Here’s Why Argo AI Is Shutting Down

Mounting losses and lack of new investors forces move, Ford says, amid longer-term doubts about Level 4 tech.

• Argo AI, an autonomous startup backed by Volkswagen and Ford, shuts down amid mounting losses.
• Argo AI would have provided the software behind Volkswagen’s planned MOIA ride-pooling service in Germany.
• Volkswagen’s Level 3 driver-assist technology is expected to be folded into Ford’s research and development base.

Autonomous tech developer Argo AI, backed by Volkswagen and Ford, is shutting down, with some parts of the company expected to be absorbed into the two automakers. The start-up had been engaged in research and development of driver-assist systems as well as Level 4 autonomous driving technology since 2016.

The decision is seen as being tied to growing losses for its two main automotive backers at a precarious time in the industry, collectively amounting to billions, as well as persisting uncertainty regarding the timeline for the commercial arrival of Level 4 technology. In many ways this uncertainty applies to all leading autonomous vehicle developers, including those that have fielded Level 4 vehicles on limited scales, but this doesn’t make the continued expenditures any less significant. This uncertainty extends both to the underlying technologies as well as the regulatory environment in the US and elsewhere when it comes to commercializing Level 4 technology.

“During the quarter, Ford concluded that the auto industry’s large-scale profitable commercialization of Level 4 advanced driver-assistance systems will be further out than originally anticipated—but development and customer enthusiasm for benefits of L2+ and L3 ADAS warrant dialing up the company’s near-term aspirations and commitment in those areas,” Ford said in announcing its third-quarter results.

Ford said it is moving its capital spending away from Level 4 technology in favor of Level 2 and Level 3 tech developed in-house. The automaker also noted that Argo AI had been unable to secure new outside investors to continue operations.

Argo has been using Ford and VW vehicles for most of its testing in recent years.

Argo AI

“Accordingly, Ford recorded a $2.7 billion non-cash, pretax impairment on its investment in Argo AI, resulting in an $827 million net loss for Q3,” the automaker added.

It’s not entirely clear what this means for Volkswagen’s planned operational debut of Level 4 ride-pooling shuttles in Germany, which was slated for 2024. However, the German automaker’s Level 3 driver-assist tech is expected to be folded into Ford’s research and development base.

I have the greatest respect for the team at @ArgoAI & what they’ve accomplished. I’m excited we’re going to bring in many of these brilliant people to @Ford to help us create a terrific L3 BlueCruise system that enables our customers to travel w/o their eyes on the road.

— Jim Farley (@jimfarley98) October 26, 2022

“As for the future of true L4 autonomy, we still believe it will be incredibly impactful in the long term. The muscles we build w/ our new talent in deploying a transformative BlueCruise L3 system will be essential to the future of accessible, driverless vehicles in everyday life,” Farley added.

The automaker’s comments highlight a more pronounced split between the goals of Level 2/3 driver-assist technology and Level 4 robotaxi technology, representing quite different aims in the industry despite the overuse of the catch-all term “self-driving” in the press.

Ford says it is willing to invest more time and money in Level 2/3 driver-assist tech—the latter offering eyes-off, hands-off capability—but sees a much more uncertain future for Level 4 autonomy, which aims to offer an entirely driverless experience within a geofenced area.

Farley’s comments also suggest a growing belief within the industry that Level 4 technology is too expensive at the moment to be commercially viable and will remain so for the foreseeable future, even as GM’s Cruise and Waymo continue with small-scale operational debuts.

Jay Ramey Jay Ramey grew up around very strange European cars, and instead of seeking out something reliable and comfortable for his own personal use he has been drawn to the more adventurous side of the dependability spectrum.