According to persons familiar with the situation, Argo AI, an autonomous vehicle firm that debuted in 2017 with a $1 billion investment, is closing down. Its elements will be merged into its two primary sponsors, Ford and VW.
Multiple sources who requested anonymity said that during a Wednesday all-hands meeting, Argo AI personnel were informed that some might receive offers from the two automakers. It was not known how many will be hired by Ford or Volkswagen or which businesses would get Argo’s technology.
Employees were informed that they will earn two different bonuses — an annual reward and a transaction incentive following the closing of the merger with Ford and VW — as part of their severance package, which also includes insurance.
These are available to all Argo workers. In addition, they will receive termination and severance pay, as well as health insurance, if they are not hired by Ford or VW. It was a significant deal, according to many sources who spoke with TechCrunch, and the company’s founders personally addressed its more than 2,000 employees.
“In coordination with our shareholders, the decision has been made that Argo AI will not continue on its mission as a company. 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,” Argo said in a statement.
In its third-quarter financial report, which was made public on Wednesday, Ford stated that it had strategically decided to focus more of its efforts on creating advanced driver support systems rather than robotaxi-compatible autonomous driving technology. The business reported a $827 million net loss for the third quarter after recording a $2.7 billion non-cash, pretax impairment on its investment in Argo AI.
The difficulty of Argo to draw in new investors appears to have contributed to that decision. Jim Farley, the CEO of Ford, revealed that by 2021, the business expects to be able to commercialize autonomous vehicle technology.
Farley implied that Ford would eventually be able to purchase AV technology rather than creating it in-house. Although profitable, fully autonomous vehicles at scale are still a ways off, he continued, “We’re enthusiastic about a future for L4 ADAS, and we won’t necessarily have to produce that technology ourselves.”
In 2016, Bryan Salesky and Pete Rander founded Argo. When Ford stated in February 2017 that it will invest $1 billion in Argo over five years, the firm emerged from hiding. Since then, the business has raised more than $2.6 billion, mainly from Ford and Volkswagen, in an effort to create, test, and ultimately market its automated driving system.
The initial Ford investment occurred at a time when the budding autonomous vehicle industry was experiencing a lot of excitement. Startups were securing mind-blowing venture capital deals, many of which were formed by early adopters of Google’s self-driving initiative. Thereafter, other companies were purchased: GM paid $1 billion for Cruise in 2016, Delphi, which is now Aptiv, paid $450 million for nuTonomy, and Amazon purchased Zoox.
Commercializing AV technology has proven to be more challenging than anticipated, despite the promises. Companies in the sector folded or were acquired by other businesses, notably Apple, in a wave of industry consolidation.
Others, in search of the funding they require to carry out their objectives, have turned to the public market, either through a conventional IPO like TuSimple or by merging with special purpose acquisition companies like Aurora did.
In the previous year, Argo appeared to be making progress. In Austin, Detroit, Miami, Palo Alto, and Pittsburgh, the company’s headquarters, self-driving Ford Fusion cars and, as of late, Ford Escape Hybrids have been often spotted testing on public highways.
For its testing operations in Hamburg and Munich, Argo was using the all-electric Volkswagen ID. Buzz in the EU. In addition, Argo is doing multiple pilot projects with Lyft, Walmart, and 412 Food Rescue in Austin, Miami, and Pittsburgh.
The business just last month unveiled an ecosystem of goods and services intended to support robotaxi and commercial delivery operations. The goods go far beyond the self-driving system that enables a car to negotiate city streets without a human driver at the wheel and include data analytics, high-definition mapping, cloud-based communication tools, and fleet management software. Argo appeared to be announcing its opening to the world.
