The Volkswagen Group and the US car manufacturer Ford are abandoning a joint project for autonomous driving. Both companies are stopping financial support for the software developer Argo AI, which was supposed to develop computer systems for autonomously used robotic taxis for both Ford and VW. The US company Argo AI will therefore probably have to discontinue its business operations. The VW Group had invested $2.6 billion in the project three years ago. Ford is exiting the joint venture immediately, posting a write-down of $2.7 billion on its balance sheet, the second-largest American automaker late Wednesday evening announced after the US stock market closed. Volkswagen will present its balance sheet for the third quarter on Friday. This should also include write-downs on Argo AI.
The two car manufacturers have each held 40 percent of Argo AI and in 2019 they agreed on a broad cooperation on autonomous driving. The remaining shares are held by Argo management around its founder Bryan Salesky. VW intends to present a new partner for its robot taxis previously planned with Argo, which are still to be launched via the mobility subsidiary Moia in Hamburg in 2025.
The company has not yet announced the name of the future partner. In corporate circles, the Intel subsidiary Mobileye is traded as a favorite. In early October, VW CEO Oliver Blume said in an interview with the Handelsblatt that “we are currently in good talks with one of the world’s most renowned suppliers.” Mobileye is one of the leading companies in the development of autonomous driving systems.
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As it was said in industry circles in the evening, the dissolution of Argo AI is mainly due to the US company Ford. The American car manufacturer was not particularly satisfied with the development of the autonomous systems by Argo AI. Ford wanted to use robotic taxis very soon, but no real progress could be seen.
Ford then offered its Argo shares to the German competitor. But Volkswagen didn’t do that, which is why the surprising end of Argo AI has now come. After Ford’s push to sell the Argo shares, Wolfsburg’s trust in the joint venture continued to dwindle.
Surprising settlement
Many Argo employees in the USA and Germany reacted in astonishment to shock at the news on Wednesday. “There have been savings over the past few months. But we hired new colleagues last week. Nobody here expected an end,” an insider told Handelsblatt.
VW has already made a takeover offer to the more than 280 employees of the German subsidiary, Argo GmbH. “We are pleased to be able to inform you that your employment relationship will not be interrupted,” says an internal memo available to the Handelsblatt. The 2022 bonus will also be paid out in full. “Volkswagen plans to take over Argo AI GmbH.”
On Thursday at 10 a.m., the Argo employees should receive further details as part of a virtual conference. Still, the mood is bad. Although German Argo employees could be used in the Hamburg Robotaxi project or switch to Cariad, the Volkswagen software subsidiary is considered second-rate in the Munich Argo team, in which many well-trained IT experts work. “We all hoped to remain independent. A lot of good people will leave the company,” said one voice.
It looks even bleaker for the employees in the USA. Many would have to look for a new job here, said an Argo spokesman. Only a few teams received a takeover bid from Ford.
The intellectual property of Argo, i.e. above all the software developed, is to be exploited by both ex-partners. Employees at Ford and VW “have access to intellectual property” Argos, the spokesman said when asked.
According to Argo circles, Ford and VW should have brought in $400 million to $600 million to secure Argo’s upcoming fiscal year. However, Ford in particular was no longer willing to do this.
“Focus and speed count, especially when it comes to the development of future technologies. Our goal is to offer our customers the most powerful functions at the earliest possible point in time and to make our development as cost-efficient as possible,” said VW boss Oliver Blume on Wednesday evening about the withdrawal from Argo. The Robotaxi project with Ford had been negotiated by his predecessor Herbert Diess.
Ford plans to develop autonomous cars
The American car manufacturer Ford is expected to withdraw completely from its own development of autonomous robotic taxis in the future. Instead, the Americans want to focus on autonomous systems for normal cars. This development is slower than with the robotaxi. Completely autonomous cars will probably not be available until the end of the decade.
Even after the end of the cooperation with Argo AI, VW wants to send the first robotic taxis onto the streets in 2025. For a good year now, the VW Group has been preparing the first autonomous shared taxis for use in Hamburg. Argo AI was significantly involved in this preparatory work. However, VW now has to continue this project with a new partner.
There is skepticism about this schedule among Argo employees. “How does VW want to do in three years what Argo couldn’t do in six years?” said one voice.
Three years ago, VW and Ford had negotiated a comprehensive cooperation. This not only included autonomous driving. For example, Volkswagen supplies electric platforms to Ford for new European electric cars. In addition, both partners jointly produce light commercial vehicles. These projects should continue as planned. “All other partnerships with Ford will remain unchanged,” said Volkswagen in the evening.
According to company circles, the Wolfsburg-based company is also planning to start its own service subsidiary for autonomous mobility services in the USA.
With agency material.
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