Ford Abandons the Self-Driving Road to Nowhere

Self-driving car developer Argo AI suddenly announced that it was closing its doors this week. Some of its 1,800-odd employees, already reduced by summer layoffs, are to be offered jobs to “work on automated technology with either Ford or Volkswagen,” Catherine Johnsmeyer, an Argo spokesperson, said in a statement. The two auto giants had sunk some $3.6 billion into Argo and owned most of it. Now, they had decided to pull the plug.

The end of Argo is just the latest sign that the global effort to get cars to drive themselves is in trouble—or at least more complex than once thought. As some investors bear down for a potential recession and others prepare for a revolution in the form of electric cars, the prevailing wisdom on autonomous vehicles has fractured in two.

Some, like General Motors subsidiary Cruise and Google sibling Waymo, have stuck with the program. They have started to roll out robotaxi services in a few places with limited functionality—at the cost of billions. Sure, they’re behind the schedules widely touted some five years ago, but they have adopted a pragmatic attitude and are plugging away at the problem.

Others, like Ford and Volkswagen, are changing lanes. They’ve given up spending heavily in hopes of a monster payout some distant self-driving tomorrow and prefer to back technologies they can sell to car buyers today.

Far from a lightweight in autonomous vehicles, Argo was a major and well-respected player. The company was founded in 2017 with a nearly $1 billion investment from Ford, which was then eager to catch up with the autonomous Joneses—Google, Uber, General Motors, and VW. Argo had pedigree, thanks to president Peter Rander, an alumnus of Uber’s abandoned self-driving project and among those the ride-hailing company had poached from the National Robotics Engineering Center, and CEO Bryan Salesky, a veteran of the Darpa challenges that kicked off the 21st century’s rush to autonomy.

Argo had wheels on the road and was testing in at least eight cities in the US and Germany, including its home base of Pittsburgh. And it had acquired a reputation in the industry for its safer approach to the dangerous project of testing robots on public roads. In addition to the backing of big names like Ford and Volkswagen, it received funding from partner Lyft, Uber’s ride-hailing rival.

What went wrong? Ford executives laid it out most bluntly on a call with investors this week: They don’t think self-driving makes much sense right now. The reasons given suggest big problems for the whole nascent self-driving industry. Jim Farley, Ford’s CEO, said the company learned through Argo “that we will have a very long road” to get to a truly self-driving car. Overall, some $100 billion has been poured into the AV industry, he estimated, “and yet no one has defined a profitable business model at scale.”

For the accountants at auto giant Ford, the math of Argo, which took in more than $3 billion during its brief life, just didn’t add up. They calculated it would be five years or more “before you could actually get to something that started to generate a meaningful business,” said John Lawler, Ford’s chief financial officer. The company disclosed a $2.7 billion accounting charge this quarter to wind down Argo, resulting in an $827 million loss.