VW intends to focus on other efforts and partnerships to develop automated and self-driving technology. The automaker earlier this month also announced a €2.4 billion ($2.4 billion) deal to invest in China’s Horizon Robotics Inc. 

“Especially in the development of future technologies, focus and speed count,” 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.”

VW in 2020 finalized plans to partner with Argo AI with a $1 billion cash infusion and folding in its $1.6 billion 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.

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. 

Hamburg Plans 

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 U.S. 

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. 

The company declined to comment on how much funding it had so far invested in Argo AI. Further details of the financial impact of the decision will be disclosed on Oct. 28 during VW’s presentation of third-quarter earnings.