COMMENTARY
Ford Motor Co. last week said it was writing down its investment in self-driving company Argo AI. The move caused Ford to report a big third-quarter loss.
That was the short-term news. The longer-term importance was that Ford’s decision poked a big hole in the notion that self-driving vehicles were going to be the next big thing.
Argo was backed by Ford and Volkswagen AG. Argo is shutting down. Meanwhile, Ford will concentrate its efforts on internal assisted-driving tech (where the driver still must monitor where the vehicle is going).
For years, automakers have said self-driving was the future. Ford, in effect, is saying that future isn’t as close as the company once thought.
In auto language, L4 self-driving tech means no human interaction is necessary.
When Ford reported earnings last week, it said L4 technology was supposed to be ready this year.
“But things have changed,” Ford CEO Jim Farley said in a statement.
The Ford chief said he was optimistic about the long-term prospects of L4. However, “profitable fully autonomous vehicles are a long ways off.” So Ford has retrenched and will concentrate on less complicated assisted driving tech.
Argo AI was supposed to be a big part of the next big thing. Instead, Argo is shutting down. Farley amplified his remarks during a conference call with financial analysts.
The thing is the auto industry is really complicated. You have highly automated vehicles traveling at high rates of speed under challenging conditions. Just when you think you have it figured out, some other change occurs.
Five years ago, automakers viewed regulatory pressure for electric vehicles as about equal to demand for self-driving vehicles.
Since then, pressure for automakers to develop EVs has remained constant or even increased. Self-driving vehicles have run into technological challenges. There are questions about what the demand for self-driving vehicles really is.
Ford was founded in 1903. It is a survivor. Still, the company has flirted with disaster many times. Survival is never guaranteed.
The company, like other automakers, is trying to navigate the biggest changes the industry has seen in more than a century. Ford’s writedown of its Argo investment is just one sign of all that.
Senior Editor Bill Koenig covered Ford for Bloomberg News from 2001 through 2008.
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