21st Century Business Herald special correspondent Qian Boyan, reporter Zhang Mingyan from Frankfurt and Guangzhou
On October 26, local time, Ford Motor announced its third-quarter financial results. One of the biggest concerns was Ford’s announcement that its previous investment in autonomous driving company Argo AI had completely failed, and it had written asset impairments for a total of $2.7 billion previously invested.
Argo AI, which was born in Pittsburgh in the United States in 2016, attracted a $1 billion investment from Ford Motor just one year after its establishment. In the following years, Ford increased the investment to $2.7 billion. Argo AI invested 2.6 billion US dollars, forming a pattern in which Ford and Volkswagen each own about 40% of Argo AI. In 2020, the valuation of Argo AI once approached 10 billion US dollars, becoming the leader of the second echelon of international autonomous driving companies after Google Waymo, GM Cruise and Aurora. Since then, with the help of the Volkswagen Group, Argo AI has expanded to Europe and expanded its European business with Munich as its core. At that time, the R&D team of Argo AI exceeded 2,000 people, and it was trying to seek listing in 2021.
According to Ford and Volkswagen’s original plan, Argo AI, which focuses on L4 autonomous driving algorithms, will prioritize the creation of an autonomous taxi Robotaxi based on Volkswagen ID.Buzz. Argo AI has previously reached a cooperation agreement with Lyft, an American online car-hailing giant, to implement autonomous driving algorithms.
However, after the two major economies of the United States and Europe entered into a cycle of raising interest rates and tightening monetary policy one after another, self-driving companies that were once overvalued thanks to the flood of liquidity are falling one after another.
When Ford invested in Argo AI, it set a goal of mass production of driverless cars in 2021, and Argo AI itself set a time point of “delivering a mature autonomous driving system within four years” – and then “four years later.” It’s a four-year wait.
According to Detroit media reports, the divestment of Argo AI was led by Ford. Ford is not satisfied with the progress of the research and development of the autonomous driving algorithm and said that it “has not seen actual progress.” “We are optimistic about the future of Level 4 advanced driver assistance systems, but profitable fully autonomous vehicles at scale are still a long way off,” Ford CEO Jim Farley said in an Oct. 26 announcement. We don’t necessarily have to create this technology ourselves.” Doug Field, CEO of Ford Motor’s electric vehicles and digital systems, even bluntly said that achieving L4 autonomous driving is comparable to landing on the moon.
Ford has previously made it clear that the future will focus on L2+ and L3 advanced driver assistance functions that can provide practical services to customers.
According to a report by Handelsblatt, after Ford decided to divest Argo AI, it had hoped to sell 40% of its shares to the Volkswagen Group. Argo AI for divestment. Volkswagen will announce its third-quarter financial results on October 28, and it is expected that Wolfsburg will also officially announce a $2.6 billion write-down of assets.
According to the interview of the 21st Century Business Herald reporter, the technical team of Argo AI was not psychologically prepared for the sudden joint withdrawal of the two shareholders. Although Argo AI announced about 120 layoffs in July this year, equivalent to 6% of the number of employees, Argo AI has not completely stopped recruiting new employees since then.
The 280 employees of Argo AI’s Munich-based German subsidiary, Argo AI GmbH, have received a letter of invitation from major shareholder Volkswagen Group, which is considering accepting Argo AI’s German subsidiary in its entirety and allowing employees to work in its software subsidiaries CARIAD and Volkswagen. Jobs were chosen between Moia, the mobility-sharing subsidiary in Hamburg. But Volkswagen’s software subsidiary CARIAD has a fairly modest reputation in the European tech industry, and most of the team at Argo AI’s German subsidiary is expected to find another way out.
In contrast, only a small part of the technical team at Argo AI’s Pittsburgh headquarters has received an offer from Ford Motor.
Since the remaining 20% of Argo AI is held by founder Bryan Salesky and his team. Argo AI, which lacks the backing of other major shareholders, is almost certain to go bankrupt after the divestments of Ford and Volkswagen. According to internal estimates by Argo AI, the company still needs $400 million to $600 million in funding to support it through 2022, and Ford is unlikely to agree to another capital injection.
Unlike Ford, which has completely abandoned the Level 4 autonomous Robotaxi, the Volkswagen Group is currently insisting on launching a Robotaxi fleet in Hamburg in 2025 through its Moia subsidiary. Previously, the German subsidiary of Argo AI was the main technology provider for the project. VW has not announced who will be the replacement for Argo AI, but it is widely expected that Mobileye, Intel’s self-driving subsidiary that has just gone public, will become VW’s technology supplier.
However, the fall of Argo AI is not an isolated case.
On September 3, Aurora, which once claimed to be one-third of the world with Google Waymo and GM Cruise, mentioned in a “leak” document that the company was considering selling to Microsoft or Apple as a whole to survive. Since its backdoor listing in May 2020, Aurora’s shares have fallen from $15 per share to $1.3 per share, a reduction of more than 90%. Today, Aurora’s market value is only about $2.5 billion, which is not as good as Ford and Volkswagen’s investment in Argo AI. half of the amount.
Mobileye, Intel’s autonomous driving subsidiary listed on October 26, also confirmed the indifference of the capital market to the autonomous driving industry. Although Mobileye did not have the embarrassing situation of breaking at the opening, the company’s valuation has shrunk to $17 billion from the previous $50 billion.