Ford and Volkswagen, two of the world’s biggest automakers, are halting their joint effort to develop self-driving cars, the AI startup Argo.
Ford said on Wednesday that it had concluded that the profitable commercialization of self-driving cars on a large scale was further than expected.
The company is still “optimistic” about the future of self-driving cars, “but cost-effective, fully autonomous vehicles at scale are a long way off and we don’t necessarily have to create that technology ourselves,” said Ford CEO Jim Farley. in a statement released as part of the company’s larger third-quarter earnings report.
The automaker will instead focus on simpler driver assistance technologies that have been easier to develop and bring to market. Some Argo AI employees will join Ford for that job, Farley said he said. Ford offers a driver assistance technology called BlueCruise, which is positioned as a rival to Tesla’s Autopilot software.
VW described similar plans in a statement.
“Our goal is to offer our customers the most powerful features as soon as possible and to implement our development as cost-effectively as possible,” VW CEO Oliver Blume said in a statement.
Argo AI confirmed in a statement that it would be closing.
“Many of the employees will have the opportunity to continue working on automated driving technology with Ford or Volkswagen, while the work of others will unfortunately come to an end,” Argo AI said in a statement.
Argo was founded in 2016 and in 2017 had less than 200 employees. In 2020 it reached more than 1,000 employees, after investments from Ford and VW, and around 2,000 in 2022.
Ford and VW said in July 2019 that they would jointly invest in Argo AI. The company was developing robotaxis, autonomous vehicles that can operate in a ridehail service that does not require a human driver. Argo was also developing AI self-driving delivery vehicles and worked on related programs in US cities.
The team effort allowed Ford and VW to share the high costs of developing self-driving cars.
Then-Ford CEO Jim Hackett said at the time that Argo AI would allow the company to “demonstrate the strength of our global alliance in this era of intelligent vehicles for a smarter world.”
Argo AI CEO Bryan Salesky spent three years working on Google’s self-driving program, now known as Waymo, which pioneered the industry in 2009. Its co-founder Peter Rander previously worked on Uber’s now-defunct self-driving program.
Companies have found that developing self-driving cars is prohibitively expensive. Ford said Wednesday it would take a $2.7 billion loss on its investment in Argo AI, leading to a third-quarter net loss of $827 million.
General Motors’ self-driving subsidiary Cruise is set to lose $1.4 billion in 2022, the automaker said Tuesday.
Even Alphabet’s Waymo, an industry leader funded by Google’s huge profits, has taken outside funding to alleviate high costs.
Ford said on Wednesday that Argo AI failed to attract new investors.