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An ID.Buzz autonomous vehicle traveling down a rainy street in Munich, Germany. | Source: Argo AI

News broke yesterday that Argo AI, an autonomous driving company backed by Ford and VW, would be closing its doors. The company’s parts will be absorbed by Ford and VW, and many of its employees will be receiving offers from the two companies.

Removing Ford’s support from Argo AI cost the company $2.7 billion in a “non-cash, pretax impairment”. Ford’s CEO and President Jim Farley gave more insight into the company’s decision to stop investing in Argo AI during Ford’s third-quarter earnings call. 

“We still believe in Level 4 autonomy that it will have a big impact on our business of moving people,” Farley said during the call. “We’ve learned though, in our partnership with Argo and after our own internal investments, that we will have a very long road. It’s estimated that more than $100 billion has been invested in the promise of Level 4 autonomy. And yet no one has defined a profitable business model at scale.”

Argo AI had been deploying its autonomous taxis in Austin, Texas, and Miami, Florida through its partnership with Lyft. It was also working with Walmart to deploy its autonomous cars to deliver groceries in Miami and Austin. 

Despite the company’s big partnerships that led to deployments across the country and billions of dollars of funding from Ford and VW, it had been showing signs of struggle. In July, Argo AI closed its Washington DC operation, where it had been testing grocery delivery for Walmart, and let go of 150 employees. The company said at the time it was making “prudent adjustments” to its business plan. 

Ford said in its earnings call that the company’s plan was to shift its focus away from funding Argo AI’s development of Level 4 autonomous driving technology, and towards creating its own Level 2 and Level 3 driving systems.

“And as for the future of true L4 autonomy, we don’t expect there to be a sudden aha moment like we used to,” Farley said in the earnings call. “Deploying L4 broadly, perhaps the toughest technical problem of our time, will require significant breakthroughs going forward in many areas: reliable and low-cost sensing, it’s not the case today; algorithms that can operate on limited compute resources without constraining the operating time and domain of an electric vehicle; breakthroughs in neural networks that can learn to operate a car more safely than a human, even in very complex urban environments.”

“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,” Farley said in a statement.

Volkswagen also pulls support

Argo AI’s other major investor, VW, also announced it had pulled its support from the company. VW said that it was “consolidating its development partnerships” and would no longer be investing in Argo AI. 

“Especially in the development of future technologies, focus and speed count,” Oliver Blume, CEO of Volkswagen AG, 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 is continuing to invest in Cariad, which will be developing partially and highly automated driving functions, up to Level 4 autonomy, for VW’s brands moving forward. The company is still planning autonomous driving deployments and announced that in 2025, VW expects customers to be able to book its autonomously driving ID.Buzz in Hamburg with its mobility company MOIA.

Both VW and Ford are working with Argo AI to extend offers to many of its around 2,000 employees. Farley said that Ford planned to bring on “several hundred people” from Argo AI. VW said it was “working with Argo AI to provide continued employment for employees”.