Argo AI – Self-driving car startup has just announced its dissolution: Raised billions of dollars from Ford and Volkswagen, even Amazon also aspired to support

The collapse of Argo AI after investors withdrew their capital, raising many doubts about the future prospects of self-driving cars.

Amazon has emerged as a potential savior for Argo AI, a self-driving car tech startup that was once backed by two of the world’s biggest automakers, Ford Motor and Volkswagen. However, the downturn in the economy caused this startup to be dissolved, thereby raising many doubts about the future prospects of self-driving cars.

Previously, Amazon planned to invest several hundred million dollars in Argo last spring. The retailer plans to use this advanced technology to automate some of its electric delivery vans from Rivian Automotive, and then set up a test fleet in multiple cities across the United States.

Ford Motor and Volkswagen AG – the two main investors of Argo AI at that time were very eager to have a third partner to share the cost of technology development. VW’s then-CEO, Herbert Diess, even traveled to the US to meet Amazon co-founder Jeff Bezos to discuss the issue.

However, the budding relationship was “soon to die” as Ford and VW feared Amazon would divert Argo’s attention. Companies have also struggled to come up with a common governance and control mechanism for self-driving car startups.

Amazon then decided to withdraw from the deal because the investment costs were too high. Without Amazon, Argo AI could not attract investors and strengthen the confidence of experts, eventually being forced to close. The valuation of this startup, which was previously in the euphoria, has reached more than 7 billion USD.

“We are incredibly grateful for the dedication of the members of Argo AI, and very proud of the achievements we have achieved together,” Argo co-founder Salesky said in an emailed announcement. .

Amazon’s retreat and the sudden demise of Argo AI underscore the fact that the heyday of self-driving cars and trucks will soon be over. Skepticism is growing, especially at a time when global automakers are investing billions of dollars in converting to electric vehicles to meet climate change goals.

Founded by Bryan Salesky, a former Google self-driving car project engineer, and Pete Rander, a former Uber Technologies driver of autonomous taxis, Argo is highly regarded for its engineering and huge backing potential. Ford initially poured $ 1 billion into this startup in 2017, then went to VW with an investment of $ 2.6 billion in 2020.

However, Ford, which is spending $50 billion on electric vehicles by 2026, has abandoned plans to pursue the dream of self-driving cars, focusing instead on current technology such as hands-free driving. Blue Cruise.

“In 2017, when Ford invested in Argo AI, the company predicted it could bring ADAS Level 4 technology to market by 2021. However, things have changed,” said Ford CEO Jim Farley. know. “We are optimistic about the future of ADAS technology, but it is far from profitable for the company. We don’t necessarily have to create that technology ourselves.”

Ford then concluded that the fruits for the necessary breakthroughs in autonomous taxis and driverless deliveries would come in just over five years. Doug Field, Ford’s chief technology officer, also called self-driving cars “the hardest engineering problem of our time, even harder than putting a man on the moon.”

Going back a year, Ford and VW still envision a future for the Argo if it can attract more investment. Amazon’s interest then stoked hope among them that Argo had found a third major backer.

Argo and Amazon first partnered through a pilot project in Miami in 2019. A test fleet of Ford Fusion hybrids equipped with Argo’s self-driving system drove from an Amazon warehouse to a delivery point. last leg. However, after that, no packages were shipped in this way.

At the start of this year, there was a lot of optimism that Amazon would make the deal with Argo. The self-driving car company is so optimistic that it has hired more staff to meet the need to equip its Rivian trucks with new technology. Argo’s global staff at that time amounted to more than 2,000 people.

By spring, Ford and VW still couldn’t agree on Argo sharing terms. VW fears that Amazon – with a reputation for dominating partnerships – will draw talent and resources away from the German automaker’s ambitious self-driving car strategy.

Around that time, Russian-Ukrainian political tensions continued to destabilize the global economy, along with supply chain problems and the highest inflation in 40 years in the United States. Spending billions on an unproven technology doesn’t seem like a good bet.

Key players in the deal began to leave, including the CEO of mergers and acquisitions at Amazon and Dave Clark, the CEO of the consumer business.

The negotiations lost momentum. VW’s CEO, Diess, was later ousted by the board amid growing concerns about the company’s direction. Just three months earlier, Diess was still posting on Twitter a photo of herself chatting with Jeff Bezos about VW’s own electric cars.

After the deal with Amazon collapsed, Argo laid off 150 previously recruited employees. The shifting economy has also taken a toll on Amazon, which is planning to lay off about 10,000 of its own employees.

Instead of considering a Ford investment acquisition and a complete takeover of Argo,

VW also invested $2.3 billion to form an autonomous vehicle joint venture with China’s Horizon Robotics Inc. This left Argo finally with nowhere to turn.

“It looks like there are only two horses left in the race right now, Waymo and Cruise,” said Grayson Brulte at Brulte & Co, which provides consulting services on autonomous technology.

By: Bloomberg, Forbes