TechCrunch broke news that Argo.AI is shutting down yesterday. According to reports, the company’s activities will move to Volkswagen and Ford, its two biggest sponsors.
A number of insiders who chose to remain anonymous told TechCrunch that during a Wednesday all-hands meeting, Argo.AI employees were informed that some of them will be receiving offers from the two automakers. It was unknown how many individuals Ford or VW would hire and which businesses would ultimately acquire Argo’s technology.
The fact that the company’s employees won’t be left out in the cold is one very nice thing. All Argo employees will receive a severance package that includes insurance as well as two bonuses: one will be given annually and the other will be given when the Ford and VW agreement closes. Additionally, Ford and VW will provide termination and severance money, which includes health insurance, to those who are not hired. It was a significant deal, according to many sources who spoke with TechCrunch, and the company’s founders personally addressed its more than 2,000 employees.
WHY DID ARGO CLOSURE? Argo appeared to be a highly promising company to those who aren’t Tesla superfans with blinders put in by the Technoking (or whatever he is these days). In addition to having the support of two significant automakers, it was also making good strides toward providing rides in numerous locations and has agreements to provide autonomous rides through Lyft.
Those of us who saw the potential are therefore probably curious about what transpired.
Thankfully, Ford and VW do give us some hints. Let’s begin with a little thread Jim Farley posted on Twitter:
At @Ford , we’re on a mission to make travel better for everyone, not just a select few. Yes, there is potential for lucrative L3-related revenue sources. In the end, though, it’s all about saving millions of people time and lessening the boredom of long stretches of roadway and stop-and-go traffic.
October 26, 2022 Jim Farley (@jimfarley98)
We can infer from this that the business wishes to change its focus. They prefer to concentrate on a hands-free eyes-free experience in privately-owned vehicles rather than investing in a robotaxi company that would provide what many refer to as SAE “Level 4” Autonomy. The TechCrunch story also mentioned that ambitions to offer more by 2021 didn’t materialize and that Ford and VW likely opted to abandon Argo because no one else wanted to invest in it.
Farley also referred visitors to a Ford press statement that provides additional context.
In every decision we make, we consider what’s best for our customers, said President and CEO Jim Farley. Ford ‘s mission statement reads, “Winning for customers is driving a re-founding of the firm with high ambitions for quality, innovation, profitability, and growth across all our businesses — making smart decisions about how we deploy capital even as we learn and adapt.”
Ford continued by saying that this entails adapting as conditions change. Ford came to the decision at the end of the previous quarter that widespread adoption of financially successful Level 4 ADAS won’t happen as quickly as planned. However, they also discovered that L2 and L3 ADAS benefits are developing, and customers are enthusiastic about them, which justifies raising their short-term ambitions and commitment in those areas.
For what it’s worth, Ford claims that it made the decision to divert its capital spending from Argo.AI, which is creating L4 advanced driver assistance systems, and instead use it to fund the development of L2 /L3 technologies within the company. Argo.previous AI’s inability to attract fresh investors was the cause of this. Ford made this decision, which resulted in a $2.7 billion non-cash loss before taxes due to its investment in Argo.AI and a $827 million net loss in the third quarter. Ouch!
To put it another way, Ford decided to cancel Argo because it didn’t think it would succeed any time soon, wrote off a sizable loss, and is now using what lessons it can to improve non-robotaxi technology.
WHY NOT MENTION VOLKSWAGEN? Volkswagen released a press release of its own regarding this as well.
VW referred to the move as “focused,” adding that rather of making additional investments in Argo.AI, it intends to collaborate more with a different supplier of autonomous vehicles, Cariad. According to the press release, Cariad is continuing to advance the development of highly automated and autonomous driving in conjunction with Bosch and, in the future, in China, with Horizon Robotics.
Similar to Ford, the firm wanted people to know that it cares about what happens to Argo employees. Volkswagen stated that it was collaborating with Argo AI “to maintain employment for current staff members and to advance the most promising initiatives in the area of autonomous driving.”
Volkswagen didn’t go into as much detail as Ford, but it is very obvious that both companies are communicating the same message. Although Argo wasn’t successful, they still believe that its technology and former employees have a lot of potential.
AUTONOMY IS DEFINITELY NOT AS EASY AS PEOPLE THINK It’s very obvious that everyone in the industry was extremely bullish about the future of autonomous vehicles, even though Tesla made the most sweeping statements. I don’t need to explain what has happened to Tesla, but GM created Cruise, Ford/VW worked on Argo, and Google/Alphabet ended up with Waymo. All of them had schedules and plans, at least some of which didn’t work out.
While there has been a lot of online discussion about this, the only thing we can say with certainty is that it is a much bigger difficulty than anyone anticipated. Therefore, it would be unfair to conclude that anyone was an idiot, including Elon Musk. It was obvious to the subject matter specialists that it would be simpler to achieve, and wise people paid attention to them. While some of them performed better than others, robotaxis are still only operational in a relatively small number of places today.
DO WE NEED TO PREPARATE FOR ANOTHER AI WINTER? The term “AI winter” refers to periods in the history of artificial intelligence when funding and interest in the subject have declined. This is comparable to the concept of a nuclear winter, where the environment is so hostile that no life can endure. Artificial intelligence has seen phases of anticipation and excitement, followed by disappointment, criticism, and budget cuts.
People may be afraid that we’ve seen yet another hype cycle fail in artificial intelligence and that winter is upon us after watching Ford suffer a $2.7 billion hit to exit Argo and other businesses still struggle with autonomous vehicles.
Even in the more limited autonomous vehicle sector, which is a part of the greater AI field, I believe it is too early to make that judgment. If we witnessed GM and Alphabet/Google leaving the building like Ford and VW, I would advise gathering coats, but as of right now, there is no indication that they are doing the same. Additionally, Tesla is still working on FSD Beta and developing Robotaxis.
Argo.AI provided the main image.
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