Amazon Behind Ford and VW-Backed Argo AI ’s Demise
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Amazon behind Ford and VW backed Argo AI’s demise, a promising self-driving technology. Argo’s key backers were eager to attract an additional partner in a bid to share the high costs involved in developing self-driving technology.

Last spring Amazon started investing millions of dollars in Argo, with its plans to use Argo’s self-driving technology to automate some of the electric delivery vans it’s buying from Rivian, setting up a test fleet in multiple US cities.

The economy, control concerns, and growing skepticism about full autonomy have all contributed to Argo AI’s woes. Herbert Diess, CEO of VW also visited the US to meet  Amazon co-founder Jeff Bezos earlier this year to discuss the possible deal.

The collaboration hit a few setbacks due to internal deliberations and it struggled to come up with a governance structure for sharing control of Argo. According to Amazon insiders, the high cost involved in Argo’s technology turned off the online shopping giant. Last month both car manufacturers reach a decision to shut down Argo, which was once valued at more than $7 billion.

The main culprit is Amazon who decided to pull out underlining the start-and-stop nature of self-driving tech development. This comes at a time when global automakers are investing billions to shift to battery power and meet increasingly stringent environmental regulations. The sudden closure of Argo has caught many in the investment community off guard. 

According to Bryan Salesky, an alum of Google’s self-driving car project now known as Waymo, and Pete Rander, a former leader of Uber’s Robo-taxi unit, Argo was highly regarded for its technical skills and big-name backers

Ford invested $1 billion in Argo in 2017 and between Ford’s commitment to electric vehicles ($50 billion over 6 years)*, CEO Jim Farley has said that they will hire hundreds of former-Argo employees to work on driver-assistance technologies.

Argo and Amazon first began working together when they conducted a pilot project in Miami, Florida. An Argo-outfitted test fleet of Ford Fusion autos drove predetermined routes from an Amazon warehouse to final destinations– so-called last-mile delivery. No packages were actually delivered during the trial, but Amazon saw enough potential in the trial to approve an upcoming partnership between the two entities.

Early this year, there was a lot of optimism that Amazon and Argo would work together. That’s why Argo opened an office in Pittsburgh and hired more employees to work on outfitting their vans with self-driving technology. The plan was for Amazon to invest in Argo as they made progress on the partnership.

Ford and Volkswagen had not agreed to terms under which they would share Argo with Amazon by the spring of 2019. Ford eventually acquiesced, but VW remained wary that Amazon-which has a reputation for dominating partnerships-would draw talent and resources away from Volkswagen’s ambitious self-driving strategy, according to the people.

In response to Russia’s invasion of Ukraine, the global economy was dealt a huge blow. Problems with supply chains and skyrocketing inflation drastically affected spending habits. Suddenly, investing billions in unproven technology didn’t seem like such a good idea anymore.

A few key players who were involved in the potential collaboration then left their respective companies. For Amazon, a mergers and acquisitions executive championing the deal and working directly with Argo left. Around the same time, Amazon’s CEO of its consumer business also exited.

Argo was on the brink of financial ruin until VW stepped in. Ford determined that it would no longer fund the self-driving firm, so VW looked at covering the costs and taking it over completely; but they instead invested $2.3 billion in autonomous driving with China’s Horizon Robotics.

Quebec has attracted a lot of attention from the EV industry these past few months. Quebec is situated between two cities, Montreal and Quebec City, which makes it an ideal location for EV manufacturing companies. Why does Quebec get so much attention? The world’s cheapest hydroelectricity, along with Canada’s mineral resources make it a top choice for manufacturers looking to produce electric vehicles.

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