Volkswagen finalizes investment in Ford’s Argo AI one year later

Remember Argo AI, the self-driving startup Ford invested in? No? Well, look at the picture at the top of this post, that’s their car wearing the ugly LIDAR hat.

Those who have been following the autonomy horse race closely may remember that Volkswagen announced they would invest in Argo about a year ago. Good news: the investment is finally done! Pete Bigelow has an update for us over at Automotive News:

Eleven months after Volkswagen Group announced a $2.6 billion investment in self-driving startup Argo AI, the deal has closed.

Officials from the two companies and Ford Motor Co. said a regulatory-review process had been completed and Volkswagen’s investment was finalized Monday.

Automotive News

Right sorry, it was only 11 months not a whole year. Think about how much progress Autopilot has made in the last year, while Volkswagen and Ford were focusing on getting papers signed. (Timing of regulatory review is, of course, somewhat out of their control. But at the end of the day, all that matters is what time you cross the finish line.)

One of the linchpins in the deal is the transfer of Audi’s Autonomous Intelligent Driving division, valued at $1.6 billion, to Argo AI. Now that the deal has closed, Argo can begin integrating the division’s 200 employees and self-driving technology into their operations. That work begins this week, and will see AID become Argo’s Munich-based European hub.

Automotive News

Oof. Audi’s “Autonomous Intelligent Driving” division, valued at $1.2 billion dollars? I don’t think so. 1.2 billion doll hairs, maybe. United States Dollars, no. Simply put this division has 0 ability to generate future cash flows. As long as development continues unsuccessfully it’s a liability, not an asset.

And good luck combining the German self-driving project with American Argo. You can’t really combine self-driving systems. It would be like trying to combine Mac and Windows, or iOS and Android –– a total train wreck. I seriously question the leadership that made this decision. It seems like they will mostly scrap Audi’s tech and go with Argo’s stack, as any “combination” effort would be hopeless. Maybe the “transfer” is a way for Audi to save face rather than write off the entire investment as a huge loss.

Munich becomes the company’s fifth engineering center, joining Pittsburgh, Detroit, Palo Alto, Calif., and Cranbury, N.J. The company maintains fleets in Miami, Washington D.C., and Austin, Texas, three cities where Ford is planning commercial launch of a taxi and delivery service underpinned by self-driving technology in 2022.

Automotive News

Like every other “autonomy” company, Argo and Audi AID have launched no products. They have generated no revenue, nor do they have a plan to generate revenue anytime soon. Why do people take them seriously when they say they’ll launch Robotaxis in 2022, but find it so hard to believe Tesla could get approval for their first driverless vehicles “somewhere” by late 2021?

Ford and Argo AI have been intertwined since February 2017, when the automaker announced a $1 billion investment in the startup that would be made over five years.

Later, the company said that it would spend $4 billion in its overall autonomous-vehicle business efforts by 2023, which have included starting a subsidiary, Ford Autonomous Vehicles LLC, which houses the company’s commercial efforts.

Though there’s close collaboration between Ford and Volkswagen in a number of areas across their respective businesses, the companies are developing their own distinct businesses and vehicles based on the Argo self-driving system.

Automotive News

So Ford and Volkswagen are investing in Argo together… while Ford also operates Ford Autonomous Vehicles LLC. Then they’re going to develop their own competing vehicles based on the same technology. Seems like a straightforward strategy with a high chance of success. What do you not get?

“We believe building the best overall customer experience will help differentiate us from our competitors in the self-driving space,” [John Lawler, the new CEO of Ford Autonomous Vehicles LLC and a Ford vice president] wrote in a Medium post. “… Now is the time for us to be thoughtful about the service we are building so it can remain relevant in a changing world and offer customers peace of mind knowing they, or their packages, are in a safe and protected environment inside our vehicles.”

Automotive News

Best of luck to Ford and Volkswagen in “remaining relevant”.

Read the full story at Automotive News

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