Argo AI

What did it do?

Argo AI was a Pittsburgh-based company developing software, hardware, maps and cloud infrastructure for driverless vehicles. It was founded in 2016 by Bryan Salesky and Peter Rander, veterans of the autonomous driving programmes at Google and Uber. Its biggest backers were Ford and Volkswagen, and the company also ran pilot services such as autonomous grocery delivery with Walmart.

Why did it shut down?

Getting Level 4 fully autonomous driving to commercial maturity proved a far longer and costlier process than expected. Despite investment from Ford and Volkswagen, the company could not find a new outside investor; an attempt to secure further investment from Amazon came to nothing. In October 2022, when it reported a third-quarter net loss of USD 827 million, Ford announced that Argo would be wound up and booked a USD 2.7 billion accounting charge. The two partners shifted development in-house towards lower levels of autonomy and divided some of the staff between them.

The story

In October 2022 Ford's chief executive, Jim Farley, told the press that "profitable, fully autonomous vehicles at scale are a long way off". That sentence announced the end of a company on which billions of dollars had been spent: Ford and Volkswagen had decided to wind up Argo AI, the driverless car company they jointly backed.

Argo was founded in Pittsburgh in November 2016 by Bryan Salesky and Peter Rander, robotics specialists from the autonomous driving programmes at Google and Uber. A few months later, in February 2017, Ford announced it would invest USD 1 billion in the company over five years and became its largest shareholder. Argo bought the lidar maker Princeton Lightwave, set up a USD 15 million research centre at Carnegie Mellon University and tested different weather and traffic conditions in millions of simulations.

In June 2020 Volkswagen joined the partnership in a USD 2.6 billion deal that included USD 1 billion in cash and AID, its autonomous driving unit in Munich. Argo's valuation rose to USD 7.25 billion; across the two partnerships, the capital raised exceeded USD 3.6 billion. The company had offices in Pittsburgh, Detroit, Palo Alto, New Jersey and Munich, and more than a thousand employees. In September 2021, together with Walmart and Ford, it announced a multi-city service to deliver online grocery orders by autonomous vehicle.

But fully autonomous driving was taking longer than expected to reach commercial maturity, and spending kept growing. When Argo failed to secure further investment from Amazon, the partners' patience ran out. In October 2022, as it reported a third-quarter net loss of USD 827 million, Ford announced that Argo would be wound up and wrote off USD 2.7 billion; Volkswagen also booked a charge of EUR 1.9 billion. Some of the staff were distributed between the two carmakers. The technology continued to be used in units such as Ford's Latitude AI and Volkswagen's CARIAD, for driver-assistance systems aimed at lower levels of autonomy.

Argo's story shows how a business can end, even with the right team and strong partners, when the time a technology needs to mature outruns its funding horizon. The Level 4 goal was the company's reason to exist; once that goal was postponed, there was no other revenue model to keep it standing.

Lessons for founders

• Set the time your technology needs to reach commercial maturity against your investors' patience; every extra year in between means another funding round.
• Do not tie your company solely to the budgets of two strategic partners; when their priorities change, your reason to exist disappears too.
• Build sellable intermediate products while you wait to reach the ultimate goal; Argo's technology lived on at intermediate levels such as driver-assistance systems.

Sources

1. Argo AI (Wikipedia)
2. Argo AI will cease operations as Ford and Volkswagen pull investments (Ars Technica, 2022-10)
3. Self-driving vehicle startup Argo AI completes $2.6B deal with Volkswagen, expands to Europe (TechCrunch, 2020-06-02)
4. Amazon Was a Secret Player in Ford and VW-Backed Argo's Demise (Bloomberg, 2022-11-22)

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