Some $4 billion poured by Ford and Volkswagen into Argo AI will go down the drain after the two auto companies pull off the plug on the autonomous car developer amid signs the program will lead to nowhere.
Both Ford and Volkswagen funded Argo AI, owning most of it.
Argo spokesperson Catherine Johnsmeyer announced that Argo would close its doors this week.
Its workers, some 1,800-odd employees, will work with either Ford or Volkswagen, she said.
Behind Schedule
Argo AI's demise has pointed to the global effort to have self-driving cars hit a roadblock.
Fear of potential recession hit the global market, and some investors in self-driving car development become wary. Other investors are cashing in on electric car development.
It is true that some companies decided to stick it out with their respective programs on autonomous vehicles, such as Cruise and Waymo, with little success.
Waymo, a Google sibling, had already rolled out a fleet of ride-hailing self-driving cars in select places, costing it billions in investments.
Admittedly, driverless car technology is behind schedule for a number of years, depending on who you are going to ask.
Tesla CEO Elon Musk said it would take another two years to have your car drive for you, the Guardian reports.
He confidently predicted the dawning of the day when car owners would no longer worry about who will drive for them.
Musk considered the pursuit of fully autonomous cars "a solved problem." A closer look at the Tesla program on driverless cars would say otherwise. Even in Tesla, the work is not yet done.
Uber CEO Travis Kalanick has a different take. To have a fully autonomous car will take more years, he said.
In 2015, the Uber CEO told journalists that he expects his ride-hailing service will be driverless by 2030.
Some Are Changing Direction
Other companies, such as Ford and Volkswagen, are changing direction.
A case in point is Argo AI, where the two auto leaders have stopped funding the seemingly unattainable and shifted their attention to technologies they can sell in the market.
Argo's demise could not be dismissed as another developer bites the dust. The driverless car developer was not a lightweight in the industry.
With almost $1 billion in money from Ford, Argo AI was established in 2017.
At the time, Ford was whetting its appetite to join the autonomous car bandwagon with its shining knights in Uber, Google, Volkswagen, and General Motors.
Tesla debuted its semi-autonomous car in 2014, a picture of a rudimentary model of what a driverless car could be.
Argo had its lineage. Its president is Peter Rander, a graduate of Uber's self-driving program, while CEO Bryan Salesky is considered a veteran of the new century rush to autonomous cars.
Argo's Initial Success
Argo AI had cars hitting the road. It was testing driverless cars in eight cities in Germany and the United States. Pittsburgh, home to Argo, had also seen the initial triumphs of the company.
Aside from Ford and VW, Argo had also enjoyed funding from Lyft, Uber's rival.
But these successes, Ford told the investors, do not make sense in the short term.
The nascent industry will take long years to attain the objectives, Ford CEO Jim Farley said.
Farley said around $100 billion had been poured into the industry, and no one has developed a profitable model for companies to jump in.
Ford Chief Financial Officer John Lawler said it would be unreasonable to pour more money into an industry that cannot give meaningful business.
The company has spent up to some $2.7 billion for Argo this quarter alone, he said.
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