Argo AI, the self-driving startup backed by Ford and Volkswagen, is shutting down, The Verge has learned. Employees were notified that an announcement would be made late in the day Wednesday. (The news was first reported by TechCrunch.)
The company, which was founded by veterans of Google and Uber’s self-driving car projects, has lost the financial support of Ford and VW, a source said. And according to TechCrunch, the company’s resources will be absorbed by both automakers. Argo is estimated to have around 2,000 employees, though it did announce a round of layoffs earlier this year. A spokesperson for Argo declined to comment.
Ford, in an announcement as part of its third quarter earnings, said that Argo has been unable to attract new investors. The automaker plans to “shift its capital spending from the L4 advanced driver assistance systems being developed by Argo AI to internally developed L2+/L3 technology” — which is commonly associated with advanced driver assist technology. Ford said it recorded a “$2.7 billion non-cash, pretax impairment on its investment in Argo AI, resulting in an $827 million net loss for Q3.”
In the earnings report, Ford said it had hoped to roll out Argo’s driverless technology as a commercial product in 2021 — but was unable to do so.
“Fully autonomous vehicles at scale are a long way off”
“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,” said Ford CEO Jim Farley, in a statement. “It’s mission-critical for Ford to develop great and differentiated L2+ and L3 applications that at the same time make transportation even safer.”
Farley said that some Argo engineers would be offered jobs at Ford to work on the automaker’s driver assist products. “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,” he added.
Argo was founded in 2016 by Bryan Salesky, the former head of hardware development for Google’s autonomous vehicles (AVs), and Peter Rander, who previously served as an engineering lead for Uber’s self-driving branch. Ford injected $1 billion into the company in 2017, and Volkswagen followed up with a $2.6 billion investment in 2020.
Argo had laid off some employees earlier this year
The funding has allowed the company to build out its AV business in the US and overseas. Argo AI is currently in the process of testing fully autonomous vehicles in Washington, DC, Miami, and Austin and planned on partnering with Lyft in those cities. It also teamed up with Walmart to deploy a driverless delivery service and was working toward its goal of launching an automated rideshare service with Volkswagen in Germany by 2025.
Ford has long touted Argo’s progress as crucial to the automaker’s overarching plans to launch a commercial robotaxi service. Earlier this year, Ford CEO Jim Farley congratulated Argo for removing safety drivers from its vehicles in Austin and Miami, two of the cities where the company tests its vehicles.
“Congratulations to our partners Argo AI!” Farley wrote in a LinkedIn post. “As we work to build and scale a fully autonomous commercial service, this milestone from Argo is a significant step forward in their technology development and the future of transportation!”
Several months later, when it was reported that Argo was laying off about 150 employees, a spokesperson called the company a “critical partner of our self-driving service, and we will continue to support them and work together on developing the self-driving technology that will power our self-driving service.”
But cracks were starting to show in these multibillion-dollar companies. Argo’s main rivals, Waymo and Cruise, had major leadership shake-ups. Valuations have dropped as timelines have stretched further and further out. Companies that went public by SPAC have seen their share price tumble. The costs have grown while revenues trickle in.
Argo came very close to merging with a SPAC, which stands for special acquisition company, even going so far as to choose JP Morgan Chase and Morgan Stanley to manage its most recent funding round. The company was said to be going public with a $7 billion valuation.
