Here’s why Ford and Volkswagen are dropping their autonomous car project

Ford Motor Co. and Volkswagen AG have announced they are closing down Argo AI, an autonomous vehicle technology company backed by both. Ford President and CEO Jim Farley said in a statement that the company is adjusting to market conditions. “During the quarter, Ford concluded that the large-scale profitable commercialization of advanced Level 4 ADAS by the auto industry is further away than originally anticipated – but warranting the development and customer enthusiasm for the benefits of L2+ and L3 ADAS.” the selection of the company in the near future. long-term aspirations and commitments in these areas,” the company’s statement said. “During the third quarter, Ford made a strategic decision to shift its investments from the L4 advanced driver assistance systems developed by Argo AI to the internally developed L2+/L3 technology.”


That ford The statement also notes that Argo AI had failed to attract new investors. Ford subsequently took a $2.7 billion pre-tax non-cash impairment charge on its investment in Argo AI, resulting in a net loss of $827 million in the third quarter.

Ford remains “optimistic” about the future of autonomous vehicles, “but viable, large-scale, fully autonomous vehicles are still a long way off, and we don’t necessarily need to develop this technology ourselves,” said Jim Farley.

Meanwhile, Volkswagen has detailed a similar path in a statement. “Our goal is to offer our customers the most powerful functions at the earliest possible time and to set up our development as cost-effectively as possible,” said VW boss Oliver Blume in a statement.

At the same time, Argo AI admitted to ceasing operations. “Many of the employees will be given the opportunity to continue working on automated driving technology at either Ford or Volkswagen, while unfortunately employment for others will end,” Argo AI said in a statement.

Related: Why fully autonomous cars won’t be a common sight on the streets anytime soon


Biggest Challenge: Funding Ford and Volkswagen’s autonomous car project

As noted above, Argo was unable to secure further funding from new investors, so Ford stopped funding the company and instead focused on its own driver-assistance technology. Meanwhile, Volkswagen invested $2.6 billion in Argo in 2019.

“The investment will be in the form of $1 billion in cash, with contributions from the Munich-based Autonomous Intelligent Driving (AID) group,” Forbes said in July 2019. “AID has about 200 engineers and will invest $1.6 billion valued in US dollars. As a result of the transaction, AID will merge with Argo AI to become Argo AI Europe.”

It’s surprising that Argo failed given Ford and Volkswagen’s significant investments in the project, but it raises serious questions about the escalating costs involved in developing autonomous vehicles.

After the early enthusiasm for autonomous vehicles, several investors have recognized the dangers and the significant financial obligations involved and are now withdrawing from this effort. For example, Lyft has announced that it will sell its Level 5 self-driving division to Woven Planet Holdings, a subsidiary of Toyota Motor, in a deal worth $550 million.

In 2020, Uber, which has invested hundreds of millions of dollars in a self-driving car project, has sold its autonomous vehicle unit to a Silicon Valley startup. And Nuro acquired Ike, a startup founded by former employees of Apple, Google and the Uber Advanced Technologies Group that hoped to build self-driving trucks. Quite literally, even the wealthiest companies are abandoning self-driving car efforts because it will take years and billions of dollars for autonomous cars to become a reality.

Connected: These vehicles are the closest thing to fully autonomous driving for the 2022 year model

Ford and Volkswagen: Creating commercially viable autonomous vehicles presents unique challenges

Automakers and tech startups face many obstacles and spend billions of dollars to produce autonomous vehicles. Obviously there are the legal implications, as we’ve seen in discussions with Tesla’s autopilot and subsequent crashes. Who is liable if the car kills a pedestrian or crashes into property? Is it the car manufacturer? The company that developed the software? And who bears the insurance obligation?

There are currently 38 states that have enacted autonomous vehicle legislation, but so far there is no consensus on the issue or comprehensive federal regulations. As such, US Representative Debbie Dingell said Reutersthe United States “nor can afford to have a patchwork of laws in 50 states.”

In addition to liability concerns and a lack of industry standards, there are also technical difficulties. Radar interference is the most obvious. “There is a possibility that the radio waves sent by two or more vehicles in close proximity will interfere with each other, resulting in false signals,” he says Aberdeen Strategy and Research. “Planes can easily use radar technology because the volume of air traffic is negligible compared to congested streets in most cities. Also, there is a considerable distance between two planes.”

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