The road map to fully self-driving vehicles is being rewritten once again, this time by Ford and Volkswagen.
When the two automakers joined forces in July 2019 to share control of self-driving start-up Argo AI, it shook up the landscape among other key players.
Wednesday's announcement that Pittsburgh-based Argo is being shuttered and some of its employees moving to Ford and VW underscores the growing realisation that automated vehicles may be even further away from mass deployment than industry executives predicted back in 2019.
“It's become very clear that profitable, fully autonomous vehicles at scale are still a long way off,” Ford CFO John Lawler said on Wednesday.
As Ford, General Motors and other companies began to realise they would need to step up investment over a longer period of time, “it was never clear what the financial returns were going to be” on automated vehicles, Evangelos Simoudis, an investor, author and corporate adviser, told Reuters on Wednesday.
Regarding Ford and Volkswagen's exit from Argo AI, Simoudis said, “I expect we will see more of those decisions.”
As the AV deployment timeline stretches out even further — after an estimated $100bn cumulative investment by global automakers and suppliers — once-inflated valuations of self-driving companies have come crashing to earth.
VW's initial investment in Argo in 2019 was valued at $2.6bn (roughly R46.7bn), including $1bn (roughly R17.95bn) in cash and the $1.6bn (roughly R28.7bn) value of VW's European self-driving unit, which was absorbed into Argo. VW also bought Argo shares from Ford for $500m (roughly R9bn).
Ford previously injected $1bn (roughly R17.95bn) into Argo when it bought control of the company in 2017. On Wednesday, it wrote down $2.7bn (roughly R48.4bn), in impairment charges.
Before it acquired the stake in Argo, VW flirted with at least two other US-based self-driving start-ups: Alphabet's Waymo and Aurora Innovation.
VW reportedly considered a $13.7bn (roughly R245.8bn) investment in 2018 in Waymo for a 10% stake that would have valued Waymo at $137bn (roughly R2.5-trillion).
The value of Waymo just before then was estimated by Wall Street at $175bn (roughly R3.1-trillion) to $250bn (roughly R4.5-trillion). Its most recent valuation by PitchBook of $30.75bn (roughly R551bn) dates to May 2020.
The market cap of Aurora, which went public nearly a year ago, has sunk to $2.5bn (roughly R44.8bn) , from a 52-week high of more than $20bn (roughly R358.4bn).
When VW announced its initial investment in Argo in July 2019, it walked away from a development deal with Aurora, when the Silicon Valley firm was valued at $2.5bn and backed by Hyundai and Amazon.com.
Hyundai eventually formed a self-driving joint venture called Motional with Aptiv. Amazon bought self-driving start-up Zoox.
Argo's most recent valuation was $7.25bn (roughly R130bn), but that was more than two years ago, according to investor website PitchBook. The company laid off 150 employees in July, when it said it was adjusting its business plan.
The value of its nearest rival, the General Motors majority-owned Cruise, was estimated by PitchBook at $30bn (roughly R538bn) in January 2021, but its current value likely has dropped since key investor SoftBank sold its stake back to GM earlier this year. GM meanwhile is losing $2bn (roughly R35.8bn) a year on Cruise.
Mobileye Global went public this week, but at a third of the $50bn (roughly R896bn) valuation it was targeting earlier in its IPO.
The company, which was acquired by Intel Corp in 2017 for $15.3bn (roughly R274bn), saw its market cap recover to more than $21bn (roughly R376.4bn) on Wednesday, reflecting the company's financial strength and reputation, particularly in assisted driving systems. Intel still holds a majority stake.
Ford and VW pop the automated-vehicle bubble with Argo AI exit
Image: Spencer Platt/Getty Images
The road map to fully self-driving vehicles is being rewritten once again, this time by Ford and Volkswagen.
When the two automakers joined forces in July 2019 to share control of self-driving start-up Argo AI, it shook up the landscape among other key players.
Wednesday's announcement that Pittsburgh-based Argo is being shuttered and some of its employees moving to Ford and VW underscores the growing realisation that automated vehicles may be even further away from mass deployment than industry executives predicted back in 2019.
“It's become very clear that profitable, fully autonomous vehicles at scale are still a long way off,” Ford CFO John Lawler said on Wednesday.
As Ford, General Motors and other companies began to realise they would need to step up investment over a longer period of time, “it was never clear what the financial returns were going to be” on automated vehicles, Evangelos Simoudis, an investor, author and corporate adviser, told Reuters on Wednesday.
Regarding Ford and Volkswagen's exit from Argo AI, Simoudis said, “I expect we will see more of those decisions.”
As the AV deployment timeline stretches out even further — after an estimated $100bn cumulative investment by global automakers and suppliers — once-inflated valuations of self-driving companies have come crashing to earth.
VW's initial investment in Argo in 2019 was valued at $2.6bn (roughly R46.7bn), including $1bn (roughly R17.95bn) in cash and the $1.6bn (roughly R28.7bn) value of VW's European self-driving unit, which was absorbed into Argo. VW also bought Argo shares from Ford for $500m (roughly R9bn).
Ford previously injected $1bn (roughly R17.95bn) into Argo when it bought control of the company in 2017. On Wednesday, it wrote down $2.7bn (roughly R48.4bn), in impairment charges.
Before it acquired the stake in Argo, VW flirted with at least two other US-based self-driving start-ups: Alphabet's Waymo and Aurora Innovation.
VW reportedly considered a $13.7bn (roughly R245.8bn) investment in 2018 in Waymo for a 10% stake that would have valued Waymo at $137bn (roughly R2.5-trillion).
The value of Waymo just before then was estimated by Wall Street at $175bn (roughly R3.1-trillion) to $250bn (roughly R4.5-trillion). Its most recent valuation by PitchBook of $30.75bn (roughly R551bn) dates to May 2020.
The market cap of Aurora, which went public nearly a year ago, has sunk to $2.5bn (roughly R44.8bn) , from a 52-week high of more than $20bn (roughly R358.4bn).
When VW announced its initial investment in Argo in July 2019, it walked away from a development deal with Aurora, when the Silicon Valley firm was valued at $2.5bn and backed by Hyundai and Amazon.com.
Hyundai eventually formed a self-driving joint venture called Motional with Aptiv. Amazon bought self-driving start-up Zoox.
Argo's most recent valuation was $7.25bn (roughly R130bn), but that was more than two years ago, according to investor website PitchBook. The company laid off 150 employees in July, when it said it was adjusting its business plan.
The value of its nearest rival, the General Motors majority-owned Cruise, was estimated by PitchBook at $30bn (roughly R538bn) in January 2021, but its current value likely has dropped since key investor SoftBank sold its stake back to GM earlier this year. GM meanwhile is losing $2bn (roughly R35.8bn) a year on Cruise.
Mobileye Global went public this week, but at a third of the $50bn (roughly R896bn) valuation it was targeting earlier in its IPO.
The company, which was acquired by Intel Corp in 2017 for $15.3bn (roughly R274bn), saw its market cap recover to more than $21bn (roughly R376.4bn) on Wednesday, reflecting the company's financial strength and reputation, particularly in assisted driving systems. Intel still holds a majority stake.
READ MORE
Ford to exit Russia after joint venture stake sale
LISTEN | Gauteng to take over e-tolls after Sanral debt deal
Mercedes-Benz lifts profit forecast as luxury car sales boom
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most read
Latest Videos