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The dream of a future with driverless cars around us is still a far-fetched imagination as the first major step towards fully autonomous vehicles has received a major setback. US auto giant Ford Motor and German carmaker Volkswagen's joint venture called Argo AI, which was working on self-driving cars, has been shut down after three years. One of the key reasons behind the two auto giants taking such a call is lack of profitability. The decision was announced by the two carmakers on Wednesday.
John Lawler, Chief Financial Officer at Ford Motor, said, “We’ve looked at this every way that you can. We just see the profitability, given the investment that’s going to be required, a long way out." According to Lawler, Ford is not sure how autonomous vehicles will benefit “in a way that would allow us to have a profitable return on that investment." The two carmakers had joined hands in 2019 in an effort to make self-driving cars a reality as they tested prototypes on the streets of United States.
The two carmakers will lose a lot of money they had invested into the technology. The German carmaker had initially invested around $2.6 billion. Ford had invested $1 billion to buy stake in Argo in 2017. The carmaker says it will now lose $2.7 billion. Argo's most recent valuation was $7.25 billion before the company laid off 150 employees in July. Ford said it and Volkswagen would hire many of Argo's 2,000 employees and some of its offices would remain open.
It isn't clear how Ford and Volkswagen's decision to shut down Argo will impact other autonomous vehicle projects. Cruise is another such unit, owned by General Motors, which aims to put driverless cars in US. GM too is losing money on Cruise, an estimated $2 billion every year.